Real Estate, The Family Home, and the “70/40″ Conversation

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The financial crisis showed many that even the “best laid plans” may not work out.  The markets have come back, however – both in stocks and real estate – but it is more important than ever to plan for your retirement plus consider caregiving situations impacting your ageing family members and loved ones.
With many living well into their 90’s, family planning discussions are helpful and popular thinking is that “70/40” has become an important place to start.  At this point the parents are 70 years old and can voice their wishes and desires on how they would like to spend their senior years with their 40+ year-old grown children.  The discussion, held well before there is a point of urgency, can include scenarios of how to plan for the costs associated with these lifestyle options.
Here are several examples of how waiting to discuss downsizing or adapting the current home for safety can leave aging family members vulnerable and in difficult situations both physically, emotionally and financially.
Tom and Jenny lived on the 2nd floor of their 2 family home they had owned for the past 30 years.  It was getting very difficult for Tom to go up and down the stairs, and certainly most difficult to go the extra flight of stairs to the basement several times a day to get items stored there.
Rebecca had lived by herself in her 4th floor apartment for 20+ years.  It was becoming more difficult for her to walk to the neighborhood store and carry groceries back home.  Also her friends from the building had moved, leaving Rebecca feeling more isolated.  She had also been careless or forgetful, letting her sink overflow.  She had to pay the cost of repair for the resulting damage to the apartment owner below.
Stan and his wife Evelyn lived in the large suburban home they raised their three children in.  Since it’s now just the two of them they basically live in the kitchen, lviing room and bedroom with the rest of the home untouched on a daily basis.  Stan used to do the law and maintenance on the house but is now unable to do this upkeep because of a bad knee.  The lack of maintenance is starting to show, but Stan and Evelyn do not want to hire help as it would add extra expenses to their already stretched budget.
Each of these seniors (all well into their 80’s) have adult children who have tried to urge their parents to make life easier and safer for themselves at this point in their lives.  In each case though, the parents are very reluctant to now consider this new idea of making a move.  They are all adamant about staying in their home and resistant to change.
By starting these important family conversations years ahead of when the senior move is urgent or necessary, the issues become apparent and problems can be solved in advance with better research and planning.  Besides exploring and introducing the senior to different types of adult living or care communities, thought can be given to how to adapt their current home to in fact age in place, if that is the desired outcome,  Working with a team of professionals, ie. an elder law attorney, financial advisor, real estate expert and contractor certified to adapt the home for aging adults, can provide comfort to all involved – the senior and their family members.
For example, well before there is a crisis explore these and other options for homeowners who need to access funds to pay expenses and remain independent:
- Reverse mortgages (homeowners must be 62 years old.  Check with your financial advisers.
- Home equity line of credit.
- Single- purpose loan (check local Area Agency on Aging as these loans offer alternatives for    home repair and offered by state and local governments.)
- Sale of the home.
- Sale-leaseback plan and life estates. (Senior can remain a life-tenant – check attorneys.)
- Property tax relief programs.
Starting at the “70/40” point and reevaluating these initial thoughts and plans every 3-5 years will let the senior better understand all the issues involved and highlight new information needing to be updated well before there is an emergency situation.  Clearer thinking can result in better preparation for the changes needed as the inevitable aging process continues.  Families involved in this communication process can experience less resistance from their senior parents and a smoother transition to the next lifestyle setting.  Most important the seniors will feel involved in the change and able to maintain their independence and dignity – what we all would want!

-Helen Keit, The Keit Team