My mom is 91, just fell 3wks ago and broke her hip. She was already with other medical issues. My step father has dementia. We have 24/7 care, running us around $6,ooo a wk. Money is starting to run out, we dont want them to be separated or leave their home, my mom has begged me not to do that, I gave her my promise. We are looking at a reverse morgage. I am the POA, but what if my stepfather can not sign the papers? I dont have a lawyer, and wonder if anyone has any advise? I am going to contact a lawyer, what kind do you suggest?
Is your mom currently in rehab?
An eldercare attorney is what you are looking for. You want one with certification :
https://nelf.org/
and you want one who is familiar with Medicaid in your state.
Many a loving adult child was made to "promise" against NH care, but IMO this does not stand because they don't have any idea of what they are agreeing to -- and it's mostly based on the elder's past (bad) experiences with NHs or ignorance about modern ones. Many today are so much better. They'd get all the care they need plus social exposure, and the facility will most likely allow them to be together if at all possible. Transitioning them (at some point) to facility care does not mean you don't love them. It's just the reality of the situation and the only real solution based on their finances.
Please do not not not even think about mortgaging your own future in order to appease this unrealistic demand. Do research, talk to professionals and go into it with your eyes wide open. Start by reading posts on this forum under the topic Caregiver Burnout.
If no one has your step-father's POA, someone may need to gain guardianship in order to mortgage the home or sell it.
You say the current living-at-home expense is $6000 / week (!). For one year, that is $312,000. If the house is worth $1.5 million, you can get almost enough out of it to cover that weekly cost in the first year. The second year the house value for the reverse mortgage will run out in about 9 months. So, you will get not quite two years of reverse mortgage revenue to keep them in their home as-is. That is not a lot of time. What is their house really worth? Adjust the numbers from there. There are online calculators to help you estimate. Remember, the reverse mortgage companies have to make money, too, or they couldn’t do this, so consider you are giving up value of the house compared to selling it outright.
Whatever you do, make sure you do the math and read *every single word* of the paperwork. And figure out what you will all do when that money runs out. My mom is your mom’s age, 91. She broke her hip a year ago, and is still doing well. Actuarial calculations from the US government Social Security Administration suggest she could live to be 96. A major insurance company suggested she could live to be well over 100. So, consider carefully the best use of their assets to make them most comfortable and happy for the maximum amount of time, rather than burning through all the resources too quickly in an unsustainable way.
I do understand those promises, though.
1. Legal issues. Barb's right; find an elder law attorney. If you need suggestions on how to locate one who's reliable and experienced, post again. I spent almost all my working life in the legal environment, private sector mostly but some governmental work as well.
2. Do research on reverse mortgage firms; compare interest rates, reputations, and as much as you can learn about each of them. AARP may have some online information to share. There are some shysters out there.
3. Estimate how much money you could get. Geaton777 raises a good point, i.e., sufficient funding for as long as possibly needed, and as we both know, that could be years or decades.
4. If you can't get a reverse mortgage that theoretically would last for the remainder of their lives, what other options would you have? TNTechie raises good points, as this scenario may actually come into play. (Have you contacted Medicaid yet?)
5. The RM scenario raises the issue of who would be mortgagors (borrowers)? Your mother would have to sign, but if your stepfather has dementia, based on his cognizance level, he may not be able to execute legal documents. Do you have medical support or advice for his level of cognizance? Would he understand the implications?
6. If you're asked or told by a RM company that you have to sign, individually, be wary. If you sign, it should be only pursuant to authority under a DPOA, not a limited POA. This could be raised with an attorney to ensure that you do have that authority. Do NOT sign a separate Guaranty and don't even consider guaranteeing the loan.
7. You and your family should NOT be co-signers, as that would obligate you to make payments, including after your parents pass, and may affect your credit rating. Your mother and stepfather should be the only mortgagors, with obligations limited to them. That would protect you from a payment commitment.
8. You queried what would happen if your stepfather can't sign? The alternatives I can think of are that just your mother would sign, or if he's executed a DPOA and authorized you to sign, you could sign as proxy, but ONLY as proxy for him.
This is where an RM company could become manipulative, advising that you (and husband?) must guarantee the loan. That would obligate both of you under circumstances which would be defined in a Guaranty, a separate document than the loan documents.
8. I'm assuming that your mother is in rehab post hip break? That's the best way for her to recover, followed by home care through an agency.
9. Check out what assistance might be available through your community in terms of home adaptation. I don't know if this is still applicable in my community, but years ago it annually received a HUD grant to help residents in need with various home improvements. The County also has a home improvement program. The interest rate was nominal, and the indebtedness was forgiven on death.
This could help with in-home adaptations, such as grab bar installation, ramp, etc., depending on the current scope of included work.
If you have questions, feel free to ask; nothing is off limit for explanation when you're facing a financial situation such as you describe.
ETA I didn't see the most recent 2 posts until after I completed mine. I was in no way intending to ignore their suggestions.
if all this is in reaction to your moms recent fall, just 3 weeks ago, I’d really really REALLY suggest that you give it another few weeks to better determined exactly what her needs will be and just how much step dad dementia increases due to moms change in abilities. That 6K may not be enough $ to deal with 2 elderly per week.
