Buying a house for Mom - Pros, cons, pitfalls?.

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Freetime76
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Buying a house for Mom - Pros, cons, pitfalls?.

Post by Freetime76 » Fri Jun 28, 2019 1:06 pm

Hi Bogleheads - We newly discovered this forum, and it is fabulous.
We’d like to tap into your wisdom and experiences: We’re selling our house and will only spend about half the proceeds on our next place. We haven’t decided yet what to do with the remainder, other than invest some for retirement or passive income.

I had the bright idea to buy a house for Mom (my MIL), with the main objective being to stabilize her living expenses. She has “ enough” to live now, but she rents. After FIL passes, she’ll be living on SS only (she is about 70 y.o.), and this concerns us greatly. SIL maybe will care for her (move there). We’re all in the thick of planning/discussing... it is a secretive topic, so not easy to address.

Anyway, we’d prefer not to be MIL’s landlord, and thought to structure it as a loan. Yes, I listen to Dave Ramsey and hear about family loan issues constantly -lol. However, her credit is not good due to an IRS debt, and FIL keeps nebulously stating that there will be “plenty” to take care of her... but none of us trust that and it keeps her dependent on him (they’re divorced) Again, the objective is to stabilize her expenses and to have her keep her (financial) independence as much as possible. We also think a “house” environment would be healthier for her. One BIL lives nearby and can assist with the property as well.

Thank you for any and all suggestions. :?

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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by ChowYunPhat » Fri Jun 28, 2019 1:31 pm

Seems you've thought about it a bit FreeTime, and you have other family members nearby to support your MIL. DW and I will be going through something like this in the next 5 years with my MIL and my parents as well....already a difficult situation where we may need to intervene.

As to your situation, buying the house for your MIL however is different than acting as the bank. Exercise caution here and predetermine how you will deal with missed payments, default, etc... If she is a bad renter it's likely she'll be a poor debtor...even with a family member owning the "note" (I hasten to add I don't know how your MIL handles money FWIW). If your family is all in this together then that is probably better than you and your spouse taking on the sole mantle of "white knight".

Really do wish you well FreeTime and encourage you as you work through the decision making process. You clearly have a big heart and want to help in any way you can.
A wise man and his money are friends forever...

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Freetime76
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Freetime76 » Fri Jun 28, 2019 1:54 pm

CYP - Thank you for replying. To answer you ( great question BTW): we’ve determined that the way MIL handles finances is... she doesn’t. She is frugal, but just sort of expects to be able to live. Now the pendulum swings between total stress and We, too, are talking a multi-year plan, here. Right now, BILs are working on things like will, POA, cash flow/budget (I.e. how did she get this IRS debt... less than 10K. It scary), insurances...

The question on the table is what’s the trajectory: she rents now, rent is going up, fixed income. Limited ability for siblings to send cash for monthly expenses. FIL’s 2 pensions and alimony are most of her income; all 3 end when he passes. In my dream world :idea: we buy an inexpensive house that she will buy from us. We all chip in and fix it up for her, but she owns it. Pre-requisite is that at least one of her kids has access to keep an eye on accounts. We hold the loan, and if money comes her way, then she can pay it off if she wants, and she has an appreciating asset. Or not. Not an investment for us, just a way for her to live on her own resources ( which BILs feel strongly about). If she bailed on the house or something happened to her, the family could decide how to proceed with the property or we take it back if not really any equity.

We aren’t wealthy, but this is something we could do.Inshould mention it’s a mixed culture family, so the concept of banding together is quite strong. Husband and Ialready vetoed buying a place with the 2 BILs because we do not want to co-own.

Argh. There is no easy solution. Thanks again!

squirm
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by squirm » Fri Jun 28, 2019 2:06 pm

Why not just pay half her rent or something. Why complicate it and accept the money won't be returned.

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Mlm
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Mlm » Fri Jun 28, 2019 2:23 pm

It's great that you want to help her but I would not tie my own financial future to owning another house or holding a mortgage. There is nothing wrong with renting at her age. Actually it would be a much easier life. If she ends up impoverished there are plenty of social programs to help her out with rent, food, utilities, health expenses, etc. You can still gift her something at that point if you are able.

Don't lock yourself into more debt. Things can change on a dime in your life too.

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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Sandtrap » Fri Jun 28, 2019 2:28 pm

Freetime76 wrote:
Fri Jun 28, 2019 1:06 pm
Hi Bogleheads - We newly discovered this forum, and it is fabulous.
We’d like to tap into your wisdom and experiences: We’re selling our house and will only spend about half the proceeds on our next place. We haven’t decided yet what to do with the remainder, other than invest some for retirement or passive income.

I had the bright idea to buy a house for Mom (my MIL), with the main objective being to stabilize her living expenses. She has “ enough” to live now, but she rents. After FIL passes, she’ll be living on SS only (she is about 70 y.o.), and this concerns us greatly. SIL maybe will care for her (move there). We’re all in the thick of planning/discussing... it is a secretive topic, so not easy to address.

Anyway, we’d prefer not to be MIL’s landlord, and thought to structure it as a loan. Yes, I listen to Dave Ramsey and hear about family loan issues constantly -lol. However, her credit is not good due to an IRS debt, and FIL keeps nebulously stating that there will be “plenty” to take care of her... but none of us trust that and it keeps her dependent on him (they’re divorced) Again, the objective is to stabilize her expenses and to have her keep her (financial) independence as much as possible. We also think a “house” environment would be healthier for her. One BIL lives nearby and can assist with the property as well.

Thank you for any and all suggestions. :?
List of the dynamics to make things easier to see.

1. Your MIL and FIL are divorced.
2. Your MIL rents where she lives.
3. Your MIL is financially independent, at the moment.
4. Your MIL is supported by your FIL?
5. Your MIL is not good with funds.
6. Your FIL will pass away before your 70 year old MIL. How do you know?
7. After FIL passes away, MIL will only have SS as income?
8. Your MIL has no credit.
9. Your MIL is in debt with the IRS? (how much?)
10. If FIL is paying alimony. How does this make MIL dependent? Isn't this a legal obligation?

Questions:
1. Why can't you save and invest the 1/2 proceeds from your house sale until your FIL passes away?
2. Why do you have to step in now while things seem to be in balance vs in time, in time?
3. Are there other alternatives than being MIL's landlord, or giving her a loan?
Last edited by Sandtrap on Fri Jun 28, 2019 6:42 pm, edited 2 times in total.
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Independent George
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Independent George » Fri Jun 28, 2019 2:48 pm

Freetime76 wrote:
Fri Jun 28, 2019 1:06 pm
I had the bright idea to buy a house for Mom (my MIL), with the main objective being to stabilize her living expenses. She has “ enough” to live now, but she rents. After FIL passes, she’ll be living on SS only (she is about 70 y.o.), and this concerns us greatly. SIL maybe will care for her (move there). We’re all in the thick of planning/discussing... it is a secretive topic, so not easy to address.

