Cut Your Living Expenses w/o Lowering Your Standard of Living

Lara

Lara

Friend of the Arts
Location
Mid-Atlantic Coast
Things you can do to cut your living expenses without lowering your standard of living:

1. Give your house to your children via an Irrevocable Trust. Then rent the house and live there. Have an estate attorney draft the documents and provisions.

2. Sell your home to your kids and live there...maybe pay rent, maybe not.

Gifting or selling your house to your children and then living there is the only option that will both maintain your lifestyle and reduce your costs according to Timothy Speises of the firm, EisnerAmper.

As long as your children are willing and able to pay for the property taxes, maintenance, repairs, and any remaining mortgage payments, your house costs will be low...maybe even non-existent.
 

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Hmm - - - -, not sure I go along with the above. Why would my kids want to take on the burden of maintaining my house, and paying the hefty Austin taxes, each year? I'm not sure anyone's kids would, unless they had a masochistic streak. Also, what happens if the kids decide that they need the money from selling the house, and get a lawyer to try and get me out, despite the pre-existing contract? I could see very, very bad situations popping up, in my final years. No, I'll pass on your advice. Thanks, though, for the input.
 

It will not work for us..Our home equity is also an insurance policy for us. If something happens to either of us will sell the ponderosa and use the equity to sustain our lifestyle longer. We both understand that we could not stay here alone and do all that is necessary to maintain it.

Our 6 children and their spouses have enough to handle with there living arrangements..
 
This strikes me as very strange professional financial advice because of the potentially disastrous repercussions. I'm with Ken & Treeguy on this one.

Even the stablest child can get into financial difficulty. Your home then winds up on his/her asset sheet and will be ripe for the taking by creditors and you'll literally be standing out in the cold.

What if you and your child (or his/her spouse) have a falling out? Irrevocable trusts are, um, irrevocable. Courts will nothing for you (other than shake their heads at your naive foolishness) without solid proof of fraud, undue influence or (your own) mental incapacity at the time of deeding over your house.

I wouldn't place this kind of pressure on my relationship with my children, nor would I risk my largest asset to conserve a few thousand dollars a year.

My highly unprofessional, but free advice to someone who can't afford to live in their home? Get a roommate or move someplace that costs less.
 
We don’t have children but this sounds a bit dodgy. Your most important investment left in the hands of your offspring. Your kids. There’s so much that could go wrong. Since we don’t have children we will put a reverse mortgage on our house and use it as additional income when and if needed.
 
Anything can go wrong sometimes, that's for sure. I'm thinking these suggestions automatically assume everyone involved is on board and relationships are solid and stable enough to consider these scenarios. Something I'll think about later.
 
I would not even consider putting myself or my family in that situation unless it was a unique one of a kind property like the Bush family home in Maine.

Even then I would sell or gift the house to the kids and make other living arrangements for myself.

I would advise any senior citizen to stay in control of their living situation and their finances until the end if possible.

You can't have your cake and eat it too especially if you let your kids beat you to it!
 
StarSong said:
This strikes me as very strange professional financial advice because of the potentially disastrous repercussions. I'm with Ken & Treeguy on this one.

Even the stablest child can get into financial difficulty. Your home then winds up on his/her asset sheet and will be ripe for the taking by creditors and you'll literally be standing out in the cold.

What if you and your child (or his/her spouse) have a falling out? Irrevocable trusts are, um, irrevocable. Courts will nothing for you (other than shake their heads at your naive foolishness) without solid proof of fraud, undue influence or (your own) mental incapacity at the time of deeding over your house.

I wouldn't place this kind of pressure on my relationship with my children, nor would I risk my largest asset to conserve a few thousand dollars a year.

My highly unprofessional, but free advice to someone who can't afford to live in their home? Get a roommate or move someplace that costs less.
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I strongly agree, and I certainly would not do this. If the child ends up in bankruptcy for some reason -- like medical bills or a lost job or some other misfortune -- the house would end up in their assets and probably would end up on the bankruptcy chopping block whether there is a mortgage against it or not. There is a whole myriad of things that could go wrong here, and I would NEVER be willing to take this huge risk. Or what if your child simply decides to sell it out from under you for some reason?? Or the house winds up as a divisible asset in a divorce?

No, No, No.

People always think their children will always treat them fairly, and it ain't necessarily so.
 
Interesting reactions, and that's what I was hoping for because I want to hear all red flags and green flags. I can certainly see that everyone's situation is different.