RM imo are generally a bad idea, my thoughts why:
1. Not enough $ to pay for in home care needed
RM tend to actually pay out 50%. How long would that $ last along w/ their current income to pay for 24/7 in home care for TWO elderly? I’d suggest that you find out to exactly what “Value” the RM will use. It could be their current tax assessor $ amount or that the RM will require an appraisal beforehand. If house has lots of delayed maintenance, it could actually come in way under assessor value, as assessor value is based on comparables of recent sales which likely have reno homes in the same zip code. It could be even less $ than initially anticipated.
2. compliance issues for house:
So what shape is their home in? And what is their insurance currently like? RMs require the homeowner to be current on all hazard insurance’s and pay taxes and do whatever maintenance and upkeep needed on the house. Do they have the $ for this and pay for 24/7 caregivers? The insurance will have to be for whatever the value of the house the loan is based on. So if it’s 200k RM on 400k home, they will now need 400K of homeowners insurance plus any other insurance for your area like flood, windstorm, earthquake. If mom was used to paying $678.90 annual for HO on her paid up home, that’s not happening. They will need new peril coverages. RM may offer to wrap this in the loan…. But it will be a more expensive cost.
On the maintenance, they have to keep the house up. So if a hail storm comes thru, they will be required to get roof repairs / replacement done. Should taxes not be paid, or obvious maintenance not done, the RM can call in the loan. Like 90 day demand and if not done, the loan is due in full or RM acquires the home and puts it up for sale.
The RM is guaranteed from the feds whether or not the elder lives there. It is not to their advantage to be all nice and understanding on why maintenance isn’t being done or property taxes were paid late.
3. do you live in the home so need to continue living there after they both die? If so, you have abt 6 mos to come up with funding to pay off 90% of loan & all fees if it’s a federally backed RM. Fees could be quite a bit.
Waiting to sell to family or having elderly live there forever is not in the RMs best interest; they need elder out & then sell asap (usually to flip) & get balance (if still is one) from the feds.
Just what’s the situation with step dad? If mom predeceases him, what are you going to do about his continuing to live there? If he has kids or heirs, they could be quite difficult on this should you want him forced into a NH. His oversight likely ends up being on you.
where is your mom right now? Most of the time they are discharged from a hospitalization directly to a NH for rehab (all r Medicare benefits). Is mom in rehab & if not, is there a medical reason as to why not?
To stretch the money as far as possible, if you're paying an agency about half the hourly wage goes to the agency and not to the caregiver. Do you know any caregivers that would want to work for you at the rate of pay your caregiver actually receives? You could get an atty to help you setting up the employer/employee contract and advise you on reporting employee taxes.
I am a financial planner in Canada. The information I am sharing is general in nature, not specific advice for your parents. I am also an Elder Planning Counselor.
A Home Equity Line of Credit, HELOC, acts as a second mortgage, but is not a reverse mortgage. If the home is fully paid off they may be able to get up to 75% of the equity in a HELOC, it would have interest only payments and would be payable when the house was sold.
But depending on their income levels, they may not qualify unless you or another family member co signed. This is not a good idea.
This frees up more funds than a Reverse Mortgage does.
But the bigger issue is your noble promise to your parents. Dad has dementia, he will get worse in ways you cannot begin to imagine. Mum is falling, having care providers will not prevent further falls. Nor will being in a nursing home.
Is the home fully accessible? Bathrooms etc?
What if the choice for your parents us, you can stay together if you move into a nursing home together now, but if you stay here until all the money is gone, you will be placed at the whim of Medicaid and will not have a choice in where you end up?
Are you POA for both parents? Does your POA allow you to enter into a RM or any other debts on their behalf?
A default does not mean taking over payments. It means the entire due balance is called for immediately.
https://www.investopedia.com/mortgage/reverse-mortgage/5-signs-reverse-mortgage-bad-idea/
As others noted, unless this is some really special high value home, they won't get nearly enough to cover their needs for very long. 6K/weeks is a hefty price to pay. My mother lived in a VERY nice MC facility (it had IL, AL and MC) for 4 years and only crossed the 8K/month last year. Your/their state isn't listed, but the cost does vary by region. Some places are higher than this, but others lower.
You REALLY need to get some expert advise about RMs. There are sketchy places that would likely sign them up in a heartbeat, knowing full well they won't be able to meet the required payments (mortgage ins, house & peril insurance, upkeep, taxes, etc) and be able to foreclose. They are NOT going to dab their eyes when they hear of the hardships.
As others noted, simple math gives this a poor outcome. Assuming the place *might* get 500K, that's only about a year and a half of care, excluding any other expenses (ins, taxes, food, utilities, etc.) What then?
The old "promise me you won't put me in a home" is the most cruel thing a parent can do to a child. We don't have crystal balls. We don't know what the future holds. We CAN check out other options, such as a smaller place or an apartment, selling the house and using the proceeds to pay rent/care, but this is still going to cost a bundle, given the care they already needed before she broke her hip.
