Family members who are overtaken with grief are often unable to move forward and make decisions. If a house was not being well maintained while the parent was ill or aging, it might fall into further disrepair. When siblings have emotional attachments to the family home, says the article “With proper planning, selling a parent’s house can be a relatively painless process,” from The Washington Post, things can get even more complicated.
The difficulty of selling a parent’s home after their passing, depends to a large degree on what kind of advance planning has taken place. Much also depends on the heir’s ability to ask for help and working with the right professionals in handling the sale of the home and managing the estate. The earlier the process begins, the better.
Parents can take steps while they are still living to ward off unnecessary complications. It may be a difficult conversation but having it will make the process easier and allow the family time to focus on their emotions, rather than the sale of property. Here are a few pointers:
Make sure your parents have a will. Many Americans do not. A survey from Caring.com found that only 42% of American adults had a will and other estate planning documents.
Be prepared to spend some money. Before a home is sold, there may be costs associated with maintaining the property and fixing any overdue repairs. Save all receipts and estimates.
Secure the property immediately. That may mean having the locks changed as soon as possible. Once an heir (or someone who believes they are or should be an heir) moves in, getting them out adds another layer of complications.
Get real about the value of the property. Have a real estate agent run a competitive market analysis on the property and consider an appraisal from a licensed appraisal. Avoid any accusations of impropriety—don’t hire a friend or family member. This needs to be all business.
Designate a contact person, usually the executor, to keep the heirs updated on how the sale of the house is progressing.
The biggest roadblock to selling the family house is often the emotional attachment of the children. It’s hard to clean out a family home, with all of the mementos, large and small. The longer the process takes, the harder it is.
This is not the time for any major renovations. There may be some cosmetic repairs that will make the house more marketable, but substantial improvements won’t impact the sale price. Remove all family belongings and show the house either empty or with professional staging to show its possibilities. Clean carpets, paint, if needed and have the landscaping cleaned up.
Keep tax consequences in mind. Depending on where the property is, where the heirs live and how much money is being inherited, there can be estate, inheritance and income taxes. It is usually best to sell an inherited property, as soon as the rights to it are received. When a property is inherited at death, the property value is “stepped up” to fair market value at the time of the owner’s death. That means that you can sell a property that was purchased in 1970 but not pay taxes on the value gained over those years.
Talk with an experienced estate planning attorney about what will happen when the home needs to be sold. It may be better for parents to create a revocable trust in advance, which will direct the sale, allow a child to continue living in the home for a certain period of time, or instruct the one child who loves the home so much to buy it from the trust. Trusts are typically easier to administer after parents pass away and can be very helpful in preventing family fights.
Reference: The Washington Post (May 16, 2019) “With proper planning, selling a parent’s house can be a relatively painless process”
We are proud to continue supporting the Salt Lake County Aging Mastery Program. We want to thank Judith Madsen for inviting us to present at the River’s Bend and Tenth East Senior Centers for another year.
Each year, we have the pleasure of meeting the wonderful people that have signed up for and attend the program. The program covers many subjects to help seniors learn how to manage their finances, health, scams, and the legal challenges they may face in the future.
Calvin presented on Advanced Planning. The presentation included wills, trusts, power of attorney, and medical directives. We often present at county and city senior centers and you may find upcoming events on our events page or by signing up for the newsletter or blog. Click here to join the newsletter and the blog.
If you are interested in learning more about the Aging Mastery Program or to sign up for it, please reach out to us or contact Judith Madsen at firstname.lastname@example.org. Click here to read more about the Aging Mastery Program.
It seems like scammers have become more aggressive and a frightening tone has gotten more than one otherwise sensible person embroiled in them. Crooks are calling and telling people that their Social Security numbers have been suspended, and that they need the number and the person’s bank account information to issue a refund, says KKTV’s report “Social Security officials hope to combat scam.”
In addition to the aggressive angry voice, is the fact that the caller ID has been “spoofed” or made to appear that the person is actually calling from the Social Security Administration or another government agency.
Nancy Berryhill, Acting Commissioner of the Social Security Administration, advises people to be very cautious and not to provide anyone with information like their Social Security number or bank account information to unknown people, either on the phone or over the Internet.
The SSA has launched a public service campaign warning about these calls, in the hope that consumers will realize that the SSA never makes threatening phone calls and never asks for gift cards in payment. The campaign is being run in conjunction with the Office of the Inspector General.
