Elderly relative paying you rent? Please read post

[Seasider]

Slightly different situation, but for comparison:

 

Our severely disabled dd turned 18 and is now legally an adult. She gets social security and the advice/instructions given to us by social workers and other parents who have walked this road before us was to charge her rent. It sounds heartless but it actually makes some sense and relieves some stress. Her social security payment is based on whether or not she pays rent--she would get a much smaller amount if she didn't pay rent. And her rent does actually help us out--we're able to fund some house projects that are popping up. I cannot be paid for all of the care I give her (because I'm in charge of her finances--can't do both), but getting a little rent money really does help me do my care giving cheerfully and not really carry guilt about not working outside the home. In the situation you describe, I would charge a monthly rent and not worry about other household expenses (which is a lot of work to track).

I know this is sort of an old thread, but as I have been reading I have come across what Ali speaks of above.

 

The elder person's social security amount may be reduced (by as much as 1/3, from articles I've seen) if they are allowed "in kind" provisions such as room and board. Also, there's a chance that an application to Medicaid for long term care may be rejected if it's shown that the elder has a place to stay with family. A written tenant agreement is recommended to protect all parties and have documentation for the cost of eldercare by a family member.

 

I just wanted to chip in here because so many of the responses above - wonderful, thoughtful responses - are based on sentiment and sense of duty. The sad fact is that decisions must often be driven by financial circumstances.

Edited August 29, 2016 by Seasider

[Ravin]

Here are two scenarios:

 

a) frail but not unwell elderly person comes to live with you, has own room and bathroom, and use of the whole house; she eats with you and you run all her errands (she doesn't drive).  The room is lying empty and would only be used for occasional visitors if she wasn't there.

 

b) the same as a) but you had hoped to start making money from the room through Air BnB (you live in a tourist area).  You don't need the money for everyday expenses but Husband is underemployed and approaching 60, so you want to prepare for your own old age by saving what you can.

 

In each scenario, would you ask the elderly person (who has means and wants to contribute) to pay a share of the household expenses - food, heating, etc. - or household expenses plus rent?  FWIW, the elderly person's will divides the estate (which may well be close to zero by the time she dies) between all her children equally.

 

I would want to balance the expectations and needs of the elderly relative with my own. So, I would probably go ahead with the rent situation, at a rate you would not offer a stranger, and put that money away. I would save it in case at some point the adult relative's needs intensify, such as needing to hire an in-home caregiver for that relative that isn't covered fully by their insurance. I would let it sit there until after they are gone or until it's needed (more examples of when I'd tap such money: major repair to the home necessary for quality of life of everyone including the elderly relative, or modifications to the home for the comfort of the relative).

 

However, if I am an heir or named in the person's will, I think I would want to get it in writing from other heirs that they agree the arrangement is fair, and to cover bases would probably want someone else than me to have power of attorney for them if they need it down the road (over their finances, not necessarily medical power of attorney, that I would be okay with if they wanted me to have it). There is a concern there that other family members might see you as bleeding the elderly relative for money, money which they would rather have line their pockets as inheritance (while they sit back and do nothing to step in and help care for relative).

[Orthodox6]

BTDT.  My father voluntarily contributed some money each month; however, we never felt comfortable accepting it.  We would have taken care of everything ourselves happily.  As it was, we spent more on him than he contributed, but successfully hid that fact from him.  He lived with us for 3-1/2 years, which was a treasure beyond price.  Unbelievable amount of stress and labour for us, but so what?  He died nearly one year ago, and we all still miss him deeply.

 

Seems foolish ever to build plans around an inheritance.  One can die any day, including before said inheritance arrives.

 

Dad's attorney occasionally pushed us to set up a lease agreement.  We told him that was unacceptable.  Social Security payments never were in jeopardy.  Medicaid was not an issue because where we live, one must first enter a nursing home as a private pay resident, then hope/pray that a dual-certified bed becomes available.  Places will not accept a prospective resident who wants to begin as a Medicaid resident; administrators will invent all manner of obstacles to accepting such a patient.

 

Edited August 29, 2016 by Orthodox6

[Laura Corin]

I know this is sort of an old thread, but as I have been reading I have come across what Ali speaks of above.

 

The elder person's social security amount may be reduced (by as much as 1/3, from articles I've seen) if they are allowed "in kind" provisions such as room and board. Also, there's a chance that an application to Medicaid for long term care may be rejected if it's shown that the elder has a place to stay with family. A written tenant agreement is recommended to protect all parties and have documentation for the cost of eldercare by a family member.