Anyway, we’d prefer not to be MIL’s landlord, and thought to structure it as a loan. Yes, I listen to Dave Ramsey and hear about family loan issues constantly -lol. However, her credit is not good due to an IRS debt, and FIL keeps nebulously stating that there will be “plenty” to take care of her... but none of us trust that and it keeps her dependent on him (they’re divorced) Again, the objective is to stabilize her expenses and to have her keep her (financial) independence as much as possible. We also think a “house” environment would be healthier for her. One BIL lives nearby and can assist with the property as well.
Is there any downside to just setting the money aside and waiting? There seem to be a lot of unknowns here - how much she might inherit from her ex, whether the BIL and SIL will continue to live nearby, what her rent will be... There is nothing wrong with renting if it's within her means, and it could very well be cheaper and easier to just earmark your money to help with rent than it is to buy a house.

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Watty
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Watty » Fri Jun 28, 2019 3:28 pm

Freetime76 wrote:
Fri Jun 28, 2019 1:54 pm
We hold the loan, and if money comes her way, then she can pay it off if she wants, and she has an appreciating asset. Or not. Not an investment for us, just a way for her to live on her own resources ( which BILs feel strongly about). If she bailed on the house or something happened to her, the family could decide how to proceed with the property or we take it back if not really any equity.
I am a big confused about how the finances work. If you basically loan her the money then you are not buying her a house, you are just enabling her to buy a house that she likely cannot afford.

A couple of points to consider.

1) The typical single family suburban home can be very isolating for an older person especially when they have to give up driving.

2) Paying for the maintenance and lawn care may also be a financially difficult.

3) Something like a one bedroom condo in senior community might be a lot better option. It is very likely that she could rent or buy similar units in the same building so there is a lot to be said for renting.

4) Her ex may outlive her so you seem to be addressing a problem that does not exist yet.

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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by JediMisty » Fri Jun 28, 2019 3:38 pm

Freetime76 wrote:
Fri Jun 28, 2019 1:06 pm
Hi Bogleheads - We newly discovered this forum, and it is fabulous.
We’d like to tap into your wisdom and experiences: We’re selling our house and will only spend about half the proceeds on our next place. We haven’t decided yet what to do with the remainder, other than invest some for retirement or passive income.

I had the bright idea to buy a house for Mom (my MIL), with the main objective being to stabilize her living expenses. She has “ enough” to live now, but she rents. After FIL passes, she’ll be living on SS only (she is about 70 y.o.), and this concerns us greatly. SIL maybe will care for her (move there). We’re all in the thick of planning/discussing... it is a secretive topic, so not easy to address.

Anyway, we’d prefer not to be MIL’s landlord, and thought to structure it as a loan. Yes, I listen to Dave Ramsey and hear about family loan issues constantly -lol. However, her credit is not good due to an IRS debt, and FIL keeps nebulously stating that there will be “plenty” to take care of her... but none of us trust that and it keeps her dependent on him (they’re divorced) Again, the objective is to stabilize her expenses and to have her keep her (financial) independence as much as possible. We also think a “house” environment would be healthier for her. One BIL lives nearby and can assist with the property as well.

Thank you for any and all suggestions. :?
Have you considered what happens if she needs extended Care? Any assets must be spent before she's eligible for aid. This will negate your gift. What if she needs to move? Holding the note is like giving the money away. In my experience, family doesn't feel obligated to pay back loans ... Investing the proceeds from your sale and helping out monthly wouldn't tie her to the property and would give her more flexibility in her living arrangements. She won't be financially independent. She'll be owing you money.......

Dandy
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Dandy » Fri Jun 28, 2019 3:45 pm

A house usually comes with a lot of maintenance. Gutters, lawn, roof, snow removal etc, etc. Maybe a condo?

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Freetime76
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Freetime76 » Fri Jun 28, 2019 4:04 pm

Dandy wrote:
Fri Jun 28, 2019 3:45 pm
A house usually comes with a lot of maintenance. Gutters, lawn, roof, snow removal etc, etc. Maybe a condo?
Good points, especially depending on how much time the family can put into helping her upkeep. Thank you.

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Freetime76
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Freetime76 » Fri Jun 28, 2019 4:06 pm

JediMisty wrote:
Fri Jun 28, 2019 3:38 pm
Freetime76 wrote:
Fri Jun 28, 2019 1:06 pm
Hi Bogleheads - We newly discovered this forum, and it is fabulous.
We’d like to tap into your wisdom and experiences: We’re selling our house and will only spend about half the proceeds on our next place. We haven’t decided yet what to do with the remainder, other than invest some for retirement or passive income.

I had the bright idea to buy a house for Mom (my MIL), with the main objective being to stabilize her living expenses. She has “ enough” to live now, but she rents. After FIL passes, she’ll be living on SS only (she is about 70 y.o.), and this concerns us greatly. SIL maybe will care for her (move there). We’re all in the thick of planning/discussing... it is a secretive topic, so not easy to address.

Anyway, we’d prefer not to be MIL’s landlord, and thought to structure it as a loan. Yes, I listen to Dave Ramsey and hear about family loan issues constantly -lol. However, her credit is not good due to an IRS debt, and FIL keeps nebulously stating that there will be “plenty” to take care of her... but none of us trust that and it keeps her dependent on him (they’re divorced) Again, the objective is to stabilize her expenses and to have her keep her (financial) independence as much as possible. We also think a “house” environment would be healthier for her. One BIL lives nearby and can assist with the property as well.

Thank you for any and all suggestions. :?
Have you considered what happens if she needs extended Care? Any assets must be spent before she's eligible for aid. This will negate your gift. What if she needs to move? Holding the note is like giving the money away. In my experience, family doesn't feel obligated to pay back loans ... Investing the proceeds from your sale and helping out monthly wouldn't tie her to the property and would give her more flexibility in her living arrangements. She won't be financially independent. She'll be owing you money.......
Also good points - yes, we’re all discussing possible care options down the road, as well.

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Freetime76
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Freetime76 » Fri Jun 28, 2019 4:11 pm

Watty wrote:
Fri Jun 28, 2019 3:28 pm
Freetime76 wrote:
Fri Jun 28, 2019 1:54 pm
We hold the loan, and if money comes her way, then she can pay it off if she wants, and she has an appreciating asset. Or not. Not an investment for us, just a way for her to live on her own resources ( which BILs feel strongly about). If she bailed on the house or something happened to her, the family could decide how to proceed with the property or we take it back if not really any equity.
I am a big confused about how the finances work. If you basically loan her the money then you are not buying her a house, you are just enabling her to buy a house that she likely cannot afford.

A couple of points to consider.

1) The typical single family suburban home can be very isolating for an older person especially when they have to give up driving.

2) Paying for the maintenance and lawn care may also be a financially difficult.

3) Something like a one bedroom condo in senior community might be a lot better option. It is very likely that she could rent or buy similar units in the same building so there is a lot to be said for renting.

4) Her ex may outlive her so you seem to be addressing a problem that does not exist yet.
Thank you Watty! Ok, appreciate you pointing out about condos vs being alone. That’s important. We are all hoping they live a very long time, both independently, so they can make fun of us for worrying and stressing out over nothing!

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Freetime76
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Freetime76 » Fri Jun 28, 2019 4:30 pm

Thanks for the replies - will keep reading anything you add... It also sounds like I need to spend more time on the investing forums, if a better plan is just to stand pat and have as much (earmarked) money as possible to help later.

We were looking for a preventive measure in hopes of a better outcome later and to have more options (aging in place is what my own mom calls it). Some of the limitations came from me, not DH, as I thought we could better handle a finite, one time outlay for various reasons (his health is a potential huge issue in the next 10ish yrs, so I don’t want us to be committed to long term costs or caretaker responsibilities for his Mom. Will keep the conversation open with the family as much as possible.