I think this scenario would work quite well for me, although not necessary...yet. I have 4 children so they could share expenses. My home is paid for so no mortgage debt. Expenses would only be maintenance and property taxes. I'd pay my utilities and HOA. I crunched the numbers with expenses vs. increase in value over the past 18 years and they wouldn't lose. But I can see where location of other seniors would negatively affect this if their property wasn't increasing in value enough.

My Will has all my children in a Trust so it would be managed by the trustee...end of any disagreements as the trustee has the last word. But as far as one or two of them falling on hard times and not being able to afford their share of maintenance, and property tax, I can see the problem. Could it be written into the Will that their unpaid part of maintenance/tax, including interest, would then be deducted from their inheritance of the house? Hmm.

Meanwhile, the value of the home would increase more than their expenses but not all that much. Not like it would if I were in California. They would share in the sale of the property when I'm gone though, free of estate tax.
 
Sorry, ain't gonna happen as long as I can control my actions, living arrangements & everything else. Saw what happens with families & deaths. My father was shut out of his mother's estate by his alcoholic brother. My mother gained control over my now passed sister's estate because the SIL wasn't well thought of, closing out her grand children's inheritance. I cared for my father in his last days, trying to protect him from abuse by my mother. After my father's passing & my mother's my older sister & I were shut out of any inheritance by my two younger siblings, we were not even listed as survivors on our mother's obit.

When I retired we sold house, belongings & anything of value, then called all the children, grandchildren told them they will get their inheritance if they show up with trucks & trailers to clean out our 2 storage bays. Moved out of state with a small cargo trailer & some luggage. Have helped my children & grandchildren financially but everything is setup to go to my wife when I pass, 90% of my income will stop when she passes. I still own an 8 acre plot of ground in another state that we have decided to give to our 3 offspring, two want to sell now & get their share, I said no, it may be my only salvation for my golden years. I still maintain ownership. You want an example of dysfunctional look no further than my ancestors.
 
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Sorry folks - -too late for us. We gave the our home to our youngest daughter back in 1995 and our 2 families have lived there ever since. At that time we retained a life lease and an agreement that if the property was sold during our lifetime the amount would be split evenly. It's a home that has never been out of our family and for most of it's lifetime has housed 2 generations. You all know your family as I do mine. It's been 23 years now, the grandkids were born during that time and are now in college and high school.

We've been able to travel, sometimes being away from home for 6 or 7 months of the year. Never a worry about the property and in accepting the home the kids also took on all expenses to do with it. Heat, electric, taxes, maintenance, etc., so we have no living expenses in that regard.

Would I recommend this to others - -probably not as in many families it would create bitterness amongst the other children and some folks sadly, don't seem to get along that well with their off spring. It has been a God-send for us and probably one of the best life decisions that we've made. No problems have arisen and being surrounded by family is, IMHO, far preferable to finishing my days sitting among a group of old timers like myself with whom I have no connection. We all make choices and sometimes they work and sometimes not. We have been lucky with ours.

At almost 85, I haven't much time left, nor my wife who's 82. I hope my end will come in the same bedroom that we presently use. My grand-dad and mom both finished their days in that same room. My grand-mother in the hospital and my dad on the front lawn while
mowing. Since being built in 1921 our home has never left the family or been sold - -only handed down from one generation to the next.

I
 
What a great family story, Dave! It seems that your "lump of coal"turned into a "fabulous diamond"! Thanks for sharing it with us!:)
 
I'm with the majority here... not going to happen. Our home is paid for and taxes/insurance are reasonable. Our children have enough on their plates already. Might be a solution for some, but definitely NOT for us.
 
I have a different reaction to this than others on the board. My sister and I did this for our parents. This was in the early 1990s. My father had a MAJOR stroke that left him paralyzed and in a nursing home. They couldn't show that they had any assets, like a house, or the they would have to use it to pay the nursing home. We signed a paper giving us the house equally between my sister and I. The house was long paid for. My mother still paid whatever taxes there were, the utilities, etc. but it didn't show up as an asset for them. She lived there until she died, ironically before my father did. When my mother passed on, all my five siblings and I divided the proceeds from the house equally. We would not have thought to do anything differently.

So this type of thing can work out. I guess everyone needs to act like adults and not spoiled children.
 
Yes, Uptosnuff. It seems to work well when the equation is right, thanks to no mortgage, your mother paying taxes, utilities, etc., and "siblings who all acted like adults". Good for you...and them.

When choosing an executor for my estate in my Will, I discussed it with all of my children. I explained I could pay an outsider to be the Trustee or I could choose one of them. They all agreed on the 2nd oldest daughter who is the only sibling to live in the same state as I, she is the least likely to move, she gets along with everyone, and is trusted by all to be fair. I feel my children will do fine to work things out with this plan after I'm gone.