 

I just wanted to chip in here because so many of the responses above - wonderful, thoughtful responses - are based on sentiment and sense of duty. The sad fact is that decisions must often be driven by financial circumstances.

 

Thanks for the contribution.  My mum's state pension (equivalent of SS) is not dependent on her living situation - it is payable to her wherever she lives.  She gets NHS healthcare as a resident of the UK, so that's not relevant to her situation.  If she needs to go into a care home, paying for that will be based on her capital/income and her ability to perform personal care tasks, not whether or not she lives with us.

 

Mum did end up living with us.  She pays 1/4.5 of the household expenses, including transport, council tax, the interest portion of the mortgage, etc.  So it's not rent, but it's a very full contribution to expenses.  She doesn't share the cost of our personal spending (clothing, entertainment) or holidays (vacations).  Her contribution makes it more likely that we can stay on in this house for her active lifetime.

[kiwik]

Yes. It is more like NZ although the living alone pension is slightly more than the sharing accommodation one. We do have the use up your savings when you move into government funded care though so spending any spare money on making the house more suitable makes sense.

[wintermom]

 

Mum did end up living with us.  She pays 1/4.5 of the household expenses, including transport, council tax, the interest portion of the mortgage, etc.  So it's not rent, but it's a very full contribution to expenses.  She doesn't share the cost of our personal spending (clothing, entertainment) or holidays (vacations).  Her contribution makes it more likely that we can stay on in this house for her active lifetime.

 

Thanks for giving us an update. I think you have a wonderful situation there for your entire family. I'd do the same, if the situation ever arises. With dependent children, that would definitely be my financial and moral priority over a parent or relative. 

[Laura Corin]

Thanks for giving us an update. I think you have a wonderful situation there for your entire family. I'd do the same, if the situation ever arises. With dependent children, that would definitely be my financial and moral priority over a parent or relative. 

 

Thanks.  There's still a big question mark however: Husband's income is quite variable and we fear that it might not be solid over the next few years.  He is trying to work out if we can sell our current rental property and make more from another kind of property.  We shall see.  It's going to be hard if we are essentially losing money by staying on in this big house.

[Bluegoat]

I chose other.

 

I don't think that paying or not paying is really something that can be set out, if the person can afford it.  If the elderly person cannot afford it, well that is that.  If they can it will probably depend more on family culture and such.  For our family, I would probably only ask if it meant the difference between actually being able to have the person there or not, so expenses.  I wouldn't expect the money to help with paying off the mortgage or making us a profit in any way.  I do think that if the elderly person can afford to pay a rent, it is a really nice gesture, especially for a family that isn't rolling in extra money.  If I were the relative I would feel obligated to do that.

 

For me, whether you intended to make money off it or not makes no differnce - family needs come first.  If I suddenly became pregnant and we needed a new room, it would go for that.  If my mom or aunt needed a home, it would go for that.  Too bad for the money-making idea.

 

Now, if I advertised a space for rent, and my elderly relative who had other choices wanted to rent it, I might treat that more like a business arrangement.  It would be important to talk about expectations there, I think.

Edited August 30, 2016 by Bluegoat

[wintermom]

Thanks.  There's still a big question mark however: Husband's income is quite variable and we fear that it might not be solid over the next few years.  He is trying to work out if we can sell our current rental property and make more from another kind of property.  We shall see.  It's going to be hard if we are essentially losing money by staying on in this big house.

 

Good luck! Tough decisions, for sure. Our good friends just down-sized in a huge way, from a 25 acre large home to a tiny, in-town home. So far, they are very happy and a lot less stressed about finances. There is a lot less up-keep in their new place as well. 

[TechWife]

I have no idea. Right now my brother is living in my parent's home and taking care of him along with one of my sisters, who is staying there part-time. We also have a part-time aide two days a week. Here, the part time aide is expensive and the balance due after my dad's VA pension is paid by myself and my husband. If my parents had money, I would much rather them pay it. So, with that in mind, I would rather the money be saved to pay for whatever care will be needed before the person qualifies for government assistance with care. I would also be comfortable receiving money to cover food expenses if the elderly person insisted on paying something. I would also expect every cent of their money to go towards their care in their final years. I would not make any decisions based upon what happens to the estate after the death of the elderly person. 

 

[Truscifi]

I would ask for a contribution to household expenses. I would not ask for rent, but would accept a modest rent if it was offered.

