I'm in need of advise

[rickc77]

Hello fellow Dis'ers,

I'm in need of your help and sugestions.

Here is my issue (I'll try to keep in short)

Before I start..the players are: myself parents and two sisters.
I'm the middle child and I'm 45 years in age. Both sisters do not wish to speak with my parents about this issue (Age / Death) and have asked my parents to work only with me and whatever is decided is ok. Their main concern right now is the house....the last thing they want is to have the State take it from them in the event they need to be relocated to a nursing home or something like that.

My parents are both in their upper 70's in age and are now speaking to me about my thought regarding buying their home from them while they still live their.
I think it is a good idea, but I think there are some laws regarding issues like this. If something was to happen within a year of my owning it, I think the state can still take it.

They asked me if I knew about something known as a reverse mortgage, but I have never heard of it, so I'll look more into that today.

My question is this.....is there a way where I can purchase their home and let them live there until they need to be relocated to a nursing home.

I hope I've asked this properly because I'm really not sure how to handle this. I really don't want to get legal advise yet until I have more information to give them.

Thanks in advance for all of your input and advise,

-Rick

 

[FroggyinArk]

You may need to go ahead and get things legal, here they have to live there three years after the sale if its to a family member, ( dad and i own grannys place across the street from me ) we have to help make sure she stays there another year,, otherwise state can take it for repayment, we initially set it up with her to have a lifetime estate then a lawyer told us that would not work that it was technically still hers and wouldrevert to state if it wasnt changed, so now she pays dad a yearly "rent" on paper and we taker care of all teh mainenance etc,, we even have to call in the service men should anything need repairs that i cannot handle. Check with a lawyer in yor state and see what the laws require,

 

[TLinden16]

I'm dealing with a similar issue in MA right now. If you were to buy your parents home right now, there is a five year look back period. So, if the state looks, and sees that you just bought the house, the state could still possibly take it from you. So, the look back period is a lot longer than the one year that you expected.

My family has gone to see two attorneys regarding this, and I've spoken to several people I know who are Trust and Estate attorneys, and they suggest setting up a trust so that the home is owned by the trust, and the kids are the benficiaries.

My situtation is slightly different then yours, as I live with my dad, and take care of the household responsibilities. We have the option of me being listed as the caregiver and having the house deeded over to me, which would make the look back period be two years. This option is the easiest for the time being, but would be more confusing later because of capital gains and gift taxes.

I do not know anything about a reverseable mortgage.

I wish I could give you better advice than that.

Karen

 

[The Mystery Machine]

OK....

Do they have money??? How much? Life insurance, cash, savings, other....
If it is a significant portion then the house would not even come into play regarding nursing home $$$. They would simply pay for that out of cash.

Next regarding the house. Why would you buy the home??? Are you planning on moving in or reselling once they are out of there?

 

[jrydberg]

BTW, a reverse mortgage is exactly that... the bank pays you a monthly payment in exchange for taking equity from your house.

 

[brerrabbit]

I completely understand your situation having gone through something similar. However my situation was forced on me by the fact that I'm an only child. My father passed away in October of 2001 while my mother was in bed recovering from a broken hip.

As for your situation if you want to buy the house and go through the process of getting a mortgage on the home then the state would have no problem because your lender would pay your parents and you would owe the lender. If you want to have your parents self finance the purchase and not involve a lender then it gets stickier because the state could say that you were merely avoiding selling the house to pay for their ongoing care. This might work if you executed the proper documents but even then you would still have a legal obligation to pay the estate of your parents after they had passed away. Assuming they have a will that would leave their assets divided amoung yourself and your sisters you would inherit a piece of the house but still owe your sisters for their share.

A reverse mortgage might be the answer. What it does is provide money monthly for your parents care using the house as collateral to cover the loan. After your parents pass away then the house is sold and the funds generated pay off the amount the lender gave for their care over time plus interest. In this situation you could live in the house with the understanding that you would have to be able to buy it when your parent passed away.

I understand the difficulties of dealing with aging parents by yourself. It's not easy and causes a lot of pain to see your parents who you counted on for so long come to a situation where they can no longer care for themselves. Whatever you decide good luck and God Bless.

 

[rickc77]

Just wanted to thank you for your thoughts.....

Looks like I have allot of work ahead of me...

thanks,

 

[rickc77]

Any ideas if there are any free legal advise web sites that I could use. I figured I'd try getting as much free information before I need to pay for it.

Thanks,

 

[Angyson]

I am Canadian,so am not conversant with your state laws on take-backs. However, I advise my clients never to sign a reverse mortgage.

The reason for this is that while the benefit is that you appear to have your cake and eat it too, as no payments are made on the reverse mortgage, the interest on the principal advanced COMPOUNDS at a proliferating [look it up in the dictionary ] rate.

Before you know it, the amount owed approaches the market value of the property very quickly and a great deal of the amount owing consists not of the original amount advanced, but of accumulated compound interest.

Get yourself any book on how much a dollar is worth at various rates of compound interest and you will quickly see how fast the loan grows. Ask your bank manager or your grade 8 teacher and you will not sign on a reverse mortgage. $1,000 please.

 

[dg39]

I don't understand this at all. My father passed away 2 yrs. ago. My mother lives in Fla. in a house that she pays a mortgage on. If she passes away, can't I just sell her house? Or is there more to it than this. I was always under the impression that I'd be able to do this with no problem. I would just pay her mortgage until the house was sold. She does have a will, leaving everything to me, not that she has much. But am I wrong in thinking this.