One good thing coming out of this is getting our own finances thoroughly in order.

smithers
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by smithers » Fri Jun 28, 2019 4:58 pm

For a cautionary tale on mixing older parents and real estate (even with the best and most generous intentions), may I suggest this classic post from JL Collins: https://jlcollinsnh.com/2014/02/20/case ... s-a-house/

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dodecahedron
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by dodecahedron » Fri Jun 28, 2019 5:14 pm

In many areas, there are some quite nice senior citizen apartment complexes run by trustworthy nonprofits where rent is a sliding scale based on income.

That would seem to be a very good option if available in your area.

Edited to add: folks I know seem to be pretty happy with the informal social opportunities in the common social spaces there.

Dandy
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Dandy » Fri Jun 28, 2019 6:02 pm

Bedroom on 1st floor is a must and not to many steps to enter.

HomeStretch
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by HomeStretch » Fri Jun 28, 2019 6:12 pm

Buying a place for your mom is not a great idea for reasons stated in other posts.

Also, the type and size of the place your mom wants at 70 may be very different than what she needs in 10-15 years to “age in place”. We learned this the hard way with my parents who are now unwilling to move to a more age-friendly condo.

If you do go ahead and buy, make sure it is/has:
- handicap accessible
- one level including laundry
- two bedrooms (one for a potential caregiver)
- an enclosed attached garage if she has a car
- only a couple stairs to enter house from outside
- well-funded HOA

Iridium
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Iridium » Fri Jun 28, 2019 6:24 pm

I suppose there might be a way to make it work, but I think focusing on it will just cause distraction and mask the larger issues.

The fact that she owes money to the IRS and that it impacts her credit (so it is not a momentary glitch or paperwork snafu) is a gigantic red flag. She should have simply paid it off (or had the IRS simply take it from her accounts), that fact that has not happened implies to me that her liquidity situation is terrible (she almost certainly does not have an emergency fund). As a result, there is absolutely no credibility behind her claim of having 'enough'. She is spending enough to meet her 'needs' but that is not the same thing as having sufficient income or savings. People who have enough don't accept charity from their exes. Those who have plenty don't get offers of charity from their exes. It is good to hear that she is frugal. Hopefully, the only issue is a leak in her budget that won't be too painful to plug once she sits down and actually figures out where her money is going. The most hopeful sign ironically is that she owed those taxes in the first place, with her income being presumed to be mostly social security and gifts, the taxes she ought to owe ought to be close to nothing. Maybe she has a source of income/funds you were not aware of.

Barring that, it is not at all clear to me that she can afford her current life style, even before consideration of the future. Buying her a single family home will just enable her to undergo lifestyle creep (presumably, a SFH videos costs more than a studio apartment, but the expenses are better hidden via depreciation, maintenance, and repairs) that will just push her finances even further into the hole. And, by the way, ties up most of your excess money that might be able to help when she has a true emergency.

I do not know why Ramsey advises against loans, but my reason is this: if an institution that has made literally millions of loans isn't willing to lend your relative money, even on a subprime basis, then there is probably a very good reason why that person should not get the loan.* A family loan is frequently a copout answer that delays, but does not prevent the crash. When the crash comes, it adds the further stress of guilt and broken trust to the situation. Step 1 is get your mother's finances in a place such that a bank wants to lend her money. Then, and only then, might it make sense to loan money to her.

I do not envy the discussions you will have to have. Parents do not like to have to admit weakness to children and especially do not like being told what they can and cannot do. However, giving your MIL a house just delays the need to have those discussions, and it will ultimately be better for everyone if all cards are on the table before doing something so drastic as to lend a substantial part of your net worth.

* Back when I worked at an auto lender, I thought that every loan we made with an interest rate above 10% should have a giant warning on the front saying in bold letters: "don't buy this car, you cannot afford it". I hate to think about the financial situation of the folks who got a loan from someone else after we rejected them.

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Freetime76
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Freetime76 » Fri Jun 28, 2019 6:34 pm

smithers wrote:
Fri Jun 28, 2019 4:58 pm
For a cautionary tale on mixing older parents and real estate (even with the best and most generous intentions), may I suggest this classic post from JL Collins: https://jlcollinsnh.com/2014/02/20/case ... s-a-house/
Wow. That’s eye-opening. HOA fees can be something else. I’m still reading the comments. We’re wrangling with the financial side, and the harder part might be the people side.

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Freetime76
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Freetime76 » Fri Jun 28, 2019 6:35 pm

HomeStretch wrote:
Fri Jun 28, 2019 6:12 pm
Buying a place for your mom is not a great idea for reasons stated in other posts.

Also, the type and size of the place your mom wants at 70 may be very different than what she needs in 10-15 years to “age in place”. We learned this the hard way with my parents who are now unwilling to move to a more age-friendly condo.

If you do go ahead and buy, make sure it is/has:
- handicap accessible
- one level including laundry
- two bedrooms (one for a potential caregiver)
- an enclosed attached garage if she has a car
- only a couple stairs to enter house from outside
- well-funded HOA
HomeStretch: thank you so much for these details.

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Sandtrap
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Sandtrap » Fri Jun 28, 2019 6:45 pm

Watty wrote:
Fri Jun 28, 2019 3:28 pm
Freetime76 wrote:
Fri Jun 28, 2019 1:54 pm
We hold the loan, and if money comes her way, then she can pay it off if she wants, and she has an appreciating asset. Or not. Not an investment for us, just a way for her to live on her own resources ( which BILs feel strongly about). If she bailed on the house or something happened to her, the family could decide how to proceed with the property or we take it back if not really any equity.
I am a big confused about how the finances work. If you basically loan her the money then you are not buying her a house, you are just enabling her to buy a house that she likely cannot afford.

A couple of points to consider.

1) The typical single family suburban home can be very isolating for an older person especially when they have to give up driving.

2) Paying for the maintenance and lawn care may also be a financially difficult.

3) Something like a one bedroom condo in senior community might be a lot better option. It is very likely that she could rent or buy similar units in the same building so there is a lot to be said for renting.

4) Her ex may outlive her so you seem to be addressing a problem that does not exist yet.
Outstanding "middle road" option. (when it's needed).

#4 . . . +1
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Freetime76
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Freetime76 » Fri Jun 28, 2019 6:51 pm

Iridium: thank you for the reply! If you’re online, what does liquidity mean? Is that cash on hand? If so, agreed that she doesn’t have any (IRS sweep emptied account, which was bad as a shock, but good for pushing the issue).

She’s receiving 2 partial pensions military and a civilian job, and the alimony all from FIL (well, technically the pensions go straight to her from govt/company, but both are based on FIL’s work history).

I hear you! Understood about the loan worthiness. We’ve had a similar conversation going on at the dinner table, trying to balance the numbers/finance side with people first, then money, then things. None of us really had a clue what “living on a fixed income” meant until lately as the cost of living is going up for MiL. It sounds promising to try to work on her ability to get her own loan, if she did end up buying something. Help from all of us could be reserved for as needed.

