My parents are selling their house to move out of state to live by us. What should they do with the equity? - AgingCare.com

My parents are selling their house to move out of state to live by us. What should they do with the equity?

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Mom has Alzheimer's but not bad enough to require in-home support yet. They will earn about $170k in equity from the sale of their home. What would be the wisest thing to do with that money?

My thinking is they should purchase a modest home in the new state using a large down payment so their mortgage is affordable. This would leave them a lot of cash in the bank to pay for private care for Mom when her dementia worsens. I think dad would prefer forking out $5k for a private care place rather than using a state-run facility, at least early on.

Or they could use most of their equity to practically buy a home outright. Aside from drastically reducing their mortgage, what advantage would this bring in light of the certain decline in Mom's condition?

Can you think of other scenarios or angles to consider?

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Look for a senior care community that can ramp up from a simple senior apartment, to assisted living, to skilled care or memory care....this seems to be a trend that makes so much sense.
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I wanted to update this in case anyone is in a similar situation. We consulted an elder law attorney on this question and she suggested my parents sell the house and use the equity as a nest egg to improve their immediate quality of life. So rather than buy another house, they would lease in the new state and enjoy life. Living in a cheaper area would allow them to hire in-home support and maximize Mom's ability to live at home. When Mom ends up qualifying for and needing long-term care, by that time the equity will likely be down to a level below the maximum allowed by the community spouse ($119k in many states).
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Thank you all so much. Clearly I was not thinking through this very well. I considered renting but was nervous with the idea of moving them twice. And they really don't have other assets beyond about $4k in fixed income combined and the potential equity.

We are fortunate in that the state they are moving to has lower cost care compared to most. It doesn't offer a lot of options for transitional living but there is a facility that starts independent and offers skilled and then memory care. That really does seem ideal in light of the comments here.

Another consideration is that my father is aging rapidly and has enough health issues to preclude him from heroic home-care for Mom. He may go before she does.

Unfortunately they have to move because they are not affording it here, and so it is best for everyone. Mom's early onset Alzheimer's has been diagnosed for two years but her test scores have remained almost the same since then, so her decline has been very slow thus far. She may very well end up living 10+ more years whereas I don't see Dad making it that far.

Thanks again for your frank advice. I am the only child who can help and this is a major task for me.
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Ok so 170k and what eise do they have as assets?
The reality of LTC is that unless they have a solid mid-six figures in assets, they if they live long enough they will run out of $, the caregivers will run out of steam and they will need a NH and will apply for Medicaid. Pam is spot-on on the costs. Really 10k is the AVERAGE cost, many east coast states it's much higher. The costs of health care for elders is staggering.

What plan is best really depends on where you are & what facilities are available & whatever the reality is for their needs.

I'm with the rent a place for them group during this transition phase. See if there are ground floor patio style apts or condos for this that are senior independent living. If there is one that is partnof a "tiered" or continuing care community that could be ideal. Problem with these are that more & more they have a large 6 figure buy-in that may not be affordable. I'd do a 6 mo lease. During this 6 mos, you get all their legal updated with a NAELA certified elder law attorney; buy them a fully prepaid funeral & burial policy that is Meducaid compliant; move their $ to a local bank and get yourself or whomever is going to be the DPOA as a signature on the account with it POD to the DPOA; find a home health agency to help out 2 -3 days a week from the beginning; get them new docs.

I bet you find that mom's cognitive ability is even less than anticipated & Dad has been showdogging for you when you've visited and now that you can see them daily, well he too has his own issues.

You have lots of homework to do before they move to your state. Start now so you are not overwhelmed. Good lck.
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If at all possible, your parents should not buy another home... because as elder age they hang on tighter and tighter to the house and refuse to move to something more elder-friendly like a retirement village, independent living, assisted living, etc.

At least at a retirement village they can meet new friends from their own age group, enjoy dinner in a common dining room or on-site restaurant.... some complexes have on-site doctors, bank branches, hairdresser/barber, transportation to doctor appointments/grocery stores/mall, and activities. Your Dad will need to have buddies to talk to, and hang out with as time goes on.

If your parents bought another home, guess who would be doing all the running around at a later date? You. Guess who would be doing all the maintenance at a later date? You. It is very exhausting trying to run two households.

There will come a time where your Mom's Alzheimer's gets to a point of needing 3 shifts of caregivers, because as your Dad ages, he won't have the energy to do it all himself, even one shift of care. My Boss' wife had Alzheimer's for 15 years and he took the night time shift, he was lucky get to 3 or 4 hours of sleep.
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I think the larger question here is what are there other assets and what is their income, aside from the equity in their home.

In their shoes, regardless of what the answer is to the above, I would get them to a certified Eldercare attorney and let her/him look at the situation from the perspective of preparing to get mom qualified for Medicaid down the road while leaving dad enough to live.

One thought is to look into continuing care communities where they could both live on a private pay basis. Make sure that it is a facility that will accept Medicaid when the money runs out.
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I wouldn't buy again. Could they get an apartment in a place near you until they need more expensive care in a senior facility? It is incredibly expensive to be in a facility. My mom is paying almost $4k a month for independent living. So if they can manage in a normal or seniors only apartment for a while, I'd put their money in a bank account or bonds - something safe and fairly liquid. I would NOT put it in another mortgage. They're past the point of owning a home, in my opinion.
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Dad is going to fork out more than $5K a month for Memory Care for mom. That $170K will cover her for about 17 months. Hate to burst your bubble.
Moving mom will cause the Alzheimers to bloom immensely. She will not be able to pack, let alone move and the stress will put her over the hedge.
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I wouldn't buy, again. Something could happen to your father and your mom couldn't live alone. Could they enter an independent living facility? Then, they would be established there, if your mom ever needs more care. They are going to need the money for their health care and you will be shocked at how quickly it goes.
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