Elderly in-laws are house-rich and cash poor. What are their options since they won't sell the house?

As your inlaws are only in their late 70's--they could need all the money they can lay hands on for 15+ years.

A LOT of people wind up in this situation, sadly. All their money is tied up--no liquidity.

I've only heard awful things about RM's so I'd be cautious there.

If they can afford 21K per month for upkeep on the house, etc., then they can certainly afford a VERY nice ALF apartment. Or a condo, where all upkeep is included--they may actually find that refreshing! I know, nobody ever wants to leave their home--but it sounds like the house is draining them dry. Selling it would put a nice chunk of cash in reserve.

ABSOLUTELY find someone who specializes in this kind of financial arrangement. We actually use our attorney for a lot of these kinds of decisions.

I agree with not getting family involved if your parents have all their decision making abilities.

The problem is that they don't WANT to move, right? And the house is packed with memories and junk, I bet. They don't want to deal with it, I'm sure.

Take it slow. It took us 3 years to get mother and daddy to realize they could not stay in their home--and during that time we were sloooooowly purging all the junk and trying to get the huge yard in shape.

Sadly, by putting off the decision for so long, they had fewer options. They SHOULD have kept my grandmother's condo and lived there--but they didn't "want to" and in the 2+ years after she passed, things went badly south for the folks and they wound up living with my brother. NOT a good idea--and 22 years later, mother is as unhappy with this situation as she was the day we moved her in.

Failure to plan---this will come back to bite them and they will be left with fewer options.

Initially, one of you family members needs to broach this subject with mom & dad. I'd find some professional help first, a few options and then let them make the appointments and decisions. Just be supportive but don't make the decisions for them (unless that's your JOB)--they will happier if THEY have made this life altering decision.

OKAY......... your inlaws are late 70's - are there any issues with dementia or loss of cognitive ability? If not - why are you in a swirl on this - it is their house, their decision to make. Stop giving them money for expenses. they need to figure this out.

Do you think they would listen to a financial advisor if he/she said "You are over-housed. You need to downsize?"

There really isn't any magic formula except that you need to spend less than you bring in every year.

They are spending more of their income than they should and soon will have to tap the equity in their home. How they do that is up to them. And it sounds like they won't even consider it until they are convinced they can't keep going as they are. I agree with the advice to stop giving them money. People will resist the truth longer if they don't feel the consequences. Step back.

I am applauding - think: standing ovation - your idea of placing this in the hands of a specialist financial advisor.

Hmmm, how to find one...

Do you know of any of their peers who have been through this process successfully? They might be able to offer a personal recommendation.

If there are any new housing developments of the kind you have in mind, see if the developers offer any sort of relocation advisory service. You could approach them pretending you're asking for yourself, and if they start any hard sell malarkey back out fast, but if you like their style...

Unbiased advice as such, genuinely objective analysis of pros and cons, would be wonderful. But apart from being jolly hard to get hold of... how can I put this... it's not actually what you want. Or, rather, it's not actually in their best interests.

Given the option to stay put, they'll stay put. If they're comparing financial products that make it possible, they'll go for the least bad non-moving option.

But *all* of these products are needless, expensive debt. And if they're living in a house that they can't afford to run, given that their living and health care expenses will inevitably rise and God forbid they should die any time soon, they need to realise their capital and get a place they can afford to live in comfortably. All of which you know, I know.

But anyway - I should research a few suitable properties and see what services you can access from related sources.

It is all incredibly emotional, in fact I'd say it's almost impossible to have the conversation without somebody leaving the room either in tears or slamming the door behind him. My heart sinks for you.

MEP1965, I assume your in-laws are clear minded, thus no memory issues. If that is the case, there is nothing you or your husband can do except try to advise them. Of course, that doesn't always work, as parents still viewed us the "kids" and what do we know :P

Good luck in trying to get your in-laws to downsize. I tried that with my parents, who were in their mid-to-late 90's. My Mom refused. Nope, nada, never. But Dad was ready to move as he was getting too tired of having the responsibility of home owner ship. But he wouldn't leave Mom behind.

Many elders are quite proud that they have a home that is mortgage free... it is a right of passage. That how it was generations ago. No one downsized back then.

Time to set boundaries. If your in-laws need help with household chores, remember it's not everyone's dream to have 2 houses to clean and 2 yards/houses to maintain. That is just too draining. Learn to say "no". They are still young enough to figure something out. Be careful, parents are really good at using guilt to get things done.

I assume the in-laws are living off of their monthly social security and probably a pension or two. Any stock dividends? If they own stock, they can sell it unless the dividend is healthy enough to give them funds.