The scamming calls are nationwide. The message is clear: if you get this kind of a phone call, hang up.
While the SSA does occasionally call people, it’s usually someone who is working with the agency on an on-going matter, so that the call and the agent making the call is not a stranger.
Berryhill advises people that if they are contacted by someone claiming to be from the Social Security Administration or the Office of the Inspector General, they should get the person’s name, their phone number and then hang up. If the same person calls again, hang up. It is more than likely to be a thief.
Contact the local Social Security office and find out if a call has been made to you. Never provide a caller with your Social Security number.
Some of the crooks are able to get information about people, including part of their Social Security numbers, and they call stating that they are asking only to verify the entire Social Security number. Again, if someone from Social Security was really calling, they would have that information and would not need it to be verified.
Reference: KKTV (March 22, 2019) “Social Security officials hope to combat scam”
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It sounds great, even if you know that the reverse mortgages are known to be a little on the pricey side. However, unexpected circumstances can make this last-chance-to-save-your-retirement strategy backfire in a big way. Just ask Evelyn Boice, who is still wearing the same clothing that she brought to babysit her grandchildren last February. The Union Leader shares her story in the article “Silver Linings: Reverse mortgages for seniors–Lifestyle Maintenance or money pit?”
It seems that a flood at Evelyn’s retirement home caused by burst pipes led to a financial disaster. She’s 83 and didn’t expect to spend her last years living in an apartment attached to her daughter’s home. She’s got a chair, a TV, a bed and a kitchen stool. Everything she owned was destroyed in the flood.
She does have a lot of notebooks—stacks of confusing and incomplete financial statements loaded with indecipherable charges, including a $35 charge every time she calls the reverse mortgage company for help. She’s got threatening letters about being in default, while she waits for the mortgage lender to release an insurance check for $48,651 that she would use to salvage what’s left of her home.
When she called the insurance company, she heard an awful comment from someone at the office: “Why doesn’t she just hurry up and die?”
Boice took out a reverse mortgage in 2007 and used $50,000 of a $200,000 loan to make emergency repairs after Hurricane Wilma struck her home, blowing out windows and doors. However, the danger comes, when homeowners don’t have enough money to live on and maintain their homes, make essential repairs or pay for insurance and property taxes. That’s non-negotiable with a reverse mortgage. Any kind of default can lead to a cascade of new expenses for appraisals, property inspections and legal work to protect the lender. The lender has all the power and all the fine print.
Her case is an extreme example of what can go wrong. In 12 years, an unbelievable amount of paperwork has accumulated. One document shows that she owes $265,000, a number that keeps increasing. The monthly interest charges range from $100 to more than $1,000, and lump sums of more than $2,500, reflecting property taxes.
Boice is getting some help from the Claremont office of New Hampshire Legal Assistance. They are helping her work through the issue, but it may only come in the form of tax deferment or reductions.
Before taking out a reverse mortgage, seniors should look at all available options. They should also have an attorney review the contract from the reverse mortgage company. One small mistake can end up costing hundreds of thousands of dollars.
Reference: Union Leader (Feb. 2, 2019) “Silver Linings: Reverse mortgages for seniors–Lifestyle Maintenance or money pit?”
Suggested Key Terms: Reverse Mortgages, Seniors, Interest Rates, Fine Print, Home Equity Conversion Mortgages, HECMs
Reading the fine print when purchasing a home in a retirement community or a care community is intimidating. The typeface is tiny, you’ve got boxes to pack and movers to schedule and, well, you know the rest. What most people do, is hope for the best and sign. However, that can lead to trouble, advises Delco Times in the article “Planning Ahead: Moving to a care community? Read the agreement.”
If you don’t want to read the fine print or can’t make head or tails of what you are reading, one option is to ask your estate planning attorney to do so. Without someone reading through and understanding the contract, you and your family may be in for some unpleasant surprises. Here are some things to consider.
What kind of a community are you moving into? If you are moving to a Continuing Care or Assisted Living Community, your documents will probably have provisions regarding health insurance, entry fees, deposits, a schedule of costs, if you need additional services, fees for moving to a higher level of care and provisions for refunds and estate planning.
When you enter an long-term care facility, nursing home, or Assisted Living facility, you may find yourself signing documents regarding everything from laundry policies, pharmacy choices, financial disclosures and statements of your rights as a resident. Not every document you sign will be critical, but you should understand everything you sign.
