Mom.had surgery recently and won't be able to return home. I am her DPOA and main caregiver,.and she has asked me to get house ready for sale...there are walls that need attention, some gutters replaced, kitchen faucet leaks and some windows are totally stuck and on and on. One realtor said, spend about $10k fixing up, and not any more. Another said if we tried to sell "as-is" it would only attract low-ball offers. So, mom has said to go ahead and work within the approx 10k fix-up budget. The problem is she doesn't have that much in her checking account. Am legally OK with extracting the monies from her Trust investments (non-IRA)? A friend said I should set up a totally separate account, in the Trust name, because once the house sells, I have to have a place to deposit it. I cannot put proceeds from house into her checking account since we are Joint Owners (she want me to inherit anything left over in that very small acct). The house is titled in Trust and after she dies (and all the nursing home bills ) if anything is left over the 5 sibs get what is left. So I just want it all to proceed without the sibs feeling like I wasted money getting it sold.
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The house is going to need lots of cleaning but I am not going to let grandkids in to do it, as much as I would like. Mom had a paid caregiver who is now suddenly without pay, so I am going to pay her, her usual weekly rate and I will help her, clean out & re-arrange furnishings.
It occurs to me, there will actually be need for 2 cleanings: one, before the Open House(s), and then 2nd, after it sells--have to completely empty everything out and for that I will probably call the local charity organizations and let them take literally everything.
The funeral was supposedly "pre-paid" but the budget for flowers, food, music, and other items was way too low! We needed to have snacks/beverages, and other food items for the visitation &prayer hour, because there were some with very small children who needed to escape, and I also spend about $30 on coloring books and brought in some old crayons, and set up some Peter Rabbit videos on the TV for them. The flowers were much more expensive, and the organist and cantor rates that funeral home quoted $100 was only half of the expected amounts. Mom also wanted a classical harpist and flute to play during Communion and before/after Mass. And the lunch we couldn't have in the church basement due to the rummage sale---grrr---so we had to go to the local country café and actually I liked the food there much better, but it was over $2,000.
I have no regrets, and mostly, because I kept myself glued to that harvest gold vinyl recliner chair watching over her, and reading Bible verses and singing her favorite hymns as best as I could. I hardly remember eating, my husband also brought me food and stayed as long as he could (but he had to report to work in the morning). I am so glad she avoided living in a facility for months on end.
I believe I might consider changing the locks too - I would have liked to have but dad had let a grandchild move in so considered his residence and I couldn't - but these people can come for that but couldn't come for her funeral?
When's your lawyer appointment? did have trouble with that grandson - had no idea even had to have a lawyer - what's the problem he kept wanting to know
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Your mother's will and/or Trust if she has one may have a provision that the expenses of her last illness are priority payments. That should keep the family quiet for awhile as you calculate and make arrangements to pay all those expenses, including reimbursement for the funeral costs which you advanced.
I might even go so far as to change the locks on the house.
I'm keeping you in my thoughts and hoping tomorrow brings relief, stability and rest for both of you.
Mallory - let us know how the care plan meeting goes today. With the change in your mom's other leg, they may want to reschedule but really try to make them stick to it. If you have a friend who can come & be there with you, try to have that happen - mainly for another set of ears hearing what is discussed. I don't know if you've had a care plan meeting before but for the ones on my mom at both NH she was in it was such that a point person was there for each of the departments - social work, activities, dietary, nursing but not necessarily the medical director. IF there is something you want addressed bring it up AND write it in the meeting report. This will be a preprinted sheet in mom's binder/chart and will have details on who was at meeting. There usually is 2 - 5 lines that are blank for notes to go into & the nursing staff usually does this BUT as your mom's DPOA / MPOA you too can write whatever concerns or actions you want addressed by the facility. You will be asked to sign off on the sheet too and that is when you write in your concerns. The binder seems to go after the meeting to the DON (director of nursing who is the goddess and ruler of a NH) who then checks to see if whatever needed to be done has been done.