Iridium
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Iridium » Fri Jun 28, 2019 7:32 pm

Freetime76 wrote:
Fri Jun 28, 2019 6:51 pm
Iridium: thank you for the reply! If you’re online, what does liquidity mean? Is that cash on hand? If so, agreed that she doesn’t have any (IRS sweep emptied account, which was bad as a shock, but good for pushing the issue).
I meant it in the sense of "accessible money." So, pensions and future inheritances don't count. Personal property doesn't count. Cash in the bank or in the wallet counts. People can sometimes be funny about investment accounts (i.e. stocks and bonds). Those accounts should be liquid, but if people irrationally refuse to sell, then those accounts become effectively illiquid.

It sounds like your focus is in the right place, as far as figuring out the story behind the IRS debt first. It is one thing if it "came out of the blue" (likely because she had mistakingly not been filling her taxes for years), it would be quite another if she has been aware of the debt for a while and simply ignoring it until it accumulated to the level that the IRS decided to take action. One potentially scary thing to consider: your MIL has spent every dollar she has ever gotten her hands on. Is she frugal by nature or by necessity? You can never fix the finances of the latter, just determine how much you are willing to subsidize and how much of a backstop you are willing to be to take care of emergencies (and make replenishing that fund part of your regular budget, because you'll never get paid back). It is an encouraging sign that she has not asked you for money. If she is accepting more from the FIL than legally mandated alimony, then that would be more troubling.

JoeRetire
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by JoeRetire » Sat Jun 29, 2019 6:38 am

Freetime76 wrote:
Fri Jun 28, 2019 1:06 pm
Anyway, we’d prefer not to be MIL’s landlord, and thought to structure it as a loan.
You don't want to be her landlord, but do want to be her bank? Seems odd.
Yes, I listen to Dave Ramsey and hear about family loan issues constantly -lol.
Don't laugh. Maybe you listened to Dave Ramsey, but it seems as if you didn't hear.

There are far too many things that could go wrong here. Steer clear.

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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Herekittykitty » Sat Jun 29, 2019 7:10 am

In addition to the problems for both your MIL and you and your wife already discussed that buying your MIL a house would cause, I don't see any problems it would solve that could not be better solved without buying her a house or buying a house to rent to her.

There are government programs including income based rent for low income and elderly. Some of these places are nice and have community rooms and community activities, which are great for the residents. There are programs (SNAP for example) for low income, including low income elderly. I know people benefiting for these programs and with a decent quality of life.

I am MIL's age, live in a senior apartment complex, and am employed full time. There are common rooms, monthly pot lucks, activities planned by the residents including card games and puzzles. It is a good quality of life. The complex I am in is a very nice complex, and I do not know if housing vouchers are accepted (they might be), but I do know people in the lower income public apartments and apartments where housing vouchers are accepted that have a good quality of life including pot lucks, activities, and so on. That doesn't mean every senior complex is nice - MIL would have to make sure before moving in. In fact, if she is not in such a place now, she might consider it - maybe consider one that she could rent at whatever rate would be charged to her with her current income and accept housing vouchers for rent should her income fall. She could check with the public housing office in her community and see which apartment complexes are run directly by public housing or take housing vouchers so she will know which ones they are. I also believe that sometimes a landlord will agree to take housing vouchers even if they haven't before; they would have to work this out with public housing and get on the program I think.

Finally, if she is not involved in the local senior center, I strongly advise her to do so. There are many activities at some and maybe all senior centers, and at least some have a case manager who can explain all kinds of benefits available for seniors at the senior center (typically activities during the day and at least one low cost meal that can be pretty good, socialization, trips, some nursing care such as blood pressure checks) and with information and possibly a case manager to help seniors access community and government benefits available to them. One benefit that comes to mind for seniors is ability to sign up for a senior ride program, which is low cost convenient transportation.

Edited for clarity.
Last edited by Herekittykitty on Sat Jun 29, 2019 8:58 am, edited 1 time in total.
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Dottie57
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Dottie57 » Sat Jun 29, 2019 7:28 am

squirm wrote:
Fri Jun 28, 2019 2:06 pm
Why not just pay half her rent or something. Why complicate it and accept the money won't be returned.
+1

I think this is betterfor someone who doesn’t handle money well. The expenses of a house are many. Keep living simple. Electricity and phone plus rent are easy enough to plan for.

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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by pennywise » Sat Jun 29, 2019 7:40 am

Freetime76 wrote:
Fri Jun 28, 2019 6:34 pm
Wow. That’s eye-opening. HOA fees can be something else. I’m still reading the comments. We’re wrangling with the financial side, and the harder part might be the people side.
Yes, it sounds like your MIL has lived the female model of having someone-husband turned ex husband-provide for her financially for a long time. Previously you mentioned she simply doesn't manage finances and that is because she doesn't have to.

If you buy her a home there is absolutely no incentive or motivation for her to transition into feeling responsible for her financial well being. It's very unlikely that somehow she will suddenly regard you as some kind of neutral mortgage bank and happily pay you each month. From her perspective the responsibility has simply shifted from her former husband taking care of her to her son and DIL. And that seems to me to be a perfect set up for years or decades of simmering resentment. How will you feel when for example you and your husband can't help one of your children financially because you have to support your MIL? Or when you and your husband can't consider early retirement because you are already ensuring your MIL is enjoying her own worry free retirement using your money?

As others have said, why not let things play out now with the intent that eventually if necessary you will help her out when and if that becomes an issue. Which it probably will because again this is more psychological than financial.

You've got a dependent/entitled mentality going on here with her and failing some catastrophic eventuality in which her entire family vanishes, expect and assume mom is going to calmly ignore finances forever because she expects to be supported by others the rest of her life.

Final query: what legally is the basis that her ex husband is supporting her? Alimony is of course a legal obligation, has she gotten court ordered disbursements from the pensions? Or is this an informal he-gives-her-money model. Probably helpful to know, understand and plan accordingly because other than his eventual death, what happens if FIL finds a new love interest and decides he's done taking care of the old ball and chain, especially if there's nothing that says he has to? It happens.

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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Sandtrap » Sat Jun 29, 2019 7:42 am

Dottie57 wrote:
Sat Jun 29, 2019 7:28 am
squirm wrote:
Fri Jun 28, 2019 2:06 pm
Why not just pay half her rent or something. Why complicate it and accept the money won't be returned.
+1

I think this is betterfor someone who doesn’t handle money well. The expenses of a house are many. Keep living simple. Electricity and phone plus rent are easy enough to plan for.
This is a great plan and keeps things simple. And is flexible.

OTOH, for someone careless with money, it can be enabling to the point of making things worse.
Not always. Sometimes. There will always be a "need" for more.

IE: I have a somewhat "incapable" family member renting one of my apartments. I've lowered the rent. He continues to be broke and in debt month to month, year after year. Every dollar that is "help money" is spent on something else. So, at a certain break even point, rent gets no lower. I've done my best. Sometimes, to a codependent (not saying this is the case here), simply knowing there are "safety nets" is enough to discourage frugality.

This is a tricky situation with no solution that can work well over a period of time because the problem is also a behavioral one besides financial. And, family. . . . (perhaps why these types of threads have so much great input from all sides of life).

These matters are so awkward. :shock:

j
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Sandtrap » Sat Jun 29, 2019 7:44 am

pennywise wrote:
Sat Jun 29, 2019 7:40 am
Freetime76 wrote:
Fri Jun 28, 2019 6:34 pm
Wow. That’s eye-opening. HOA fees can be something else. I’m still reading the comments. We’re wrangling with the financial side, and the harder part might be the people side.
Yes, it sounds like your MIL has lived the female model of having someone-husband turned ex husband-provide for her financially for a long time. Previously you mentioned she simply doesn't manage finances and that is because she doesn't have to.