They also offered to help her with any duties needed to finalize the estate upon her request and understood she has the last word in all decisions.
 
Lara said:
Yes, Uptosnuff. It seems to work well when the equation is right, thanks to no mortgage, your mother paying taxes, utilities, etc., and "siblings who all acted like adults". Good for you...and them.

When choosing an executor for my estate in my Will, I discussed it with all of my children. I explained I could pay an outsider to be the Trustee or I could choose one of them. They all agreed on the 2nd oldest daughter who is the only sibling to live in the same state as I, she is the least likely to move, she gets along with everyone, and is trusted by all to be fair. I feel my children will do fine to work things out with this plan after I'm gone.

They also offered to help her with any duties needed to finalize the estate upon her request and understood she has the last word in all decisions.
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We also made a similar choice, Lara. Our second oldest daughter (with the consent of the other 3 kids) We also have left copies of our final wishes to be distributed to the other children so as to lessen the burden on our daughter in explaining our wishes. Not to be confused with our will, this is just a non-legal document that choices carried out by our daughter are not her idea but what we wished.

Our 4 kids are all nearby and are very close as are their siblings so I don't foresee any problems. We are not wealthy folks so there is no small or large fortune for the kids to bicker over. Haha
 
Uptosnuff said:
I have a different reaction to this than others on the board. My sister and I did this for our parents. This was in the early 1990s. My father had a MAJOR stroke that left him paralyzed and in a nursing home. They couldn't show that they had any assets, like a house, or the they would have to use it to pay the nursing home. We signed a paper giving us the house equally between my sister and I. The house was long paid for. My mother still paid whatever taxes there were, the utilities, etc. but it didn't show up as an asset for them. She lived there until she died, ironically before my father did. When my mother passed on, all my five siblings and I divided the proceeds from the house equally. We would not have thought to do anything differently.

So this type of thing can work out. I guess everyone needs to act like adults and not spoiled children.
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It was my understanding that a home is exempt from Medicaid's "asset limit" and Medicaid does not require it to be sold to pay for long-term care.

I don't expect my children to "act like spoiled children" at all; I just don't want to burden them with unnecessary taxes and insurance payments on MY house. As long as I am capable of handling my business I intend to do so. To each their own.
 
C'est Moi said:
...my children, I just don't want to burden them with unnecessary taxes and insurance payments on MY house. As long as I am capable of handling my business I intend to do so. To each their own.
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That's nice C'estMoi that you are handling things while you're capable. I'm sure most of us, who are capable, are handling our own affairs...as am I. But this thread is about seniors who are no longer capable and "need to cut their expenses in order to maintain their standard of living".

If the kids are unable to take part in this plan or just don't want to get involved, then it won't work. It will work however if the kids look at it as a lucrative investment for themselves while helping their parents have quality of life in their later years...and if the kids are able. It's not for everybody.

The kids WILL end up with a house (paid for by their parents hopefully) when their parents die. It's smart for them to maintain that investment to sell for the fair market value after their parent(s) is gone while also helping their parent(s) live at home as long as possible (another savings of hospital bills and nursing home bills).
 
The rented house we lived in when my daughter was born was owned by a lovely elderly lady that was related to our landlord...
She was an absolute sweetheart, she would bring over food,offer to babysit and was just a joy.One day a man knocked on her door with paperwork and simply told her,this is my house now,your daughter sold it to me and proceeded to tell her she had a week to clear out. Her son lived nearby and she moved into his home but she lost her independence and passed shortly after.
In NYS it's illegal to transfer a property within 7 years of an admission to a long term care facility,it is considered fraud,an attempt to hide assets.
Not sure where the information came from in that post but any financial planner will tell you they're both very bad advice.
 
Giantsfan1954 said:
In NYS it's illegal to transfer a property within 7 years of an admission to a long term care facility,it is considered fraud,an attempt to hide assets.
Not sure where the information came from in that post but any financial planner will tell you they're both very bad advice.
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I've looked into this a little bit, and GiantFan, you're not kidding when you say this is very bad advice. Anyone considering this would be well advised to consult attorneys and financial planners who specialize in elder matters, plus do plenty of other research.

C'est Moi is correct in her statement about a person's residence being exempt from the Medicaid's asset limit.

IMHO, transferring a house or other assets to preserve an estate or avoid paying one's own medical expenses is no different morally or ethically than welfare, food stamp or other fraud against governmental agencies.

https://www.payingforseniorcare.com/medicaid/look-back-period.html
 
I have no kids. This is something that could work for some if all are in agreement but I don't think it's a very common way to go.
 

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