Hope that mom's spirits get better. Surgery is always difficult and depressing then with other "healthy" parts going amiss even more so. If mom could be on the yo-yo pattern of being ok then having an incident and each time declining more, think carefully how you would be able to juggle being there for mom AND having to deal her home repairs AND your home & life as well. There is only so much Mallory to go around…...
I remember decades ago some retirees would buy an investment property to which later down the road they would move into... being the house currently rental, they could remodel and deduct the expenses on their taxes while there was a tenant in the property or between tenants. And when the time came to move into that home, it was already updated :)
The property tax exemption issue and/or rebate is a good point. In Michigan there is a provision for residents of nursing homes and other facilities to deduct a portion of property taxes, but I don't recall without checking the form exactly what relief it provides. It is something that Mallory could check for her state.
As to trusts and banks, yeah, been there, gone through that.
Flyer, I was curious about the $250K exemption, so I did a quick check. Apparently that provision was created in 1997 and still holds:
bankrate/finance/money-guides/home-sale-capital-gains-1.aspx
That article does need to be updated though - it boasts that homeowners can use the funds saved to travel to Europe or other enjoyable pleasures. It should read that homeowners can set those funds aside to pay for their senior years medical costs and IL, AL, and/or LTC costs.
We're giving Mallory some nice research assignments!
Now my moms house has foundation & settlement issues, so no FHA or VA buyers. Only cash or conventional. Difficult sale if has to go on market.
Garden - trusts and banks, sigh.....the banks don't train front line staff on legal basics. Really they are cashiers. Anything that isn't simple in/out is a problem. I work on projects that get paid via SWIFT & had an assistant recently who needed to get paid as she invoiced independently, it took like 8 people at her bank to get the code as nobody knew whats what.
Mallory does your bank have a trust dept? There usually is an older indeoendent bank or two in larger cities that are banks with a trust dept. if most of what you are facing financially for the next few years is in trust accounts, you might want to consider moving all to a bank that understands trusts.
Also about property taxes, find out IF mom needs to be living there to get the homestead or primary residence tax break. Some areas won't allow if in a facility. Or require a statement of return filed before taxes reduced. Taxes on 350k could have a huge jump if she can't get primary residence adjustment.
It's hard to be specific without seeing mom's home. My general advice would be to fix cosmetics and clean it to within an inch of its life. Get rid of lots of clutter, including closets. If you have to rent a storage facility for furniture clutter, do so.
You are trying to stage the home.walk thru it as a buyer and begin making a list. Pay special attention to the kitchen. Kitchens sell homes. Replace the faucet, take clutter off the counters except for a toaster. Fix any plumbing leaks.
Replacing windows is a big ticket item. I'm figuring that won't make sense. Tell your a Realtor that you will be very open minded in fixing things after a buyer has had a home inspection. Ask your Realtor what she would suggest you do to give mom the most bang for her buck.
Price it reasonably and don't let it languish on the market. The longer your market time, generally, the lower the offer.
malloryg8r, since your Mother's house has a newer roof and newer A/C unit, that is great as those are major expenses for flippers so they won't need to worry about that. If you are curious what could stop a sale contract in it's tracks, you could hire your own Home Inspector, prior to listing the house For Sale, to come out [around $300-$400 depending on your area] and he/she will go over the house with a fine tooth comb letting you know what a buyer might ask to be fixed. That way you won't get any surprises when the Buyer has their own Home Inspection.
As for radon, houses on either side could have radon but not the house in the middle, or vise versa. Radon slowly travels underground, what might have been there for years could be gone or increased. One never knows until there is a test. Unless the basement is finished with a bedroom or a family room, many Buyers don't bother with a radon test if the basement is unfinished. If the house is on a slab, then a Buyer is more opt to have said test. Fixing is around $1500-$2500 depending on area.
That is strange about restrictions on renting... or does it mean if your Mother lives there, she can't have unrelated people renting rooms in her home? Renting out the house could become a quagmire unless you know the ins and outs of renting.