How much income (SS, pension, dividends) is incoming per year?
Outgo is 21K per year.

Do they understand that they are underwater? Or are there cognitive issues in play here, even if mild ones?

Do they have a family lawyer who has any leverage?

They are spending $21k annually in housing-related expenses including taxes; they are spending more with all other expenses taken into account and will be $5k in the red annually per my budget, which I worked up with their assistance and which does not have much fat in it. The have SS and a small pension and no investments and limited cash. Happen to live in a very expensive part of the country which makes it difficult with a limited fixed income, no investments and depleted savings. MIL -- who is lucid but has a very hard time making decisions about towels let alone something of this magnitude -- has come to me for assistance since I can run numbers for her, I am in the real estate field and I am less attached to the house, albeit I have enjoyed many a family celebration there and understand the decision is difficult. Prior to me getting involved they hadnt worked up an annual budget nor had they put together a five year capital plan of repairs for the house to understand how expensive this situation could become. They knew this day would come, my FIL left the decisions to my MIL and she hasnt been able to focus/decide. More recently the children have busy helping the parents on a day to day basis as there were health issues with FIL, so I was assisting more with the long view. My spouse regularly deals with any repairs he can handle, which helps. The children have discussed assisting financially rather than the parents taking out expensive loans, but at the risk of sounding awful, we have a mortgage, two kids in HS and going to college and I have other plans for my savings, hence I feel if they dont focus we can get left contributing for many years to come...which will make me extremely bitter. If they had no equity in their home that would be another (worse) story, however, they do and have a net worth significantly higher than many people their age...they just dont like their options. MY MIL is terrified she hasnt considered all options, so i have encouraged her to speak to her estate lawyer who may be able to give her advice or push her in the right direction. She hasnt done that because she doesnt have the $$ to pay him...which I have in the past indicated we would cover if it meant she would take some forward movement. Round and round we go...been several years now!!

I believe the only way for anything to happen is for the kids to stop funding. Young people are supposed to fund their future, and the parents, the future of themselves and their kids. Never the other way with kids funding the grands or parents!! When our elders reach the bottom of the barrel, they are forced to make decisions they don't like.

Help them prepare for that eventuality by asking if you can have this or that that you know they would not take to a smaller house, and dispose of it - donate or sell if you like. If you are ever asked, "I don't know exactly where it is, but thank you so much for that!" The work that needs to be done on the house can be with the line of credit, now, so that the house is ready to be sold. Medical payments can be stretched out over time, but the need for house repair can come suddenly.

Sometimes it is the whole process of downsizing and moving that causes all the resistance rather than the move itself, just the though of finding a new home and figuring out what to do with their stuff, let alone the actual labour involved, can cause people to shut down. Maybe the best strategy would be to do the leg work in finding a more senior friendly home in a nice 55+ community and then assure them that You All will take care of the details of a move and sale. Even if you have do it all it would save you so much grief in the long run.

Boy, are they lucky to have you on the team!

The only thought I can add is that it is easier to swim TO a nice new place, than it is to strike out FROM a dear old but now uninhabitable country that you are sad to leave behind.

Again, that comes down to finding their next home first, then working out how to get them to move to it.

Don't you just love stubborn people. I mean logically, they had to borrow from their own children. You'd think it would dawn on them we don't need this house for just the two of us.

Like suggested. Maybe find a place and take them to see it. A nice independent living with activities, outings and transportation. Usually comes with 3 meals a day. Big thing for me would be no cooking.

I would not invest for repairs unless it would really bring in more for the house. If they ever need Medicaid, the house has to go for Market Value.

I am currently studying Personal Financial Planning and repeatedly the professors state that seniors are loath to sell the family home, even when it makes sense.

I am faced with that with Mum right now. Step Dad just died and she has considerably less income to work with. She owns her own home. When she complains that she will not have enough money I unemotionally state you have more than enough equity in your house to live very comfortably for the next decade. I do not offer her any financial support.

Mum is showing signs of age related decline, she talks about needing to write everything down on her calendar, but no diagnosed dementia at this point. She is still capable of learning new software on the computer, balance the check book etc. Her mother and mil lived in their own homes until a very short hospital stay prior to death, but she has outlived both of them and most her savings.

She wants to go on a trip with her sister to celebrate their 85 birthday this year. If she sold hte house it would be a no brainer.

My bad for not reading the entire post before I said anything. $21 K per YEAR.