If you buy her a home there is absolutely no incentive or motivation for her to transition into feeling responsible for her financial well being. It's very unlikely that somehow she will suddenly regard you as some kind of neutral mortgage bank and happily pay you each month. From her perspective the responsibility has simply shifted from her former husband taking care of her to her son and DIL. And that seems to me to be a perfect set up for years or decades of simmering resentment. How will you feel when for example you and your husband can't help one of your children financially because you have to support your MIL? Or when you and your husband can't consider early retirement because you are already ensuring your MIL is enjoying her own worry free retirement using your money?

As others have said, why not let things play out now with the intent that eventually if necessary you will help her out when and if that becomes an issue. Which it probably will because again this is more psychological than financial.

You've got a dependent/entitled mentality going on here with her and failing some catastrophic eventuality in which her entire family vanishes, expect and assume mom is going to calmly ignore finances forever because she expects to be supported by others the rest of her life.


Final query: what legally is the basis that her ex husband is supporting her? Alimony is of course a legal obligation, has she gotten court ordered disbursements from the pensions? Or is this an informal he-gives-her-money model. Probably helpful to know, understand and plan accordingly because other than his eventual death, what happens if FIL finds a new love interest and decides he's done taking care of the old ball and chain, especially if there's nothing that says he has to? It happens.
Great points.
Well said.

These relationship dynamics and behavioral/codependent issues are the "elephants in the room". It is often easier to focus on the numbers than the "elephants".

j :shock:
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Herekittykitty » Sat Jun 29, 2019 9:25 am

It is possible the military and other pension have widow's pension benefits. That would be worth knowing.

It would also be worth knowing why she is in debt to the IRS and what her plans are to pay the debt off; if she has no clue how to manage that you could offer to advise her on it. If family members are going to bail her out of the financial mess if the IRS attaches her income or assets to get paid back and if she is incapable of paying it from her income, you and other family members may want to consider helping her get it paid off sooner rather than later so that doesn't happen.

If she has no clue how to budget, or if she is mentally incapable for some reason and will never regain the capacity, or if she chooses not to because she doesn't have to - it would be good to know why she isn't managing her budget. Learning to budget is powerful. If there are resources that can help her learn that would be great, assuming she wants to and can.

And women her age can and do work. I'm one of them and I'm fine with it. I'm professionally employed but there is plenty of unskilled and somewhat skilled work to be had and which I wouldn't mind doing. There may be programs in her area to help her find work she can do. One such program if she doesn't have much in the way of work skills is Experience Works: https://www.experienceworks.org/

Under no circumstances should you purchase for her or assist in purchasing a house or condo for her. In my opinion, that would be a curse, not a blessing. It would be terrible for her and for your family.

Finally, you mentioned Dave Ramsey. There are mixed opinions on him on this board. But in this case, it would be good if your mother could get introduced to his budgeting system, which is simple. Look into a Dave Ramsey FPU class for her (and maybe yourself and your husband) - in my opinion pay attention to budgeting, saving, "Baby Steps," but maybe not to his investing advice (the investing advice is likely not relevant to your mother anyway, although if she has enough income but is just managing it badly, it might). (For investing education and advice, come here, ask questions, read the Wiki, and read recommended books.) There are other simple budgeting systems (pencil and paper is fine) she could utilize if Dave Ramsey doesn't appeal to her/you.

Concluding: Your mother likely has the potential to have a good quality of life if she manages what she has appropriately and if she accesses options (subsidized housing if eventually needed, senior center services, getting a job if needed or even if just wanted and not needed, budgeting) available to her. (If any of the pensions have widow's benefits this will be easier, but it can be possible even without if done right.) And as someone mentioned, your father may outlive your mother anyway.
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Freetime76 » Sat Jun 29, 2019 10:26 am

Herekittykitty wrote:
Sat Jun 29, 2019 7:10 am
The complex I am in is a very nice complex, and I do not know if housing vouchers are accepted (they might be), but I do know people in the lower income public apartments and apartments where housing vouchers are accepted that have a good quality of life including pot lucks, activities, and so on. That doesn't mean every senior complex is nice - MIL would have to make sure before moving in. In fact, if she is not in such a place now, she might consider it - maybe consider one that she could rent at whatever rate would be charged to her with her current income and accept housing vouchers for rent should her income fall. She could check with the public housing office in her community and see which apartment complexes are run directly by public housing or take housing vouchers so she will know which ones they are. I also believe that sometimes a landlord will agree to take housing vouchers even if they haven't before; they would have to work this out with public housing and get on the program I think.
This is encouraging, especially the part about the cost flexing with income. I’m very glad you’re in a happy place!

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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by mrb09 » Sat Jun 29, 2019 10:30 am

My wife and I bought a house for my parents when they retired. We rented it to them with a significantly subsidized rent. No loan, we were landlords and they were renters. We ate the difference between rent and loan amount. The main reason for doing this was to move them closer if they started needing help (which did turn out to be the case), and they could not afford market rents near us.

From my wife and myself's point of view, this worked out in the end, but it was not at all a good financial move. We bought the house at the top of the market in 2007, and it never recovered. For a while I was worried that I'd need to move my mom to a full time memory unit, and I had to worry about the cost of that + a house that was under water.

Honestly if I had to do it over again, I would have just rented them a place and had them pay me the subsidized amount, rather than actually buying a house.

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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by dm200 » Sat Jun 29, 2019 10:31 am

Freetime76 wrote:
Fri Jun 28, 2019 1:06 pm
Hi Bogleheads - We newly discovered this forum, and it is fabulous.
We’d like to tap into your wisdom and experiences: We’re selling our house and will only spend about half the proceeds on our next place. We haven’t decided yet what to do with the remainder, other than invest some for retirement or passive income.
I had the bright idea to buy a house for Mom (my MIL), with the main objective being to stabilize her living expenses. She has “ enough” to live now, but she rents. After FIL passes, she’ll be living on SS only (she is about 70 y.o.), and this concerns us greatly. SIL maybe will care for her (move there). We’re all in the thick of planning/discussing... it is a secretive topic, so not easy to address.
Anyway, we’d prefer not to be MIL’s landlord, and thought to structure it as a loan. Yes, I listen to Dave Ramsey and hear about family loan issues constantly -lol. However, her credit is not good due to an IRS debt, and FIL keeps nebulously stating that there will be “plenty” to take care of her... but none of us trust that and it keeps her dependent on him (they’re divorced) Again, the objective is to stabilize her expenses and to have her keep her (financial) independence as much as possible. We also think a “house” environment would be healthier for her. One BIL lives nearby and can assist with the property as well.
Thank you for any and all suggestions. :?
Others have made very good points!

1. I would lean against tying up a lot of your funds to become her "landlord".

2. While 70 (I am 73) is not that "old" - her "lifestyle" age may be much higher or lower. Her housing "needs" and/or desires may change a lot. Is a "house" even the optimum for her? Does she really need/want a whole house?

3. If you can do it, she might need some help in stabilizing the support/financial issues with FIL. Is there life insurance (with her as beneficiary) involved and, if so, is it assured that he will not cancel it? Is she receiving or utilizing the FIL/divorce situation fully?

