[Robin]

Selling my father’s home (@$2-$2.5 mil bedore taxes) and need advice where and how to invest it to pay for his assisted care.

He is 89. Assisted living is @$15K per month. He has LTC. But they denied him currently.

Will reapply but in meantime selling his home to cover the costs.

Don’t need advice on assisted living, just investment advice please.

[Brittany]

I’m not an expert in assisted living pricing but 15k seems steep

[Linn]

Don’t sell til he passes. Step up in cost basis and way less to taxes. See an estate atty.

attempt to get a loan.

[Aarti]

Novice question. Why not rent an apt next to where you live and hire a senior care provider during the day?

Won’t it save $$$

[Mwikali]

You need about 20-25k/month, so about 200,000-250,000/year safe money.

I would do 3 year laddered CD locked up in 3montj,6 month and 1 year etc for the safe money.

I would also do bonds – depending on where you live you could also look into Municipal Bonds for year 4-6

The rest equities but that would be 25% or less in SP500.

[Tristan]

Since he’s needing a lot of money immediately, at least a large chunk generally should be liquid and low risk.

You could bucket some of it for growth while spending down the rest if it makes sense.

Do you know why the LTC policy denied it?

Can he not perform 2 ADLs or is he needing assisted care more as a product of lifestyle vs disability?

Thinking you may want to consider alternatives to selling the home if you are likely to get LTC going in the next few months?

[Rick]

Another vote for considering a heloc or similar. Maybe heloc to start, refi into a fixed when amount is bigger and rates lower, back to drawing heloc, repeat.

Tax free “income” along the way. Tax free cap gains at his passing.

Hard to tell if other income exists making it less than $15k for solely the house.

Also hard to tell is in home care in his current house is an option.

At least something to consider.

[Frank]

I’d use a reverse mortgage, but if you had to invest the money, I’d use something like the Vanguard Wellesley or Wellington Funds.

Don’t make this complicated or do anything illiquid.

[Scott]

An average 89 year old male has a life expectancy of about 5 years, so I assume he is average obviously you or his Dr have better insights.

I’d park what you need for at least that length of time in say a Treasury or TIP ladder.

Once you have the first few years covered investing conservatively in Wellesley or Wellington probably works.

You could add a year or two or three to the the bond ladder depending on risk appetite and his health.

Presumably the actual need is a bit less than $15k/month (ie if he has SS or a pension) and the need would be less if you can get the LTC claim approved (fingers crossed there).

You can try the reverse mortgage route however be mindful the loan has to be repaid within 12 months of entering assisted living (you only mention Dad so I assume there is no spouse who would stay in the home) so it is possible a HELOC is better once you factor in the RM fees.

If he is already in AL you would need to speak with an experienced RM team to be sure he would even qualify I’m not sure.

I understand the comments about holding on to the home but it’s not great to have an empty house, you and he may not want to be landlords and time dealing with the home is time not spent with your dad.

He ‘won’ the home lottery and might not be a situation where the tax tail wags the dog, but the cut may be large depending on when he bought it.

[Gallo]

Your best investment is a home health aide and have him stay in his own home. Whatever years he has left, will be spent in the peace and comfort of his home.

Your children will see a wonderful example of how to care for their elders and you will have the peace of mind in knowing that your dad is safe.

I have worked for 30 years in senior care and this is my best advice.

Most LTC insurance will cover home care, work with his doctor and the nurse they send for the assessment, to ensure that he meets the standard of care requirements.

[Heather]

My father-in-law went on hospice and has been with them since 2023. He qualified due to being on oxygen and not very mobile.

He pays about 6k per month and has money in stocks, cd, and funds.

He bought AI and tech stocks and was doing great until recently.

[Joel]

Sorry to hear about your dad.
Borrowed money spends the same as money from a sale, but it’s not taxable.

Delaying the sale results in a stepped up cost basis when he dies. You have to make a guess as to which works out best financially for everyone involved.

Given his advanced age, you will probably want to stay conservative with investments if you sell.

Vanguard Wellesley fund or just a short-term or intermediate term bond fund might work. Or CDs or Treasuries.

[Dalton]

Many others suggested a reverse mortgage, I would advise STRONGLY against it. Sell the home now instead of creating a much larger problem and headache down the road.

Put it in money market and laddered CDs with 25% equities IMO.

What would you do with the home? You have home maintenance, insurance among many other things. The loans are “non-recourse” but still very predatory in my opinion.

You can only borrow up to 60% loan to value and they will get their 95% of value paid back one way or another almost always.

Best case scenario you get $1.2m in a loan and a tiny bit of home equity with a big headache.

If for some reason you want to become a landlord- rent the home outright and if you can or want
to get home equity loan do that. Depending on his social security income/pension, etc.

On reverse mortgages, over half of surviving non-borrowing spouses will not be able to stay in their home after the borrowing spouse dies.

Most of the time they have 30 days and the foreclosure process.
I know this is just an opinion but I have sold a significant amount of reverse mortgage homes and it never ends pretty- almost all of them should have sold outright years prior.

Not just financially but it almost always leads to putting someone that is living in the home, homeless.

You as the executor become the bad guy that ruined their life- it could be a tenant, a niece, neighbors kid… almost always someone will need a little help to get on their feet finds a way to move into the home and becomes manipulative and uncooperative occupant.

[Gina]

Actually going to comment: was he a veteran? If so he might qualify for Aid and attendance pension benefits and selling the home first would knock him out of getting that.

(They don’t count the home as liquid assets… but if he has a home like that he might have other assets they do count, so that’s why I say “might”)

And no… this benefit is not just for VA homes etc. it can be used anywhere. Also… wow.. 15k per month!

Even here memory care w full med servicing is maybe 7500! This is why I always tell folks to get LTCI!!!

And how sad the LTCI won’t pay. my adopted mom had brain cancer and used it, and then for literally 2 weeks she was cognizant and coherent… that’s when they tested her and started denying her… told me to send her home (she would’ve burned the house down!!! Plus…). About 2 weeks later she went on hospice and they started paying again.

Crazy system
I hope you get it!
Finally: no step up in basis of you sell while he is still alive.

Gonna be a potential tax hit esp if he is single and only can exclude 250k (am a real estate broker and certified sr housing professional) Personally, I’d take out a Heloc or if he’s can be in the actual home with assistance, a reverse mortgage (very safe now after safeguards added a few years ago).

Then you’d get the stepped up basis.

[Author]

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