What if you move into a retirement home, sell your house and give the house money to your son or daughter – is that a good idea?
George, age 84, did just that. His wife died this spring and he no longer can take care of the family home – too many chores and too many memories. He sold it for $150,000 in cash. The only other asset George has is a $50,000 bank account. George’s monthly income between social security and a pension is $3,000. His new retirement apartment will cost $2500 monthly. George walks with a cane, and has trouble getting out of a chair.
Bill, George’s only child, is out of work. Bill told his father he is behind in his bills and could use some help. George decided to give Bill all of the house sale money as an early inheritance, the only “legacy” he expects to provide. Bill told George that they can’t live together, as they are both too set in their ways.
Is this a good idea for George to be so generous? Probably not.
The problems being ignored by George are scary.
- If George’s health continues to deteriorate as he ages, he may need more help than is provided in a retirement home. This means his monthly expenses will increase to more than his income. If he needs help in an assisted living facility the average cost is about $4500 monthly, and for skilled nursing care, that costs an average of $8000 per month. George’s rainy day fund of $50,000 will quickly evaporate making up the difference.
- If George runs out of money, how will he be able to live and get the care he needs? Medicaid, the government program, will not pay George’s bills if he needs help within the next 5 years, because he gave away the money from the sale of the house. It is highly probable that Bill will not have the ability, and maybe not the desire, to give the money back to George if George needs help.
Is this the ultimate self-deception?
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****************** UPCOMING SEMINAR *******************
Free public seminar – SATURDAY, November 5, 2016 at 10:00 a.m. and 2:00 p.m.
Join us for this informative seminar, sponsored by Susan M. Graham, to help you understand ways to create your Estate Plan and at the same time increase your retirement security – bring a friend or two!
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