Money in reserve versus 100% left to beneficiaries. Any advice?
I am trying to plan a smooth time after my parents both are gone. I anticipate to sell their home, will need some cash left in their checking account. However, (on the advice of their attorney, who is not Elder Care) they have every single account with beneficiary designation divided equally amongst 5 kids....this means no monies available to me to make their home presentable for sale. I am thinking they should keep a decent amount maybe 10k in an account, with their Estate as beneficiary, and could be used by me Executor for their final expenses of settling estate. Why did their lawyer not include that in his advice? Now I am faced with asking my parents to both go to their bank and fill out new forms & paperwork, which is a bit unsettling for my dad especially. I am wondering if anyone here can comment on the need for some monies, does about 10k seem adequate?
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Is there a lot of equity in the house? Mortgage all paid off? If yes, one can use the equity to pay for anything needed to help the house to sell, but the tradesmen would need to wait until the house gets a Buyer and it goes to closing to get their money.
You can sell the house *as is* which would save you time from running back and forth to the house, or handing out keys to all the tradesmen doing the work. Just reduce the house by whatever it would cost to update the kitchen/baths, new rugs, new windows, whatever is needed. Investors like *as is* houses as they can get a good deal on the price, go in and update, and flip the house for a higher cost.
As for the monies available, I would try for $20k.
Another problem that I see coming is how these accounts will all be equal if you as the POA are going to be drawing form those funds still over the years for their care and for their taxes?
I don't know how if $10,000 will be enough for remodeling the house to prepare it for sale? A lot of this depends on how much longer your parents live and what upkeep you will need to be doing to the house while they still live in it?
Maybe, I am totally off base, but this strikes me as being more complicated than it needs to be. For instance, my dad and step-mother set up their will to be equally divided between he two children and me with my part divided by certain percentages between myself and my two boys upon the death of whoever died last. My step-mother died in May of 2014. My dad is 89 and living at home with 24/7 care via three caregivers who work 8 hour shifts each. This arrangement frees up my step-sister who is the POA to spend their money on his care expenses plus on upkeep of the house. If he should still be alive and need to move to a memory care unit in a nursing home, the house should have been kept up well enough to sell without too much trouble or expense.
If I were your dad, I would find all of this very unsettling.
-parents ages & health - what is their assets like, can they afford to private pay for NH care if needed, or AL. Do they have about 300K, cause that is what they will need to do private pay NH at a minimum for a couple of years.
- is there insurance policies and who for beneficiary
- do they have a fully prepaid funeral & burial policies
- condition of the house right now and what are the comps & DOM's. This will give you an idea of what you might be able to get for the house. Personally I'd go to see a couple of homes that are similar to your parents house in sq ft and zip code. If they are all renovated to be sold, you are either going to have to do a lot of work to make it meet your area's comps or you get low $ investor money. It if needs a lot of work, there are costs and time involved for that - just how much of a sense of humor will you have to run to the house to pay a workman for the 8th time in a week. Your siblings will not expect you to get paid for your time on doing this sorts of things, I bet. The DOM (days on market) is important as if it takes 6 months to sell in your 'hood, that is 6 months of having to have the house kept up, maintained, cleaned and full utilities going on, all that costs.Perhaps the costs of an insurance rider for it being in estate and on the market. Buyers want & expect granite countertops, waterfall shower head, modern kitchen (thank you H>V) and they can easily find those. There could be something odd about the house, that is unplanned - like in a historic district, or watershed issues. If they have been in the house since forever, who is going to clear it? Old people homes filled with their stuff is just not competitive.
The attorney probably did what your parents asked for: to divide their $ equally. There was no planning done or reality check on the costs of aging - both of the aging of themselves and their house done I'd bet. If I was going to be names executrix of this, I'd take all their legal, details on the house and a face sheet on their assets & income and details on all the kids (& spouses) and go to see on your own an elder law guy. One thing I've found is attorney's do love looking at others work to point out all the things that should have been done. Also if you are executor you want to make sure there are funds to be able to pay your for your administration of the estate.
5 siblings means 5 in-laws and someone (there will be 1 in-law who is going to be a total butt rash I bet) is not going to be happy. 10K too too low.
Then comes along me, the Buyer, who isn't a fan of granite or stainless steel, and prefers a side-by-side refrigerator, butcher block counter-top, and all appliances to be in white :)
I believe if the accounts are still owned by your parents, then they have the right to draw from them to pay for their care and upkeep on their house. I think only co-ownership would mean an account would immediately go to the beneficiary like it did with my mother and I for she made me co-owner with right of survivorship of her personal accounts and CD's.
Anyhow, all of this sounds like a total mess.
Funerals prepaid. No debts (now) but if there's extended NH they don't have much funds left, in their 90's.
My mom says she can add me as co-owner to her personal checking account so we will do that asap. But all their IRA and other bank accounts, including mom's checking, are sitting there with beneficiary designations. So if the parents both died in their sleep tonite, does that mean all the 4 siblings would be awarded or somehow could cash in their share? Or is there some function that I as Executor have to (I hope) wait until all bills are paid, and adjust the accounts accordingly, before the sibs can cash in? They have roughly $250k in all accounts, not including home. I really don't want to have to pay any house-related costs out of just my share (and the sibs are as you guessed, not very involved & unreliable to pay back money they've ever owed me).
Dad is pretty all about control, isn't he? Sounds like mom will be amenable if things need to change, the day she stops doing daily laundry, I'd be concerned though.....
Really I'd suggest you take all things " parent" & you go on your own to see a NAELA elder lawyer to have them review what done so far and provide options.
Dad probably feels with 250k liquid, his home, that all is of no worry. 1 fall, trip on the stairs to the basement, or bad illness and you have to hire 3 Darcy's, their nest egg will be significantly reduced.
You want to make sure that IF there are funds, that you are paid -& separate from your inheritance - to administer their estate as executrix & have that in will.
Also ask your legal, about what the church your folks mention in their will tends to handle things. If its catholic or larger denominations, they have legal on retainer and may posed even more work for you as executrix.
Out of curiosity, which sibling or better yet their spouse will likely be the one to be unhappy no matter what?