My mom is 91, just fell 3wks ago and broke her hip. She was already with other medical issues. My step father has dementia. We have 24/7 care, running us around $6,ooo a wk. Money is starting to run out, we dont want them to be separated or leave their home, my mom has begged me not to do that, I gave her my promise. We are looking at a reverse morgage. I am the POA, but what if my stepfather can not sign the papers? I dont have a lawyer, and wonder if anyone has any advise? I am going to contact a lawyer, what kind do you suggest?

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I looked at this as a math problem, which it is, then did some reverse mortgage calculations based on current rates and offers.

You say the current living-at-home expense is $6000 / week (!). For one year, that is $312,000. If the house is worth $1.5 million, you can get almost enough out of it to cover that weekly cost in the first year. The second year the house value for the reverse mortgage will run out in about 9 months. So, you will get not quite two years of reverse mortgage revenue to keep them in their home as-is. That is not a lot of time. What is their house really worth? Adjust the numbers from there. There are online calculators to help you estimate. Remember, the reverse mortgage companies have to make money, too, or they couldn’t do this, so consider you are giving up value of the house compared to selling it outright.

Whatever you do, make sure you do the math and read *every single word* of the paperwork. And figure out what you will all do when that money runs out. My mom is your mom’s age, 91. She broke her hip a year ago, and is still doing well. Actuarial calculations from the US government Social Security Administration suggest she could live to be 96. A major insurance company suggested she could live to be well over 100. So, consider carefully the best use of their assets to make them most comfortable and happy for the maximum amount of time, rather than burning through all the resources too quickly in an unsustainable way.

I do understand those promises, though.
Helpful Answer (17)
Reply to Goddatter

Get an elder care attorney. Place them in a facility. Get them the care they need, not what they want.
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Reply to Bridger46164
Live247 Oct 19, 2021
Yes, you make an important distinction - what they need rather than what they want. The elders can't imagine what they need, they just seem to want nothing to change or at least remain the same as they remember it, which is not possible when their needs are so great and money is so finite.
There is such a professional as a Medicaid Planner, although I don't know how common they are (I found one in south FL). You may want to also consider an accountant or financial advisor. Unless their home is worth a lot (like at least 1 million) I'm not sure even a reverse mortgage will last long for 2 people needing 24/7 care...and then what? They''d be moving somewhere else (and please -- not your house). At that point a facility will cost less monthly and you won't be worn down to a stub.

Many a loving adult child was made to "promise" against NH care, but IMO this does not stand because they don't have any idea of what they are agreeing to -- and it's mostly based on the elder's past (bad) experiences with NHs or ignorance about modern ones. Many today are so much better. They'd get all the care they need plus social exposure, and the facility will most likely allow them to be together if at all possible. Transitioning them (at some point) to facility care does not mean you don't love them. It's just the reality of the situation and the only real solution based on their finances.

Please do not not not even think about mortgaging your own future in order to appease this unrealistic demand. Do research, talk to professionals and go into it with your eyes wide open. Start by reading posts on this forum under the topic Caregiver Burnout.
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Reply to Geaton777
rovana Oct 18, 2021
I agree about such promises. I don't think they are binding because in nearly every instance, there is an element of guilt coercion, which would invalidate a promise. But really, how can anyone promise such a think when the future is unknown?
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Graves, you're wise to raise these issues before moving forward, and there are a lot of issues.   Get a cup of coffee, or glass of lemonade as this will be long.

1.   Legal issues.    Barb's right; find an elder law attorney.  If you need suggestions on how to locate one who's reliable and experienced, post again.  I spent almost all my working life in the legal environment, private sector mostly but some governmental work as well.

2.   Do research on reverse mortgage firms; compare interest rates, reputations, and as much as you can learn about each of them.   AARP may have some online information to share.  There are some shysters out there.  

3.   Estimate how much money you could get.  Geaton777 raises a good point, i.e., sufficient funding for as long as possibly needed, and as we both know, that could be years or decades.   

4.   If you can't get a reverse mortgage that theoretically would last for the remainder of their lives, what other options would you have?   TNTechie raises good points, as this scenario may actually come into play.   (Have you contacted Medicaid  yet?)