4. Since health/medical expenses are a significant part of most seniors expenses, is she optimizing her medicare coverage and choices? For example, if she has original medicare - but no medigap - she has a big financial risk? Investigate medigap with Original medicare as well as Medicare Advantage plans. Also check out Part D - prescription drugs. Also, encourage and support a healthful lifestyle. I don't know any details, but I often see a lot of signs, notices, etc. about those on Medicare needing "extra help". I would check these out.

5. Sounds like there are multiple siblings and spouses/significant others involved in this issue. For many reasons, I urge you to try to have consensus - as well as splitting the financial obligations and risks. If you were to buy a house and become her landlord, you would be taking on a disproportionate risk (IMO)

6. Different localities and jurisdictions often have quite varied programs and assistance/subsidies for seniors. Check out that she is taking full advantage of any programs for which she is eligible. If she might live in different jurisdictions, see which would be best for her. Be aware of just how you provide any financial assistance - such that it does not disqualify her from any such programs.

7. Look for ways of being supportive of her having a satisfying lifestyle. I believe that seniors who have that do much better and are net financially better off. [Although not always ;) ]

8. See what might be done to improve her credit. Bad credit can have a lot of implications and increased costs.

9. Since moving in with SIL is a possibility - explore all of the implications you can think of - especially financial risk. Maybe - to split the risks and obligations - you could offer to contribute some of the funds you have for modifying the SIL's house for this - something like a mother-in-law suite? Such modifications can make such an arrangement much better for all involved. Some seniors live very harmoniously with adult children and some can be nothing but a PITA. My maternal grandmother lived very harmoniously with my father (my mother died decades before) and uncle in her elder years. My late inlaws (especially my MIL) would not have been, in just about any way, harmonious with my wife and I.

10. Demographics and family "culture" can have a big impact. My boss, for example, comes from a "culture" where caring for (financially and otherwise) parents is important. Her parents live with her sister - part of that culture. Take this into account (if applicable) in this situation.

Good Luck!
Last edited by dm200 on Sat Jun 29, 2019 10:46 am, edited 1 time in total.

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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by BrooklynInvest » Sat Jun 29, 2019 10:37 am

If she goers in assisted living her assets may have to be liquidated, no?

My guess is that would have an impact although as a creditor you probably get paid back at some point.

If this level of entanglement and complexity isn't needed perhaps prudent to avoid and just help MIL financially with a nice rental when/if it's needed? Renting later in life is a little culturally atypical I guess but there's a lot of practical advantages.

And who knows what changes are in your future.

Good luck OP!

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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by matthewbarnhart » Sat Jun 29, 2019 11:28 am

Dottie57 wrote:
Sat Jun 29, 2019 7:28 am
squirm wrote:
Fri Jun 28, 2019 2:06 pm
Why not just pay half her rent or something. Why complicate it and accept the money won't be returned.
+1

I think this is betterfor someone who doesn’t handle money well. The expenses of a house are many. Keep living simple. Electricity and phone plus rent are easy enough to plan for.
Another vote here for keeping it simple. The current situation is already complicated, and adding a loan, home purchase (with attendant maintenance and expenses), etc will only make it worse.

Unless you're just dying to become a landlord or a bank:
  • invest the net proceeds from your home sale per your AA.
  • if/when she needs a hand, gift her cash up to IRS limits.
(My mom is a 67yo window with a great pension + SS benefits, and also with health and mobility problems. She rents a 1 bedroom apartment, and she, my brother, and I all sleep well at night knowing she's free of the burden of homeownership.)

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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Dottie57 » Sat Jun 29, 2019 11:43 am

matthewbarnhart wrote:
Sat Jun 29, 2019 11:28 am
Dottie57 wrote:
Sat Jun 29, 2019 7:28 am
squirm wrote:
Fri Jun 28, 2019 2:06 pm
Why not just pay half her rent or something. Why complicate it and accept the money won't be returned.
+1

I think this is betterfor someone who doesn’t handle money well. The expenses of a house are many. Keep living simple. Electricity and phone plus rent are easy enough to plan for.
Another vote here for keeping it simple. The current situation is already complicated, and adding a loan, home purchase (with attendant maintenance and expenses), etc will only make it worse.

Unless you're just dying to become a landlord or a bank:
  • invest the net proceeds from your home sale per your AA.
  • if/when she needs a hand, gift her cash up to IRS limits.
(My mom is a 67yo window with a great pension + SS benefits, and also with health and mobility problems. She rents a 1 bedroom apartment, and she, my brother, and I all sleep well at night knowing she's free of the burden of homeownership.)
Agree +++

A house just expands expenses. An apartment is much easier to deal with.

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Freetime76
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Freetime76 » Sat Jun 29, 2019 11:49 am

mrb09 wrote:
Sat Jun 29, 2019 10:30 am
My wife and I bought a house for my parents when they retired. We rented it to them with a significantly subsidized rent. No loan, we were landlords and they were renters. We ate the difference between rent and loan amount. The main reason for doing this was to move them closer if they started needing help (which did turn out to be the case), and they could not afford market rents near us.

From my wife and myself's point of view, this worked out in the end, but it was not at all a good financial move. We bought the house at the top of the market in 2007, and it never recovered. For a while I was worried that I'd need to move my mom to a full time memory unit, and I had to worry about the cost of that + a house that was under water.

Honestly if I had to do it over again, I would have just rented them a place and had them pay me the subsidized amount, rather than actually buying a house.
Mrb09 - thank you for sharing your own experience, we definitely were thinking this would not help us financially and just sort of looking to minimize the damage. Renting -not us as the landlords- sounds better and better!

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Freetime76
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Freetime76 » Sat Jun 29, 2019 11:58 am

dm200 wrote:
Sat Jun 29, 2019 10:31 am
Freetime76 wrote:
Fri Jun 28, 2019 1:06 pm
Hi Bogleheads - We newly discovered this forum, and it is fabulous.
We’d like to tap into your wisdom and experiences: We’re selling our house and will only spend about half the proceeds on our next place. We haven’t decided yet what to do with the remainder, other than invest some for retirement or passive income.
I had the bright idea to buy a house for Mom (my MIL), with the main objective being to stabilize her living expenses. She has “ enough” to live now, but she rents. After FIL passes, she’ll be living on SS only (she is about 70 y.o.), and this concerns us greatly. SIL maybe will care for her (move there). We’re all in the thick of planning/discussing... it is a secretive topic, so not easy to address.
Anyway, we’d prefer not to be MIL’s landlord, and thought to structure it as a loan. Yes, I listen to Dave Ramsey and hear about family loan issues constantly -lol. However, her credit is not good due to an IRS debt, and FIL keeps nebulously stating that there will be “plenty” to take care of her... but none of us trust that and it keeps her dependent on him (they’re divorced) Again, the objective is to stabilize her expenses and to have her keep her (financial) independence as much as possible. We also think a “house” environment would be healthier for her. One BIL lives nearby and can assist with the property as well.
Thank you for any and all suggestions. :?
Others have made very good points!

1. I would lean against tying up a lot of your funds to become her "landlord".

2. While 70 (I am 73) is not that "old" - her "lifestyle" age may be much higher or lower. Her housing "needs" and/or desires may change a lot. Is a "house" even the optimum for her? Does she really need/want a whole house?