This situation is very reminiscent of my folks. They could NOT keep up their huge house and yard, we were all raising small families and trying to deal with our own stuff--having to give up 4+ days a month to simply keep their lawns mowed and the weeds down was about all we could manage. They 2nd mortgaged the house and gave oldest brother $175,000--and there went any chance at a secure "retirement".

We tried to get them to rent out the basement to a family, which would have helped--in the end, they HAD to sell, under the gun and it was horrible.

Your IL's have a lot of options. But taking money from you kids shouldn't be one of them.

We're in the beginning process of "downsizing"--makes me laugh b/c our house is only 1800 sf, but it's a split entry and I simply do not want to have all these stairs. DH is giving me nothing but pushback---but in the end, I will get my way b/c I am sick and tired of shoveling snow off my car (he gets the garage) and hauling everything up and down stairs all day. I've had a cast on my broken foot for the last 5 weeks and thunking up and down those stairs all day is making him nuts....plus it hurts and it's dangerous, but half of the house is downstairs!

I am taking a page from my g-ma's book. Suddenly widowed at age 61, she took a year to grieve and breathe--then she bravely sold her "dream home" and moved to a condo. Never looked back. I know this took incredible courage and I appreciate it more as I am now older than she was when she did this. She lived 100% independently until a couple of months before her death.

Not planning will result in disaster and sadness--almost for sure. Mother and daddy dragged their feet so much it wound up that they had NO options but to move in with brother. 22 years now. And really. nobody is happy with this.

I hope during all of the "Emotion Involved," You asked them if their "Construction' They are Residing in, Is "Protected" By the "Five Year Look Back," Or Medicaid, If it would come time for them to Go into a Nursing facility, Would snatch it all away to pay their way?

"Your ILs have a lot of options. But taking money from you kids shouldn't be one of them."

Midkid is so right. You set the precedent in 2018 of helping with some unexpected expenses. The other sibs may have, as well. As time goes on, though, chances are all sibs won't keep ponying up cash for the elders. Will your H insist on continuing to help them?

NO ONE should be helping them financially. Don't make that mistake again. As long as they can guilt their kids into doing it, there won't be any forward progress made in getting them to be more realistic.

Reverse mortgages are rip-offs, from what I've read. They'll be lucky to recover half the value of the house, and the small print on those contracts does NOT favor the homeowner. Offer assistance with condo-shopping, packing, yard sales, preparing the house to be sold, but don't give them money. They need to face the truth; the only way they'll be able to afford to live comfortably is to do so in another place, and they can only do that if they wring every last dime out of their house. That means a full sale, no mortgages. Tell them, repeatedly if necessary.Then brighten the house up, fix what could drop its value, and stage it well, and maybe it will sell well.

You have much company. Sorry their life plans didn’t work out well. The recommendations to get financial advisor involved make good sense, to have one unattached person with financial knowledge, at the table. If you can arrange that, it may help any fears they have regarding the big decisions coming. Here’s the rub. From my personal experience, financial advisors cherry pick their clients. Most won’t work with many Baby Boomer retirees living on Social Security, with no brokerage accounts to steer the money/trade commissions their way. I’ve been trying to consult with a financial advisor, for our limited resources, house poor here, little resources, as well. If, and that’s a big if, they will even talk to you on the phone, once they realize you don’t have decent savings via IRA, 401k, brokerage accounts, they won’t take your phone calls, and won’t call you back. I’ve tried three recommended financial advisors in the past year. Or rather, contacted them. Only one sent paperwork for me to fill out detailing assets, income, budget. I worked hard putting it all together, sent it all back. He won’t take or return my phone calls, ignores emails. Two recommended by accountant, even mentioned who referred me, when I tried to contact them. Won’t take calls, won’t call back. So, if she has access, make that appointment, and consider yourselves lucky you can get the audience. It seems that unless you walk through the door with a good amount of money to invest, the middle class is mostly shut out of their services. The working class retirees are precisely the ones that need their services the most.

If your in-laws refuse to downsize and tuck thousands of cash away, is there any chance of turning the home into a duplex to where they can live in half of it and then start to have money coming in to help cover their expenses? Or at least rent out a couple bedrooms to a pre-screened family? (Preferably family members that could also watch after them?)

You want a financial advisor that you pay. This way they will take you as a client even without a brokerage account. The free ones are interested in running your brokerage account. A reverse mortgage is a bad idea. Selling the house outright will get you much more total money in the long run. Have you taken them to any free lunches at an assisted living? Once they see the place, they may be interested in moving. As far as the junk in the house, you help them pick what to take. Everything that is left, you can clear our. As far as repairs on the house, $10,000 sounds like a low number for repairs on a house of that value. Consult a real estate agent to see if you can sell the house without repairs. Please get them to a lawyer for power of attorney and health care poa/ directive. You will need these soon enough. In the meanwhile, stop enabling them by paying ANY of their expenses. They need to be forced to face reality. The are adults. Adults pay their own bills.