5.   The RM scenario raises the issue of who would be mortgagors (borrowers)?  Your mother would have to sign, but if your stepfather has dementia, based on his cognizance level, he may not be able to execute legal documents.   Do you have medical support or advice for his level of cognizance?  Would he understand the implications?

6.   If you're asked or told by a RM company that you have to sign, individually, be wary. If you sign, it should be only pursuant to authority under a DPOA, not a limited POA.   This could be raised with an attorney to ensure that you do have that authority.   Do NOT sign a separate Guaranty and don't even consider guaranteeing the loan.

7.   You and your family should NOT be co-signers, as that would obligate you to make payments, including after your parents pass, and may affect your credit rating.   Your mother and stepfather should be the only mortgagors, with obligations limited to them.   That would protect you from a payment commitment.  

8.  You queried what would happen if your stepfather can't sign?   The alternatives I can think of are that just your mother would sign, or if he's executed a DPOA and authorized you to sign, you could sign as proxy, but ONLY as proxy for him.  

This is where an RM company could become manipulative, advising that you (and husband?) must guarantee the loan.   That would obligate both of you under circumstances which would be defined in a Guaranty, a separate document than the loan documents.

8.   I'm assuming that your mother is in rehab post hip break?   That's the best way for her to recover, followed by home care through an agency.  

9.   Check out what assistance might be available through your community in terms of home adaptation.    I don't know if this is still applicable in my community, but years ago it annually received a HUD grant to help residents in need with various home improvements.   The County also has a home improvement program.   The interest rate was nominal, and the indebtedness was forgiven on death.

This could help with in-home adaptations, such as grab bar installation, ramp, etc., depending on the current scope of included work.

If you have questions, feel free to ask; nothing is off limit for explanation when you're facing a financial situation such as you describe.

ETA I didn't see the most recent 2 posts until after I completed mine. I was in no way intending to ignore their suggestions.
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Reply to GardenArtist

$6,000/week = $35.71/hour. Seems very steep to me, but I guess it depends on the area of the country and the level of care. That would pay for a VERY nice assisted living apartment plus some extra help beyond what the AL place provides, assuming the house is worth a decent amount and can be sold. Find some place that allows for transition to a MC unit if/when stepfather needs it or to LTC if either person needs that level.
Helpful Answer (7)
Reply to newbiewife

Unless this home is literally worth millions and millions of dollars, there is no reverse mortgage that will provide 24,000 a month to allow this couple to remain inhome. That is for a start. Reverse mortgages are very tricky. In some if one or both leave the home for care (something that can happen at any moment in this case) the mortgage is fully payable, involving a need to sell the home.
From almost any aspect this not on does not make sense, but will likely also be impossible for any POA to do. It would involve a very very liberal and complete written POA for BOTH owners of the home, both on title, and here you have two who are not mentally capable of doing this.
This is very very dicey and not something to discuss with any forum, no matter how smart you may think any here might be. This is purely and simply a legal question for which you need the advice of a Trust and Estate AND an Elder Law attorney; this is paid for by your POA for your stepfather. Take your papers to your appointment and a list of your questions. Wishing you good luck.
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Reply to AlvaDeer

Sorry about your difficult situation. Please contact an eldercare attorney right away in your State and County to discuss the reverse mortgage options BEFORE making any decisions. Unless your parents have sufficient property equity for their care and home upkeep, plus their income will help, their money may run out. Also think about what may happen to their home if your mother and/or stepfather needs to move into a NH and never return home. And do not co-sign any type of loan without careful discussions.
Helpful Answer (7)
Reply to Patathome01

Graves30: Imho, while they seem like a grand plan, Reverse Mortgages are not what they may seem since this mortgage loan will have to be repaid - when the time comes. That's correct - you would be borrowing against the equity of the home and that loan becomes due by the heir of the RM. It is very wise for you to seek counsel in the form on an elder law attorney about the legal ramifications of a Reverse Mortgage.
Disclaimer: I do not profess to be a seller of RM's, nor am I an attorney as there are some on this thread who are pro RM's. I am merely responding to the OP's question(s).
Helpful Answer (7)
Reply to Llamalover47

I wouldn’t worry on his ability to sign the paperwork as RM tend to be somewhat casual on this. I would be concerned if he could do the required “counseling session” with a Q&A in order for the loan to be completed. Each of them would need to be relatively competent and cognitive to do counseling. If it’s a federally backed RM, those loans are strict about participation. If mom is on pains meds, those often cloud judgement and your are told not to do anything legal till drugs have run their course.

if all this is in reaction to your moms recent fall, just 3 weeks ago, I’d really really REALLY suggest that you give it another few weeks to better determined exactly what her needs will be and just how much step dad dementia increases due to moms change in abilities. That 6K may not be enough $ to deal with 2 elderly per week.