If moving into a nursing home that accepts Medicaid, you and your family need to know that nursing homes that accept Medicaid are not permitted to demand payment on admission from either an adult child or a power of attorney from their own funds. However, Pennsylvania does have support provisions regarding children, that are called “filial responsibility.” This should not be a problem, as long as you speak with an elder law attorney who can make sure you have completed the Medicaid application correctly and are in full compliance with all of the requirements.
If your adult children ask you to sign documents and “don’t worry” about what documents are, you may want to sit down with an experienced elder law attorney to review the documents. When someone is not trained to review these documents, they won’t know what red flags to look for.
If someone signs the document who is not the applicant/future resident, that person may become responsible for the costs, depending upon what role you have when you sign: are you a guarantor or indemnitor? That person typically agrees to pay after the applicant/resident’s funds are exhausted. The payments may have to come from their own funds. Sometimes the “responsible party” is simply the person who handles business matters on the applicant’s behalf. You’ll want to be sure that the person signing the papers understands what they are agreeing to.
Almost all agreements will say that the applicant, or the person receiving services, is responsible for payment from their own assets. However, if someone signing the documents is power of attorney, they need to be mindful of what they are signing up for.
If possible, the person who will receive services should be the one who signs any paperwork, but only after a thorough review from an experienced attorney.
Reference: Delco Times (Feb. 5, 20-19) “Planning Ahead: Moving to a care community? Read the agreement”
There are many complex rules about transitioning from employment-based health care coverage to Medicare, and mistakes are expensive and often, permanent. That’s the message from a recent article in The New York Times titled “If You Do Medicare Sign-Up Wrong, It Will Cost You.”
Tony Farrell did all the right things — he did the research and made what seemed like good decisions. However, he still got tripped up, and now pays a penalty in higher costs that cannot be undone. When he turned 65 four years ago, he was still working and covered by his employer’s group insurance plan. He decided to stay with his employer’s plan and did not enroll in Medicare. Four months later, he was laid off and switched his health insurance to Cobra. That’s the “Consolidated Omnibus Budget Reconciliation Act” that allows employees to pay for their own coverage up to 36 months after leaving a job.
Medicare requires you to sign up during a limited window before and after your 65th birthday. If you don’t, there are stiff late-enrollment penalties that continue for as long as you live and potentially long waits for coverage to start. There’s one exception. If you are still employed at age 65, you may remain under your employer’s insurance coverage.
What Mr. Farrell didn’t know, and most people don’t, is that Cobra coverage does not qualify you for that exemption. He didn’t realize this mistake for over a year, when his Cobra coverage ended, and he started doing his homework about Medicare. He will have to pay a late-enrollment penalty equal to 20% of the Part B base premium for the rest of his life. His monthly standard premium increases for Mr. Farrell from $135.50 to $162.60.
There are several pitfalls like this and very few early warnings. Moving from Affordable Care Act coverage to Medicare is also complex. There are also issues if you have a Health Savings Account, in conjunction with high-deductible employer insurance.
Here are some of the most common situations:
Still employed at 65? You and your spouse may delay enrollment in Medicare. However, remember, Cobra does not count. You still need to sign up for Medicare.
If you have a Health Savings Account (HSA), note that HSAs can accept contributions only from people enrolled in high deductible plans, and Medicare does not meet that definition. You have to stop making any contributions to the HSA, although you can continue to make withdrawals. Watch the timing here: Medicare Part A coverage is retroactive for six months for enrollees, who qualify during those months. For them, HSA contributions must stop six months before their Medicare effective date, in order to avoid tax penalties.
There are many other nuances that become problematic in switching from employer insurance to Medicare. If this sounds complicated, at least you are not alone. Moving to Medicare from other types of insurance is seen as complicated, even by the experts. The only government warning about any of this comes in the form of a very brief notice at the very end of the annual Social Security Administration statement of benefits.
There are advocacy groups working on legislation that would require the federal government to notify people approaching eligibility about enrollment rules and how Medicare works with other types of insurance. The legislation was introduced in Congress last year – the Beneficiary Enrollment Notification and Eligibility Simplification Act — and will be reintroduced this year.
Reference: The New York Times (Feb. 3, 2019) “If You Do Medicare Sign-Up Wrong, It Will Cost You”