How to pay for getting Mom's house ready for sale?

Are you anticipating that your mother might need Medicaid to pay the facility where she'll be living? If so, I would wait for the Medicaid experts here to advise on sale of the house, as it might be that it would become an asset for Medicaid reimbursement after your mother's death.

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.

Have you thought about a home equity line of credit? It could be used for the necessary improvements with some left over to pay for care. What about renting the home to provide additional income? A reverse mortgage will not work as your mom would have to have the intent to return.

My mom has about 5-7 yrs of assets depending on the markets and the NH costs. I suspect she may not live that long but who knows. Thanks for the idea of home equity line of credit. My goal is get it on market within 45 days and sold (fingers crossed) in another 100 days. Local market is about 80 days. There are restrictive covenants in her neighborhood against anyone other than related persons (no renting to strangers)(I wouldn't want to be a landlord anyhow ). She isn't able to walk at all following knee surgery with complications. So the care conference said to be prepared that she won't be returning home, unless a miraculous change. And mom is not putting forth any good efforts at PT. So sad. And only 2 of 4 siblings have visited (I am so thankful the 2 did finally visit).

P.s. Medicare A is supposed to pay the surgery & PT/ SNF stay up to 100 days. She has small LTC policy which kicks in at day 61? of self-pay, but only pays around $45/day (...crickets....)x max 100k but only 10k per year (...crickets...). Very old policy.

Mallory - would mom with house sale & savings have at least 400/500K? That's what she would likely need to private pay for NH 5 years. If not, then you may want to approach whatever you do with the thought that Medicaid will need to be applied for and so do all $ transactions with future medicaid in mind.

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 $.

Also clearly ask the NH if they take LTC as payment. Some just flat will not. My moms NH was either private pay or medicaid. What biz office told me was that LTC require all sorts of reporting - like staffing schedules, staff training, education, etc - in order to get paid. A low pay policy just isn't worth all the work involved.

Thanks Igloo for your tboughts, her home was built in 1950's but extensively remodeled (stripped to studs, new everything ) in 1998, and addition was put on and all the landscape redone. They used to own several acres around it but sold all.that to developer, and became part of the new neighborhood's association (with restrictions on renting, outdoor clothesline, etc). So I am fairly sure the guts of the home are good --re-roof done about 3 yrs ago after hail, and new furnace/AC 2 yrs ago. I will definitely get 1 or 2 more real estate professionals...one said over phone that radon abatements may be needed (in our area lots of radon). But my main question is--can I legally access the investment accounts, set up a separate Trust checking account with 10 or maybe 15k, and use that for "house" expenses prior to sale (not just paint but Dumpster, sealcoat driveway, cleaning carpets, fix faucet, even new brighter light bulbs, fresh house plants etc, all of that does add up). I suppose I will just have to go and pay an attorney to get the "final" answer. But even for that, I should be paying it out of mom's account (not the joint account with me).

Cost to hold the home current with utilities, association fees, insurance and property taxes is about $1200/month. Value of home might be 350k but still has a mortgage (long story.....). Investment accounts about 170k. She does get 1300/mo Social Sec.

Mallory, is your mother aware of the speculation that she won't be able to return home? I'm wondering if that's why she's not enthused about participating in her recovery.

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.

I know I plan to sell my parents house "as is" when the time comes... update remodeling can become a major headache and very time consuming. I would list the house "as is, price reflected of such" and hope for a bidding war by flippers :)

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.

Realtor here. The advice you received to do some fix-up is correct. As-is will definitely scare off buyers. And most buyers don't have a lot of cash to fix up a broken down home.

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.

Re your other question, as her POA, you are your mom. Anything she can do you can do. If you can take mom WITH you to place the POA, that will make it easier. Keep crystal clear records. Your siblings will question what you've done. Don't get sloppy.