RM imo are generally a bad idea, my thoughts why:
1. Not enough $ to pay for in home care needed
RM tend to actually pay out 50%. How long would that $ last along w/ their current income to pay for 24/7 in home care for TWO elderly? I’d suggest that you find out to exactly what “Value” the RM will use. It could be their current tax assessor $ amount or that the RM will require an appraisal beforehand. If house has lots of delayed maintenance, it could actually come in way under assessor value, as assessor value is based on comparables of recent sales which likely have reno homes in the same zip code. It could be even less $ than initially anticipated.

2. compliance issues for house:
So what shape is their home in? And what is their insurance currently like? RMs require the homeowner to be current on all hazard insurance’s and pay taxes and do whatever maintenance and upkeep needed on the house. Do they have the $ for this and pay for 24/7 caregivers? The insurance will have to be for whatever the value of the house the loan is based on. So if it’s 200k RM on 400k home, they will now need 400K of homeowners insurance plus any other insurance for your area like flood, windstorm, earthquake. If mom was used to paying $678.90 annual for HO on her paid up home, that’s not happening. They will need new peril coverages. RM may offer to wrap this in the loan…. But it will be a more expensive cost.
On the maintenance, they have to keep the house up. So if a hail storm comes thru, they will be required to get roof repairs / replacement done. Should taxes not be paid, or obvious maintenance not done, the RM can call in the loan. Like 90 day demand and if not done, the loan is due in full or RM acquires the home and puts it up for sale.

The RM is guaranteed from the feds whether or not the elder lives there. It is not to their advantage to be all nice and understanding on why maintenance isn’t being done or property taxes were paid late.

3. do you live in the home so need to continue living there after they both die? If so, you have abt 6 mos to come up with funding to pay off 90% of loan & all fees if it’s a federally backed RM. Fees could be quite a bit.

Waiting to sell to family or having elderly live there forever is not in the RMs best interest; they need elder out & then sell asap (usually to flip) & get balance (if still is one) from the feds.

Just what’s the situation with step dad? If mom predeceases him, what are you going to do about his continuing to live there? If he has kids or heirs, they could be quite difficult on this should you want him forced into a NH. His oversight likely ends up being on you.

where is your mom right now? Most of the time they are discharged from a hospitalization directly to a NH for rehab (all r Medicare benefits). Is mom in rehab & if not, is there a medical reason as to why not?
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Reply to igloo572

There are alternatives to reverse mortgages.

I am a financial planner in Canada. The information I am sharing is general in nature, not specific advice for your parents. I am also an Elder Planning Counselor.

A Home Equity Line of Credit, HELOC, acts as a second mortgage, but is not a reverse mortgage. If the home is fully paid off they may be able to get up to 75% of the equity in a HELOC, it would have interest only payments and would be payable when the house was sold.

But depending on their income levels, they may not qualify unless you or another family member co signed. This is not a good idea.

This frees up more funds than a Reverse Mortgage does.

But the bigger issue is your noble promise to your parents. Dad has dementia, he will get worse in ways you cannot begin to imagine. Mum is falling, having care providers will not prevent further falls. Nor will being in a nursing home.

Is the home fully accessible? Bathrooms etc?

What if the choice for your parents us, you can stay together if you move into a nursing home together now, but if you stay here until all the money is gone, you will be placed at the whim of Medicaid and will not have a choice in where you end up?

Are you POA for both parents? Does your POA allow you to enter into a RM or any other debts on their behalf?
Helpful Answer (6)
Reply to Tothill
Goddatter Oct 19, 2021
A point to emphasize most strongly: Do NOT co-sign any loan!

A default does not mean taking over payments. It means the entire due balance is called for immediately.
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