If they do not want to sell the house to an "outsider" would they consider selling to one or all of the children? If so you all could buy the house once they move out sell the house and return to each "investor" the money that they put in to "buy" and any profit would then also be split by the % that was put in.
You do not need to tell your parents what became of the house just knowing that it went to family should be enough to placate them. If after moving into the Assisted Living, or Condo, or where ever they move if they want to go back to the house just tell them that it is getting the roof done, the house is being painted, , the windows are being done the floors are being done....what ever you have to tell them that they can not go back for a visit.

I have had a very good experience with my mother and a free financial consultation with an advisor from Fidelity.com, if you have a local office. IF your parents would be receptive to a professional showing them how owning the house now is detrimental to their financial and physical health. The agent would also explain how it is hurting other family members who are contributing financially instead of saving for their own retirement.

In the initial phone call to set up the appointment, Fidelity will ask the size of the assets, but there will be absolutely no pressure to utilize their ongoing management beyond the initial meeting. Best wishes.

A reverse mortgage would be perfect for their situation. It is expensive upfront but solves all the problems.

In my own experience (grandmother and father) getting an elder to sell their long-term, paid-for home is impossible if they don't want to move. In my situation, Granny's dementia progressed to the point of requiring her being placed in a memory care unit. Our uncle had DPOA and was co-owner of the paid-for house for a decade so the house was spared sale when she was placed. He just moved in as he had been paying for repair for many years. She passed away some years ago. Dad is still in his home, age 92, and refuses to leave. We've done everything to try to change his mind, even asking him to come live with us in a senior designed apartment we built for him in our home. My mother also lives with us in her senior apartment. He has little equity and savings is nearly exhausted. With his refusal, we siblings (3 of us) have had little choice except continue to help him stay in his home, including 'infrequent' financial help, rotating shopping and weekly house cleaning and yard chores, and doing home repairs ourselves (one of us is skilled at home repair). Two of us live out of state, so we keep a schedule of times we can go to him and give 'sister' a break. AND the two of us who live out of state are also have in-house, ill, elder in-law parents ourselves. There is no easy way to solve the problems involving stubborn elder parents. PLEASE ask your parents to get a DPOA and healthcare directive ASAP. I recommend you speak with an attorney specializing in eldercare, as we did.

Make With a representative from AAG mortgage. If you take this route, it will enable them to stay happy in their own home, do maintenance and minor improvements. You sure to request a man with Gray hair because many people who are depression babies only take heed from a man close to their age. There are articles that prove these mortgages are legitimate, protected by the government and are regulated. Prefer credit lines. They can live there until they pass away or until the borrowed equity is exhausted. If they pass away and there is still equity in the home, You can either pay off the balance due or sell the home and keep the remaining equity.

Whichever way you slice it, and however governments regulate them, mortgages are loans on which interest is payable.

For young adults buying a house, it makes sense to take out a long term loan. Their incomes are likely to rise. They have years and years ahead. They will benefit from the increased equity in the house.

For older people trying to maintain a house and lifestyle that are beyond both their needs and their income, it is STUPID. It is STUPID to borrow money to keep up a house that you do not need and cannot afford to live in comfortably.

What if they outlive the cash they derive from the reverse mortgage?

Why doesn't every one of these products come with a specification showing the exact amount of money to be paid to the finance company in fees and interest?

And - this has got steam coming out of my ears - it will "enable them to stay HAPPY in their own home" Happy? Really? Not increasingly frail, disabled, at risk and isolated?

Reverse mortgage/equity release products are needless debt sold to emotionally vulnerable people through empty promises that prey on their fears. I can't think of a legal financial product that's more cynical in all its premises.

A reverse mortgage will just make the problem bigger and prolong the inevitable! These companies might be legal but that doesn't mean they are ethical. In the find print you will find a clause stating that you the homeowner (borrower) does not stay in the house xx many weeks or some will state xx many months they (RMC) have the right to take your house. So if your partner dies and you go to rehab for PT and not occupied the house for 8 weeks (we'll say) they (RMC) can take your house. Than where do you go? As far as I am concern these companies are scams! Yes, I have done my research on them!

I agree with CM it is stupid to borrow money at that age for a house and lifestyle that you can't afford. They might be happy at that moment, but they're be sorry later!