Mom was not too happy during today's visit, she wanted me to stay like overnight, next to her, said I should have them bring in an extra bed. Sob. I also have my own family that needs me.... I did stop at her home on way home to pick up mail and check those windows which are so sticky. They are new inserts and others on addition are all new. There must be some kind of warranty thru Andersen so I will check her files. There are definitely no renters allowed--it is a restrictive covenant of her homeowner association. The next care conference is on Monday June 15th....hope she has made some progress. Any progress at all, would be good news. She did also win 12 tokens playing bingo, so that is something she can't do living at home. And she is loving having a hot breakfast.

Freq - I just got home inspection done, ran $ 275. Very detailed, 17 pages with photos to accompany each area. Got the referral from probate attorney.

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.

Igloo, at one time I remembered there was a $250k tax deductible when it came to a single owner seller of a house... wonder if that that is still around? I hope so. One could take the selling price, subtract the price paid for the house years ago, subtract the cost of fixing it up to sell [believe there is a time limit on the fixing], and subtract the mortgage. The IRS makes it so complex at times.

Igloo, I had to google Swift accounts to find out what they are - I learn something new every day!

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!

GardenArtist, thanks for the BankRate website, lot of good info there.

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 :)

Thanks for all the info...yes I have research to do. May get the opportunity tonite. Mom has developed a blood clot, not in the leg with surgery but the other. So she now gets warfaren or Coumadin and I am thankful this TCU / rehab nursing home was so on top of her issues. I am sleeping the night in a a large vinyl - coated recliner. Thank heavens I had a pillow and stadium blanket in trunk of car. They did give me sheets but they are slip-sliding all over the vinyl chair (need to get duct tape. ...). Hope the warfaring drug does its magic. Mom is still not really able to "walk" even with her walker and seems weaker, not getting better. Sigh.

Freq & Garden - good to know the 250K still in effect.

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…...

We are in ER, she appears to have had a stroke from clot travel to lungs, there is lots of testing going on....

Mallory, I hope the stroke issues can be addressed quickly and safely.

I'm keeping you in my thoughts and hoping tomorrow brings relief, stability and rest for both of you.

I'm so sorry; please let us know

Thinking of you and mom, Mallory.

Mom passed away June 18th. She just couldn't pull through, but all very peaceful, only 2 siblings could make it to see her before she passed -- but she was unconscious by the time they arrived. Funeral was Monday 22nd. One sibling didn't even come, said it cost too much but wants me to send the video, I guess I can do that, so he can have some closure. I got no help whatsoever with all the funeral prep and I am exhausted. Spent about $6000 on my own credit.card and hope it is reimbursed by estate. Already 2 (of 4) siblings have asked me, "when will I get some money " and several grandkids want to get in her house to grab furniture and kitchen stuff. I have an appointment with the lawyer and am not letting anyone in the house!

Mallory, I am sorry for your loss and that you are having to deal with so much family wanting so soon.

I too am sorry that your mother is no longer with you, and am equally sorry for the inappropriate and selfish behavior of some of your siblings.

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.

Oh, Mallory, I'm so sorry - I thought funeral expenses were first anyway but I just hate you had to come up with it - guess would have just thought she would have had to or at least that you wouldn't - that's a lesson I suppose that the funeral homes make you even if they do have it? - glad you at least did or at least had the credit to get it - I have known of so many lately that neither they nor their family did - my dil's grandfather just passed and his kids were out doing car washes, grilling, bake sales, anything they could to come up with the money - nobody had any credit either, just realizing what a problem if you've run it up ahead of time - wow

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

wow that is a good idea, change the locks, will go over to Lowe's tonight and have hubby figure that out (he is nervous too, so will give him something to do). The lawyer was for once, very nice, and did talk briefly with me at the visitation, apart from siblings, which was good. I'll meet again next week. I did send out a "mass" email to everyone to just say, hold onto your wishes--I cannot let anything go from her house until I meet with lawyer and get it somewhat organized. I don't want to seem like I am telling them all what to do, but, I AM telling them to wait, maybe for my own sanity.
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.