3. If you can do it, she might need some help in stabilizing the support/financial issues with FIL. Is there life insurance (with her as beneficiary) involved and, if so, is it assured that he will not cancel it? Is she receiving or utilizing the FIL/divorce situation fully?

4. Since health/medical expenses are a significant part of most seniors expenses, is she optimizing her medicare coverage and choices? For example, if she has original medicare - but no medigap - she has a big financial risk? Investigate medigap with Original medicare as well as Medicare Advantage plans. Also check out Part D - prescription drugs. Also, encourage and support a healthful lifestyle. I don't know any details, but I often see a lot of signs, notices, etc. about those on Medicare needing "extra help". I would check these out.

5. Sounds like there are multiple siblings and spouses/significant others involved in this issue. For many reasons, I urge you to try to have consensus - as well as splitting the financial obligations and risks. If you were to buy a house and become her landlord, you would be taking on a disproportionate risk (IMO)

6. Different localities and jurisdictions often have quite varied programs and assistance/subsidies for seniors. Check out that she is taking full advantage of any programs for which she is eligible. If she might live in different jurisdictions, see which would be best for her. Be aware of just how you provide any financial assistance - such that it does not disqualify her from any such programs.

7. Look for ways of being supportive of her having a satisfying lifestyle. I believe that seniors who have that do much better and are net financially better off. [Although not always ;) ]

8. See what might be done to improve her credit. Bad credit can have a lot of implications and increased costs.

9. Since moving in with SIL is a possibility - explore all of the implications you can think of - especially financial risk. Maybe - to split the risks and obligations - you could offer to contribute some of the funds you have for modifying the SIL's house for this - something like a mother-in-law suite? Such modifications can make such an arrangement much better for all involved. Some seniors live very harmoniously with adult children and some can be nothing but a PITA. My maternal grandmother lived very harmoniously with my father (my mother died decades before) and uncle in her elder years. My late inlaws (especially my MIL) would not have been, in just about any way, harmonious with my wife and I.

10. Demographics and family "culture" can have a big impact. My boss, for example, comes from a "culture" where caring for (financially and otherwise) parents is important. Her parents live with her sister - part of that culture. Take this into account (if applicable) in this situation.

Good Luck!
Wow. This is a super To Do list. Thanks extra for taking the time to type it out, because we are going to use it. The PITA comment is spot on - a happy MIL is a sweetheart. Unhappy stressed MIl is rough. I expect I am the same way with my spouse :sharebeer

#7 - wanting a better lifestyle for her is a huge driver for this. She seems stuck in a rut, and a more stimulating life (going outside, gardening, games, whatever) is something we think would help vs. just worrying, sitting. Great points, all.

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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Herekittykitty » Sat Jun 29, 2019 12:56 pm

Don't forget to see if you can find out if your father's pensions have widow's benefits to which she will be entitled if he predeceases her and which he cannot change.
I don't know anything.

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Freetime76
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Freetime76 » Sat Jun 29, 2019 1:33 pm

Herekittykitty wrote:
Sat Jun 29, 2019 12:56 pm
Don't forget to see if you can find out if your father's pensions have widow's benefits to which she will be entitled if he predeceases her and which he cannot change.
I won’t! We’re about 90% sure that the military one was not set up to continue for her when they divorced, no idea about the other one. Will *definitely* investigate both of them. It’d be a big help.

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Freetime76
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Freetime76 » Sat Jun 29, 2019 1:53 pm

Update from OP: so... we just had a frank discussion fueled by copious amounts of coffee. Moving forward, we’re nixing the house idea (sigh. No more redo of a house for my MIL a la Joanna Gaines :D will just have to do my own house - it’s a hobby).

We should get $400K easily from this house and will only use 200 or so on the next one. So a portion of the remainder is going into an account to be named The Mom Fund. Bad pun, but the word on that account will be mum (I.e. not advertising that we have it), to try to encourage independence on her own. This makes DH happy because a stash will be there for his mom. It makes me happy because a MIL emergency will not be a sudden drain on the household budget, which is cranked down pretty tightly for us to catch up on our own retirements ( no pensions here!).

In the meantime, we’re going to suggest to the family that we all divide and conquer, maybe SIL go on senior benefits duty ( she knows the system best), BILs tackle the accounts, wills, POA, DH usually is the heavy to work on getting their mom to work with them. He really wants her finances to be sorted out by her, meaning she owns her budget, and I agree that she’d feel empowered. ...isn’t there some famous saying out great plans lasting until the first shot is fired :wink:

Thank you for talking us out of it (house purchase), and for all the info, suggestions and experiences. Here I thought we were the only ones who don’t have this figured out...

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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Watty » Sat Jun 29, 2019 2:56 pm

Even without buying her a house you should consider what will happen to her if your wife happens to die before her since it sounds like she will depend on her in one way or another. You may want to get additional term life insurance to provide for her in case that happens.

I don't remember the exact details but there was a post a while back which had a situation something like;

1) Husband and Wife had the husbands Mom move in with them.

2) Husband dies and the Wife still has the mother in law living with her.

3) Wife remarried and they have the mother in law, wife, and second husband living together.

4) Wife dies and the second husband is left living with his late wife's mother in law.

Weird stuff can and does happen.

It might seem that the wife or second husband might not have a lot of obligation to the mother in law but it is more complex than that since they inherited funds that could be attributed back to the first husband so using some of those funds to support his Mom would be a factor to consider.

It would have been much cleaner if the original husband had an additional life insurance policy to fund a trust to support his Mom if he died first.

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Sandtrap
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Sandtrap » Sat Jun 29, 2019 3:00 pm

Freetime76 wrote:
Sat Jun 29, 2019 1:53 pm
Update from OP: so... we just had a frank discussion fueled by copious amounts of coffee. Moving forward, we’re nixing the house idea (sigh. No more redo of a house for my MIL a la Joanna Gaines :D will just have to do my own house - it’s a hobby).

We should get $400K easily from this house and will only use 200 or so on the next one. So a portion of the remainder is going into an account to be named The Mom Fund. Bad pun, but the word on that account will be mum (I.e. not advertising that we have it), to try to encourage independence on her own. This makes DH happy because a stash will be there for his mom. It makes me happy because a MIL emergency will not be a sudden drain on the household budget, which is cranked down pretty tightly for us to catch up on our own retirements ( no pensions here!).

In the meantime, we’re going to suggest to the family that we all divide and conquer, maybe SIL go on senior benefits duty ( she knows the system best), BILs tackle the accounts, wills, POA, DH usually is the heavy to work on getting their mom to work with them. He really wants her finances to be sorted out by her, meaning she owns her budget, and I agree that she’d feel empowered. ...isn’t there some famous saying out great plans lasting until the first shot is fired :wink:

Thank you for talking us out of it (house purchase), and for all the info, suggestions and experiences. Here I thought we were the only ones who don’t have this figured out...
Great plan!
Great family dynamics!

Thanks for the update and the time to post.
Lot's to learn from your post!

j :happy
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Sandi_k
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Sandi_k » Sat Jun 29, 2019 8:32 pm

Freetime76 wrote:
Sat Jun 29, 2019 1:33 pm
Herekittykitty wrote:
Sat Jun 29, 2019 12:56 pm
Don't forget to see if you can find out if your father's pensions have widow's benefits to which she will be entitled if he predeceases her and which he cannot change.
I won’t! We’re about 90% sure that the military one was not set up to continue for her when they divorced, no idea about the other one. Will *definitely* investigate both of them. It’d be a big help.
You haven't mentioned Social Security yet. If they were married for more than 10 years, she can claim on HIS record. She'll get a higher payment, and it does not reduce his income AT ALL.