Sell the house and downsize or your parents will not only be living with you but living off you. Do you really want to financally support your parents? Of couse not!

If you or sibs really have that big emotional attachment to it than one of you needs to move in and take over the house bills and maintenance!

Another way to look at this is from a business point-of-view. Let's say the house is a business and it is cash poor. The first thing you do is start elucidating assets to free up some cash and if that can't be done than you sell the business! Your parents need to free up some cash.

There is no other way around it!

If they have an estate lawyer, they should have done some estate planning there, more than just "we want to leave the house to the kids" in a will. If they don't feel confident that their current attorney is worth paying for expert advice, my recommendation is that they contact an attorney who specializes in Elder Law so they can determine what their options are. Many of these attorneys will offer a free initial consultation and explain what they will charge for the services they can provide.

Oh, such a common error by the elder. Living above their means. Financial advisor is needed stat. As one ages, ideally #1 They have paid off their mortgage loan, #2 They are downsizing possessions, #3 They are eating less and cheaply, #4 They have a financial portfolio --- all if possible. That's just for starters. KEY --- DO NOT OUTLIVE YOUR MONEY.

Haven't heard anything good about RMs and likely would not consider it myself or recommend it. Others posted here with more scary info!

IF there are enough issues that need dealing with on the house, a home equity line of credit could help. Yes, it needs to be paid back, but taking enough to make the needed repairs AND enough to cover the payback temporarily might be workable. The danger is if those borrowing are not disciplined enough to manage the funds. It is too easy to spend spend spend on OTHER stuff and not focus on what needs to be done AND paying it back. This would also be a good option if you can convince them to sell/move - getting necessary work done, and "sprucing" it up will increase the chance of sale and possibly bring a higher sale price. We had to do a lot of cleaning, painting, heat/AC replacement and glass replacement (fogging) before selling mom's condo, but resisted the realtor's suggestions about a couple of "outdated" light fixtures and replacing bath counter with granite! Condo sold for MORE than listed price without these "updates"! Saved us a lot not doing those counters!!! But the other work needed to be done in order to have it sale-ready.

The nice things about a line of credit is that only what is needed is borrowed/charged interest, and as the balance is paid down, the balance available goes up. Also, IF the funds are only used to make needed repairs to the home (discipline!), it would be tax deductible. If used to fix up the place before sale, just make the minimum payments. The loan will be paid off at closing.

Clearly the best option would be downsizing, but so long as they remain competent AND resistant, there isn't much you can do. Since you have done up a budget, which shows shortfall, focus on that - keep ramming it home until they realize this is not feasible! Certainly all their children should resist enabling them to remain status quo - aka no funding them! It is fine to assist with things that need to be done, such as painting, minimal repairs, lawn care, if they truly need the help, but not to the point that it takes up all your free time!

For those who insist on hanging on to things, perhaps suggesting storage for "good" items might help them in the decision to down-size. They won't have to part ways with these things. If possible, try to work on helping them get rid of "stuff" that isn't any good (might have to do this when they are out!) Our mother also resisted "cleaning up" and "clearing out". Had no idea how much stuff she had, especially the clothing as I didn't go around checking everything, just tried suggesting clearing out clothes that do not fit. Nope. I keep my clothes nice. Sure, but what good is it if you don't fit in it anymore! Once we moved her to MC, and started cleaning up - oh boy!!! Every closet stuffed full, every box, bag, tote, any kind of storage was enough to open a store!!! FIVE porta-closets!!! We ended up ditching most of the clothes to goodwill, still have to deal with all the shoes and handbags, never mind all the jewelry (mostly cosmetic stuff, not worth much.) Easier to deal with it before if possible. It took us over a year and a half to get it all ready to sell, meanwhile 14k or more a year spent on minimal utilities, taxes and condo fees!!!!

MEP1965, I noticed that your Mom-in-law is thinking about putting the grown children's names on the Deed. You are right, don't do it.

If down the road within the next 5 years, if either in-law needs to go onto Medicaid, Medicaid will see that the in-laws had "gifted" the house to their grown children. Oops. Thus, Medicaid would be denied. The in-laws would need to be self-pay if they need to be in a nursing home. They would need all the equity they can squeeze out of the house when selling to pay for their care.

And you are correct about tax repercussions later down the road, if the house needs to be sold, and everyone's name is now on the Deed. Putting names on a Deed like that, the base used to calculate Capital Gains Tax would go all the way back to when the in-laws had purchased the house. Inheriting the house is the better choice.