My mother is 80 years old, and in fairly good health, besides some borderline hypertension. I rent a house in Staten Island, NY, and she owns a paid-off house in Queens, NY that is too large for her. We need to either sell her house, or get a reverse mortgage to pay off some of my debt, and buy a her a smaller house.
(We've spoken to a friend who is a reverse mortgage counselor, so we are aware of all the related aspects)
So, to make the right decision, we need to start planning her immediate living situation and her future long term care for either situation.
What we're concerned about, is that there may be a time when she needs to go into a care facility at some point, and need to protect either the new small home (purchased through selling existing home), or protect the equity in the existing home (with reverse mortgage) from being seized by the state for care costs after her death.
My mother, along with myself and my wife would prefer not to live together, so one house for all of us is not an option.
Does anyone have any thoughts on reverse mortgage vs buying a smaller home and protecting remaining asset from Medicaid?
None of her money should go towards paying your bills. Pay them yourself.
An elder care lawyer would be your best bet to guide you through the process. You do not want to come out in 10 years or so and find you've made some horrific financial decisions.
Does mom want to protect her assets so she can leave her kids an inheritance or is she planning on using her money for er own care? It makes a huge difference in how you plan for the future.
I wouldn't attempt this move w/o legal aid. You won't want drama now or when mom passes or requires higher levels of care.
Good Luck with this!
I would like to gently suggest that you are somewhat romanticizing your mom's future aging progression. For this reason I do not recommend you buy her another house. You will be the one propping up the pretense that she is independent when in reality you will be orbiting around her needs for care more and more with each passing month as you struggle to maintain another home. Also, she will be isolated there by herself. Even if she is socially engaged now and even drives, you will be amazed at how quickly this can all come to a screeching halt. Please research some good quality Independent Living communities that have transitional care into Assisted, Long-term, Memory and hospice. This is not to "warehouse her" but to help meet her growing needs while keeping her socially engaged and sharing her supervision with qualified professionals so that you're not taking on all of it by yourselves. Please read more on this forum, as it will be very informative and eye opening for you. I wish you all the best in moving forward!
Reverse mortgages are only good if someone with money wants to take equity out of their home to buy investments that have a much great return then the interest rate on a Reverse Mortgage, plus fees.
NO, NO, NO, you do not use any of Mum's assets to pay off your debts. They are 100% your responsibility, not hers.
Does Mum want to sell her paid off house in Queens? Or is it your idea in order to access some of her assets to pay off your own debts? If Mum does not need to access the assets for her own use and wants to stay in her house, then as long as she can afford to pay the household expenses from her income or other assets, she can stay put.
If Mum sells her house, buys a smaller one and pays off your debt and 6 months later has a massive stroke and needs 24/7 care, she will be looking at medicaid look back.
There are lots of stories where when Medicaid is needed there are reversed mortgages, mortgages, more than one person on the deed desides the spouse... it causes a lot of problems when Medicaid is needed. Not so much for the one needing the care but the one who had to deal with Medicaid recouping their money after the person dies. If there is a house, there will be a lean. Then the Executor/Administrator has to sort it all out.
Spending any money of Moms for yourself will effect Medicaid if she ever needs it. She can't even gift it. Since I so wish I had talked Mom into selling her "white elephant" and getting an apartment, I suggest that may be a better choice for Mom. No taxes, no upkeep, no water bills...At 80 unless you want the responsibility, she will have to pay for lawn service, plumbers, heater men ect...An apartment its the rent each month, electric and cable/internet/phone. Proceeds from the house can offset any thing her monthly income cannot afford.
If you consider adding on for the purpose of Mom living with you, you cannot use her money. Medicaid considers it as a gift and you profit from that gift if you sell ur home. Its an improvement for you.
While Mom is alive, her money is hers for her care. If she agrees to help with your debt, just be aware that you may eventually be responsible for her physical care because of Medicaid penalties.
That was in 2014. Dad died in 2015 and my mother is still alive at 93 and living in Memory Care Assisted Living. Their hard earned money will run out in 2021 and THEN I will apply for Medicaid to finance my mother's new life in Skilled Nursing. When Medicaid does their 5 year look back, there's nothing to hide and no fraudulent activity to discover. All that will be revealed is that ALL of their money went towards paying for their care.
I've killed myself over the years to make sure I didn't spend any of their money and to make sure it would be extended as long as humanly possible, because that's the right thing to do. My father was an immigrant from Italy who worked his entire life so their 'retirement' could be handled properly, thank God. I am an only child and forever grateful they had the funds to keep them well cared for in AL for 7+ years.
Why do you think your mother has to pay some of your debt? Why do you want to protect her assets from paying for her care?
I don't understand the logic.
If there's any left over after she passes - may she live forever - then good luck to you. I'm sure she hopes there will be, and I respect that as a natural wish in a parent; but you don't have the ghost of a right to expect the state to fund or subsidise her care while she's sitting on cash reserves or property assets.
This is about mom receiving the care she needs without being penalized for giving her money away.
My Dad moved to Independent Living facility and he loved it. His rent included weekly housekeeping and weekly linen service, plus meals in a restaurant dining room. The women at dinner most were dressed to the nines :) Oh, money used to pay the rent was the equity from Dad's house.
As for Medicaid, please note that us taxpayers, including you, fund this option. If everyone tried to protect their assets, then Medicaid would either fail to exist or our taxes would double in cost.
If you take a loan from your Mom, make sure paperwork is drawn up correctly, along with an interest rate.