House Question.. elderly father passed away .. elderly mother needs financial help

[ppe]

Hello Everyone.. so .. my elderly father recently passed away this September 2024… as a result my surviving elderly mother cannot afford to reside in their (mortgage free) home on the now reduced social security she is receiving. My mom’s home is worth $296,000.00. I own a (mortgage free)home worth about $130,000.00 .. my mother and me were thinking that maybe I could sell my home and purchase her home for what I sell my home for…$130,000.00. She and I would continue to live there with me being the new owner and of course assuming the responsibilities with her assistance. This purchase would be well below market value. My concern is her age 83 and any future problems we might face regarding doing something like this. Her idea was to gift me the below market difference of approximately $160,000.00 …. Any advice or opinions are much appreciated!!

 

[Just Blue]

Hello Everyone.. so .. my elderly father recently passed away this September 2024… as a result my surviving elderly mother cannot afford to reside in their (mortgage free) home on the now reduced social security she is receiving. My mom’s home is worth $296,000.00. I own a (mortgage free)home worth about $130,000.00 .. my mother and me were thinking that maybe I could sell my home and purchase her home for what I sell my home for…$130,000.00. She and I would continue to live there with me being the new owner and of course assuming the responsibilities with her assistance. This purchase would be well below market value. My concern is her age 83 and any future problems we might face regarding doing something like this. Her idea was to gift me the below market difference of approximately $160,000.00 …. Any advice or opinions are much appreciated!!

What US state is this in? Does your mother have children other than yourself?

 

[ppe]

What US state is this in? Does your mother have children other than yourself?

Ohio … no … I am the only child

 

[adjusterjack]

I big problem may occur if she needs Medicaid. Medicaid typically has a 5 year look back period for the disposal of assets. Selling her house for less than half of the market value could result in her being denied Medicaid for the amount of time based on the market value instead of the sale price.

I suggest consulting an estate planning or elder law attorney for the pros and cons of the deal.

 

[ppe]

I big problem may occur if she needs Medicaid. Medicaid typically has a 5 year look back period for the disposal of assets. Selling her house for less than half of the market value could result in her being denied Medicaid for the amount of time based on the market value instead of the sale price.

I suggest consulting an estate planning or elder law attorney for the pros and cons of the deal.

Ok … thank you

 

[LdiJ]

Ok … thank you

Since you are the only child, you could still sell your home and move in with her and help cover the costs. You could simply bank the money that you get from selling your home.

 

[ppe]

Since you are the only child, you could still sell your home and move in with her and help cover the costs. You could simply bank the money that you get from selling your home.

Possibly … thank you

 

[bcr229]

This situation is why reverse mortgages were created, especially if she's not at the point yet from a health perspective where she needs a live-in caregiver.

 

[quincy]

https://www.hud.gov/program_offices/housing/sfh/hecm/hecmhome

There are reverse mortgage scammers who prey on the elderly so know well who you are dealing with before considering a reverse mortgage. And make sure mom knows about the risks involved, not only the benefits, if she wants to explore this option.

 

[LdiJ]

https://www.hud.gov/program_offices/housing/sfh/hecm/hecmhome

There are reverse mortgage scammers who prey on the elderly so know well who you are dealing with before considering a reverse mortgage. And make sure mom knows about the risks involved, not only the benefits, if she wants to explore this option.

Reverse mortgages can be a benefit to someone who is house rich, and cash poor, does not intend to move again in their lifetime, and prefers to spend their assets on their own comfort, rather than sacrificing to leave them to their heirs. They can particularly be of benefit to someone who is struggling to have a decent quality of life in their later years.

As an overall financial strategy however, reverse mortgages are expensive, and the requirements to keep the asset in top condition can be arduous. You also lose the flexibility of being able to move as your needs change. You can of course still move, but your financial needs/ability to do so could change significantly due to the reverse mortgage.

 

[ppe]

Reverse mortgages can be a benefit to someone who is house rich, and cash poor, does not intend to move again in their lifetime, and prefers to spend their assets on their own comfort, rather than sacrificing to leave them to their heirs. They can particularly be of benefit to someone who is struggling to have a decent quality of life in their later years.

As an overall financial strategy however, reverse mortgages are expensive, and the requirements to keep the asset in top condition can be arduous. You also lose the flexibility of being able to move as your needs change. You can of course still move, but your financial needs/ability to do so could change significantly due to the reverse mortgage.

She already borrowed $80,000.00 against the house … my efforts would be intended to rescue the house.

 

[LdiJ]

She already borrowed $80,000.00 against the house … my efforts would be intended to rescue the house.

Then the house is not mortgage free as you indicated in your first post. Under that circumstance it may be worth the downsides to buying her out at less than full market value.

 

[ppe]

Then the house is not mortgage free as you indicated in your first post. Under that circumstance it may be worth the downsides to buying her out at less than full market value.

Yes… apologies ... I failed to mention the loan she took. Our thoughts are for me to sell my house and use all the money or most of it to pay off the loan she took. She would sign her house over to me and gift what ever amount the market dictates over to me and call it even. She can then be free of needed loans and bills she can’t handle alone.

 

[LdiJ]

Yes… apologies ... I failed to mention the loan she took. Our thoughts are for me to sell my house and use all the money or most of it to pay off the loan she took. She would sign her house over to me and gift what ever amount the market dictates over to me and call it even. She can then be free of needed loans and bills she can’t handle alone.

I would probably be cleaner to go the more official route and have a proper closing with her giving you a gift of equity, rather than having her "sign it over" after you pay off the loan. In other words, make it a proper sale with the loan being paid off as part of the closing process. It just makes it a bit more official and therefore less likely to raise flags down the road. You could even consider giving her a life estate in the property since she would be giving you a gift of equity (give her the legal right to live there for the rest of her life or until she is no longer physically able to do so).

 

[quincy]

Yes… apologies ... I failed to mention the loan she took. Our thoughts are for me to sell my house and use all the money or most of it to pay off the loan she took. She would sign her house over to me and gift what ever amount the market dictates over to me and call it even. She can then be free of needed loans and bills she can’t handle alone.

Your mom should speak with an elder law attorney before making any decision about her house.