While getting appropriate advice (legal, financial), check out places in your area. The newer facilities today are nothing like NHs of the past. They can likely remain together, even if stepdad needs MC. There was a couple in mom's MC unit. She had been in another facility for physical issues, but when her husband needed MC, they moved into this place together. She didn't need the MC, but it was less expensive than paying for his MC and her AL and they could be together.
If the RM is the plan, please don't sign anything yourself. Signing as proxy, aka DPOA might be okay, but be VERY careful - if not, you could end up responsible for paying.
This illustrates very well why we must think twice before we accept treatment that will prolong our lives which may not necessarily be a good road.
2.) I know you promised your parents but at some point, as POA, you have to do what is in THEIR best interest (and yours) financially & medically,. You are not superhuman and and they are not in a frame of mind to objectively assess the situation.
If you contact an Elder Care Attorney they can guide you on Medicaid Planning and asset protection and everything you need to know. Make an appt and it will give you a better perspective on your options and what is realistic at this point.
I promised my dad he could come back with me and I am in the same boat. He was living with me and has dementia which I was managing while still working as a single mom with 3 kids. But he recently had a leg amputated and there's no way I can care for him in the manner he needs and deserves without being neglectful. And I can't afford to stop working. It is always a heart wrenching decision.
Agree with all to find Elder Care Attorney.
It is very difficult to find a nursing home that provides remotely decent living conditions. Yes, there is Community Medicaid which will provide money for care, but it is not very much per hour and, depending on state, does not cover overnight. It will pay for modifications to home (like roll in showers) to make homes as safe as possible.
I am very sorry for your trying situation and that of your mother and step father. She deserves peaceful final days.
I personally would rather pass on than enter a nursing home. Seen too much from having relatives in them for 10 years. Unless you have lived in them (I have), unless you have had relatives there not on Medicare rehab wing but in Medicaid wing (very different care)- you have no idea the abysmal level of care and very poor quality of life. According to Centers for Medicare and Medicaid (CMS), most provide under 2 hours a day of direct care. This totals all staff time to include anyone’s hours who is a nurse (even if they are office/administrative only) and nurse aids divided by patients.
Elder Care Attorney can make you aware of the best options in your state.
The one my parents are at seems to need to be checked out by us kids as there are issues that need to be addressed. All the kids are long distance at the moment, so we weren't there when they chose their location.
From almost any aspect this not on does not make sense, but will likely also be impossible for any POA to do. It would involve a very very liberal and complete written POA for BOTH owners of the home, both on title, and here you have two who are not mentally capable of doing this.
This is very very dicey and not something to discuss with any forum, no matter how smart you may think any here might be. This is purely and simply a legal question for which you need the advice of a Trust and Estate AND an Elder Law attorney; this is paid for by your POA for your stepfather. Take your papers to your appointment and a list of your questions. Wishing you good luck.
Sorry about your difficult situation. Please contact an eldercare attorney right away in your State and County to discuss the reverse mortgage options BEFORE making any decisions. Unless your parents have sufficient property equity for their care and home upkeep, plus their income will help, their money may run out. Also think about what may happen to their home if your mother and/or stepfather needs to move into a NH and never return home. And do not co-sign any type of loan without careful discussions.
Reverse mortgage comes due if she leaves the house (vertical or horizontal) and they check every few days at age 91. The property taxes and insurance (especially skyrocketing flood insurance in some areas) can also cause them to act.
True RM story, after H. Katrina couple of friends of ours had parents living in Lakeview area of New Orleans. LSS Lakeview stayed flooded 4’-10’ for about 3 mos & lots of homes were slab on grade 1950/60s ranchburgers so water to or above roofline. Science fiction level of mold. For all, the insurance (HO, NFIP) had RM listed as a payee as it is securitized lending. So any insurance checks would have BOTH owner & RM name on checks. Owners signed check and then sent off to mortgage holder and in theory they sign and return. None of the RM released any insurance funds, they kept the checks. RM expected owner to do whatever to secure the property asap & at their own expense (like get blue roof or a dry-in done & mold remediation) and come up with a timeline of repairs & when utilities on & with estimates and only then would the insurance proceeds get released. And if not done pretty quick, RM was within the loan agreement to call in the loan in full. They would use the insurance $ toward the call in too. All had loans called in.
And to make matters even worse, none of the kids knew their folks had taken out RM. The parents weren’t really old, like in their late 70’s - early 80’s, they bought homes when Lakeview was built & owned them outright. They just though of the RM as a easy line of credit to just have. They had proper insurance. There just was no way to get repairs, remediation, power up within the timeframe in the agreement. The RM would not do extensions either. It was totally predatory.
Disclaimer: I do not profess to be a seller of RM's, nor am I an attorney as there are some on this thread who are pro RM's. I am merely responding to the OP's question(s).
RM companies don’t loose out.
Now if the family or heirs want to actually buy the place, they have to come up with $ in full and quick. It rarely imo makes sense to do. Might could if the property has appreciated in value beyond huge AND heirs have cash on hard to pay in full the RM amount (I think it’s at 90% for heirs)