[ktgrok]

Yes, here in the states it is a good idea, in order to spend down the savings in order to qualify for medicaid. Basically, if they go into a nursing home they WILL end up on medicaid anyway, after spending all their savings on the first many months of care. So either way, no inheritance. Makes sense for that money to be spent on "rent" or caregiving, or whatever. It's actually advised by elder care lawyers. 

[TranquilMind]

I couldn't charge my mom, but then she would have wanted to contribute here and there and would have just done so. 

 

About the Airbnb thing, maybe you could make it a joint venture with mom taking some ownership?  What if you rent out the room say on "high season" in your area and Mom sleeps either in another part of the house or goes to stay with a sibling or something for a couple of weeks here and there.  And then you get to make money that way and she helps in that way.  Maybe you can pay her a percentage for giving up her room. 

[Bambam]

I don't really see a difference in the scenarios.

 

You are allowing a family member to live in an unused room that you could rent for $$. She is willing and able to pay. Let her pay.  

 

She would be paying much more somewhere else with room and board and errand-running services.  Point that out to any other siblings who might be upset that there won't be any money left to inherit. It could be that they might have needed to contribute to her living expenses if this option wasn't available.

 

 

 

[Guest]

Here is what I would do, in a generalized sense.  YMMV by the case.  

 

If my mom were to come to live with us (impossible because of our house situation), she would want to pay rent, and I would absolutely accept it.  She would, as a matter of fact, want to pay above-market rent (not a lot but a little) as a way of transferring our inheritance without incurring inheritance taxes.  It would also be a legitimate spend-down on the path to Medicaid, should that be required.  

 

AND I would bank every penny of it.  As long as she could pay for her medical, she would.  If she had to go into assisted living, I would give the banked money toward that.  And if she ended up in a long-term care facility on Medicaid, I would use the banked money to make her life better in any way I could.  And at the end of her life, I would use the money to provide for a sensible funeral (not one intended just to spend the money) and then split whatever was left with my sibling/s.  

[ktgrok]

Here is what I would do, in a generalized sense.  YMMV by the case.  

 

If my mom were to come to live with us (impossible because of our house situation), she would want to pay rent, and I would absolutely accept it.  She would, as a matter of fact, want to pay above-market rent (not a lot but a little) as a way of transferring our inheritance without incurring inheritance taxes.  It would also be a legitimate spend-down on the path to Medicaid, should that be required.  

 

AND I would bank every penny of it.  As long as she could pay for her medical, she would.  If she had to go into assisted living, I would give the banked money toward that.  And if she ended up in a long-term care facility on Medicaid, I would use the banked money to make her life better in any way I could.  And at the end of her life, I would use the money to provide for a sensible funeral (not one intended just to spend the money) and then split whatever was left with my sibling/s.  

 

All this. It would allow my mother to be on medicaid in a facility, and me still be able to buy her a new robe now and then, or whatever. It's honestly standard practice in the USA. My grandmother needed nursing care for about 2 years before she had to go into a facility, and my mom, as an LPN, was paid to do it. She moved in, had round the clock care from my mom, and my mother was paid the going rate. It worked out well. Otherwise that money would have gone to the nursing home she eventually ended up in.

[Pen]

I'm not expecting any inheritance.

 

In-home help is free in Scotland, but it's not always great quality or very reliable.  Nursing home care is subsidised: you pay the 'hotel' costs, but social care is free.  When you run out of money, the state steps in, but you sometimes need to move to a cheaper facility at that point, which can't be fun.  

 

We are planning our retirement to put as little strain as possible on our children: money, housing, etc.  But who knows what will happen?  For now, my children like having my Mum around.

 

 

Can I move to Scotland? It sounds nicer than here.

[Laura Corin]

Can I move to Scotland? It sounds nicer than here.

 

Honestly, I don't think most of that will be in place by the time I need it.  It's 39 years until I'm Mum's age, and costs are rising year by year as we all live longer.  That's one of the reasons that I'm concerned about setting ourselves up for retirement, so as not to be too much of a burden on our sons.

 

[Halftime Hope]

Seems foolish ever to build plans around an inheritance.  One can die any day, including before said inheritance arrives.

 

We just went through some of this discussion in our extended family since my brother and SIL cared for my parents until my dad passed in March. 

 

Ironically, it was my father who was overly zealous to guard his expenditures; we would have rather he used some of the money on making memories while he was able to enjoy them.

 

I am grateful there were enough funds to hire the additional caregivers he needed, but he really didn't want to spend money for that either.  I would have preferred a healthy balance of priorities. Sigh.