You know her better than them - do you think she can turn this situation around? What did the operating surgeon say? I always hate to read about a situation in which people in a nursing facility offer a dire prognosis because we've been through that before with my father, at a hospital rather than facility, and he proved them all wrong.
Nonetheless, you raise the trust issue. These are just my opinions, based on experience working for EP law firms and handling my sister's trust. I am not an attorney, and would recommend that you run this scenario by the attorney who prepared the trust documents, just to make sure you have all the bases covered.
Just my thoughts...
The DPOA, assuming it contains the requisite provisions to allow you to withdraw from financial accounst, would authorize you to take funds from her investments. I would first start with the mandatory Minimum Distribution Requirements from her IRAs, as a specific amount must be withdrawn annually anyway. So use it for the house.
If you withdraw from mutuals, I assume you know that you may pay capital gains taxes on the difference between basis and fair market value on the date of the sale, so you might want to estimate that in terms of how much to withdraw as well as any taxes that may be owed on your mother's 2015 income.
The issue of a separate account is one on which I've been advised differently. It's my experience that bankers don't always understand that even if assets such as mutual and stocks are titled in the name of the trust, the income still is treated the same way for tax purposes while the settlor is alive. This is what our attorney told us.
I think to be on the safe side, and to keep the funds straight and separate, I would in fact create a separate account. However, I've only set up a trust account after death. I have no experience or reaction on how a bank would treat a trust account for a living trust when the settlor is still alive. (I'm assuming your mother has a living revocable trust.) There might not be any problems or issues. I did find that some banks had staff that weren't particularly knowledgable on living trust issues.
I agree that the funds shouldn't go into the joint checking account, especially since if anything does happen sooner, there would likely be an issue of withdrawing her funds and comingling them with yours. Since the joint checking account will cede to you after her death, keep it clean and don't comingle funds that would be allocated among the other siblings.
Thinking ahead, I'm wondering how you plan to hold the proceeds from the house after sale. Assuming there will be a substantial amount after payment of any existing mortgage(s), and assuming you're aware that savings accounts aren't paying high rates of interest, do you plan to invest the money and pay for the nursing costs as needed?
Again, I stress that this "advice" is based on my experience but probably isn't as thorough as would be a legal consultation.
About the house make sure there are not any issues that would really affect its ability to sell - like any problems with foundation, electrical & plumbing. If the 10k is for "painting & primping" so it's strictly a visual appeal & there are problems that would be found by a house inspection (which a buyer would need to get done as the mortgage underwriter will want this), then IMHO the 10k will be a total waste both of $ and the time you will spend dealing with vendors.
So did Realtors each provide you with comps? Drive around to actually see the homes from the street and note IF they are like moms house. Look at the DOM and the % reduction from the initial listin for the actual sale - if they were 120 days with 30% reduction then spending to paint & primp is a waste. Often doing this ends up being a benefit to the realtor to mske the initial showing of the house nicer for them. Look at a couple of the ones currently listed (like actually go inside and walk the property) to see IF moms is comparable. If moms house is old unrenovated and is very dated, it just is not going to get buyers to pay top $. Buyers want & expect granite countertops, rainfall shower heads due to HGTV. Old houses with decades of elderly living in it just isn't competitive unless yours is a unique market (like area has little to no inventory so even crap houses sell)
Also the 10k......get estimates on all this before you start down this path. Realtors tend to gloss over costs, the 10k/2 weeks morphs into 22k and 5 weeks. Review what running utilities 24/7 and having yard & house done every week will cost. If house is on market for months all those expenses add up. Doing an "as-is" sale could actually realize the same profit if you factor in repairs, costs to have on market and your time in all this. Really I'd suggest you look at all this first before even dealing with how to deal with trust $.
I'm sorry to learn that she won't be able to return home and hope that you're able to find arrangements that are suitable and pleasant for your mother. And I hope she recovers well from the surgery.