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Freetime76
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Freetime76 » Sun Jun 30, 2019 10:15 am

Sandi_k wrote:
Sat Jun 29, 2019 8:32 pm
Freetime76 wrote:
Sat Jun 29, 2019 1:33 pm
Herekittykitty wrote:
Sat Jun 29, 2019 12:56 pm
Don't forget to see if you can find out if your father's pensions have widow's benefits to which she will be entitled if he predeceases her and which he cannot change.
You haven't mentioned Social Security yet. If they were married for more than 10 years, she can claim on HIS record. She'll get a higher payment, and it does not reduce his income AT ALL.
Yes! One of our victories was finding out that MIL did get herself signed up for Social Security based on the FIL’s work history. We wish she’d waited, but water under the bridge. Thanks also for the tip about it not affecting his income, so no complaints from him allowed :wink:

We also found out that MIL can file for his full SS payment if he predeceases her - a Survivor Benefit I think it was called, even though divorced (she has not remarried). Helpful if both pensions end at that time.

(Edited to fix the quotes.)

patrocity
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by patrocity » Sun Jun 30, 2019 10:50 am

@freetime I'm going to be having a similar conversation with my own parents who are divorced. Since discussing finance has always been off the table, I'm not sure how to go about this. Both parents are in their 70s and lack transparency with what they have and don't have. They both still work, but I think it's because they have to and not because they want to.

I've made some peripheral comments, but never the direct question. Did you ask for actual numbers about all of these things? Were siblings in on the conversation, or were you the point person.

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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Herekittykitty » Sun Jun 30, 2019 11:16 am

I suggest you get a copy of the divorce decree and read and understand it. It will have information that could help you help your mother including understanding what the decree entitled her to and may lead you to track down things, such as whether she did qualify for part of his military pension and for some reason either bargained it away or still is entitled and just didn't file for it. It will also show whether your father is required to send her a certain amount of money or if he is just doing it because he wants to. Knowing that will help you and your mother know how secure the money he is sending is, and if she is getting all she is entitled to.

Here's an article you may want to read:
"Understanding Divorce in the Military."
https://www.military.com/money/retireme ... itary.html

Finally: It is indeed, as other posters have pointed out, important to understand Social Security benefits as applies to your mother (married 10 years, divorced, and the low income earner of the two). Understanding and getting the decision right can make a significant difference in current and lifetime income (maximizing current income is not always the same as maximizing lifetime income.) What is important is for her to know what benefits she is entitled to now, and what she will be entitled to as his widow should she predecease him.
The Social Security website is well organized and helpful.
Another helpful resource is: "Social Security Made Simple: Social Security Retirement Benefits and Related Planning Topics Explained in 100 Pages or Less Paperback - May 8, 2019." Be sure and get the latest version of the book, which I think this one is.
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by dm200 » Mon Jul 01, 2019 8:29 am

Freetime76 wrote:
Sat Jun 29, 2019 1:53 pm
Update from OP: so... we just had a frank discussion fueled by copious amounts of coffee. Moving forward, we’re nixing the house idea (sigh. No more redo of a house for my MIL a la Joanna Gaines :D will just have to do my own house - it’s a hobby).
We should get $400K easily from this house and will only use 200 or so on the next one. So a portion of the remainder is going into an account to be named The Mom Fund. Bad pun, but the word on that account will be mum (I.e. not advertising that we have it), to try to encourage independence on her own. This makes DH happy because a stash will be there for his mom. It makes me happy because a MIL emergency will not be a sudden drain on the household budget, which is cranked down pretty tightly for us to catch up on our own retirements ( no pensions here!).
In the meantime, we’re going to suggest to the family that we all divide and conquer, maybe SIL go on senior benefits duty ( she knows the system best), BILs tackle the accounts, wills, POA, DH usually is the heavy to work on getting their mom to work with them. He really wants her finances to be sorted out by her, meaning she owns her budget, and I agree that she’d feel empowered. ...isn’t there some famous saying out great plans lasting until the first shot is fired :wink:

Thank you for talking us out of it (house purchase), and for all the info, suggestions and experiences. Here I thought we were the only ones who don’t have this figured out...
Sounds like a great plan - especially that the applicable relatives/in-laws are working together!

It really does make a lot of sense to learn about various programs and plans available for seniors. My sister-in-law, for example, was really helpful with her knowledge of such programs (not necessarily all financial) in the case of my late father.

It is probably the case as well that by such follow up, her "quality of life" will be better as well. Win - win!

While not immediate, it might also be a good idea to have plans outlined or in place for funeral/burial options and choices. For example, in my case, as a veteran (relatively short service enlisted in the Navy) my wife and I can be buried in a National Cemetery. Purchasing a burial plot for both of us could be a significant expense.

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Freetime76
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Re: Buying a house for Mom - Pros, cons, pitfalls?.

Post by Freetime76 » Tue Jul 02, 2019 3:17 pm

patrocity wrote:
Sun Jun 30, 2019 10:50 am
@freetime I'm going to be having a similar conversation with my own parents who are divorced. Since discussing finance has always been off the table, I'm not sure how to go about this. Both parents are in their 70s and lack transparency with what they have and don't have. They both still work, but I think it's because they have to and not because they want to.

I've made some peripheral comments, but never the direct question. Did you ask for actual numbers about all of these things? Were siblings in on the conversation, or were you the point person.
I wish I could say we had a great method to broach the subject. We didn't. We tried the hinting/peripheral comments/being really blunt and no go. The housing situation (long term) always was a concern, given that the finances were a total ????? Basically DH and I are in the camp that feels owning a house is a good asset to have for 'aging in place' (grandma, mom, aunt etc. had one and benefited later in life, as care was arranged in their homes).

Back to your question. We had the following going for us:
1) The IRS levy created a crisis situation. Crisis meant MIL asked for help. The brothers got their Mom to share bank account statements etc. in order to get 2018 taxes filed and get the IRS on a payment plan.
2) Everyone knew something different, and pooling info among the siblings was extremely helpful.
3) It was not possible to get specific #s from MIL until much later. At first, the focus with MIL was to stress that this is for HER, and her kids sharing worries over wanting to know that she is OK. (DH said his mom related to both daughters in law were previously divorced and so had to consider this as ex-spouses, as well.)
4) FIL answered specific questions at the dinner table asked (by a DIL). The context was concern for their Mom. I am *incredibly* grateful to him for this generous conversation. It was humbling that he shared specifics with us in this way.
5) We pulled the divorce decree ourselves, so knew what questions to ask. It was needed to filing the taxes properly. Yes, it felt very odd doing this.

[As an in-law, I talked with my DH, but minimize my direct contributions in the conversations within their family. Meaning, DH and I decided what we thought/could contribute, and he did the talking. If I talked with BIL or MIL directly, I was treading a line of being in their business too much.]

A previous poster stressed the importance/benefits of MIL doing her own budget, and that is in fact what we're working on. She's happier at least working on it and not burdening the kids with it. This is going to take A Long Time, but a win for all (even with the housing questions down the road).
Hope that helps - good luck!

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