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Siblings shared financial responsibilty to widowed mother
Old 07-16-2017, 12:02 PM   #1
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Siblings shared financial responsibilty to widowed mother

My dad recently passed away and my three siblings and I are committed to making sure my mom can financially maintain her standard of living during her remaining years. She is an active 78 y.o. and is in good health. Her income consists of Social Security and approximately $100k in investments which I have recently taken over the management of. She lives in a senior mobile home community so other than the value of her mobile home (maybe $30k) she does not have any other assets. I estimate I will need to withdrawal approximately $8,000-$9,000 per year from her investments to keep her at the same financial level as she was when my dad passed away. She does not have LTC insurance so I have not figured in health related expenses yet. Her four siblings are in the middle and upper middle class income level so should be able to support her financially if her investments run out or she has major medical expenses or needs LTC.

So I have a couple questions I am seeking advice on:
1. What happens if one or more of the siblings unexpectedly dies before she does? The financial responsibility will then be spread out over fewer people as I expect the remaining spouse will not want to contribute to their late spouse’s mother-in-laws finances.
2. Would it make sense to start having the siblings contribute now and keep it in a separate investment account in case it is ever needed? If my mom dies before her money runs out then her assets will be equally divided among the siblings. If one or more of the siblings dies before she does then they will have contributed something to the overall pot and the financial burden will be less on the surviving siblings.
So I am seeking any advice you can offer I am sure there are plenty of people on this forum that have dealt with these similar issues.

Thanks,

f4
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Old 07-16-2017, 12:14 PM   #2
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If it was me I think I would get buy in from your three siblings to each put $100/month into a 50/50 equities/bonds account. That would be $4800/yr. Your mom can take out 8K/yr from the 100K she currently has. That is a 8% withdrawal rate for year 1. The withdrawal rate will increase each year (unless market returns >8%). When the 100K is depleted (estimate mom age 90 or later) the sibling infused account will be greater than 60K (maybe closer to 70-75K based on market performance). That Sibling infused account will carry her to the finish line. Obviously adjustments will nee to be made if any of your listed senario's come to fruition. Good luck.
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Old 07-16-2017, 12:14 PM   #3
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Have you talked to your siblings and do they all want to contribute? Can they all afford to and not hurt their retirement savings? Would your Mom be willing to accept $ from all of you? When my Dad died his pension was reduced and my Mom reduced her expenses accordingly so she could live on it plus her SS. She would never take any $ from us. I think it is unreasonable to expect her siblings to provide financial support for your Mom unless they have expressed a desire to do so. Now when my Grandpa died his pension died with him so my poor Grandma was in a pickle. This was a long time ago when you could not have a survivor benefit. So the kids got her into a nice low income senior housing and helped with the cost of meds, etc because she did not get enough $ to survive without a small amount of help.
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Old 07-16-2017, 12:50 PM   #4
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If you get buy in from your siblings you could each commit to setting aside money for her future needs...

I would not count on your siblings, however... my experience with family's and eldercare is that the contributions are not always even... and if you're not careful a lot of resentment can build up between family members. I made the decision years ago to do what I could - but not resent siblings (or sibling in laws) who made different financial decisions... I haven't always been able to avoid resentment... but I work hard to dump that emotional baggage as quickly as possible and retain a civil relationship.
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Old 07-16-2017, 12:53 PM   #5
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I don't think you can expect your mother's siblings to provide financial support. In Western society, once a person has established their own family, that responsibility usually devolves to their spouse and/or offspring.
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Old 07-16-2017, 01:11 PM   #6
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Exactly what you do is probably less important than getting together, coming up with a plan, and then writing it down for all to sign. The more detail you have and the more "what-if" cases you discuss, the more likely it is that everyone will live up to his/her responsibilities. The intent here is not to have ammunition for legal action as that is probably undesirable for many reasons. The intent is to avoid problems when people's memories of discussions or agreements differ.

This should not be done at the last minute. Now is a good time, where discussions can be thorough and check-writing is not imminent.

If you decide to begin contributions immediately, they should probably not be in her name. If she has to go into a care facility, these assets would have to be liquidated before the state would provide support, yielding you essentially nothing for your money. And, if you go the immediate contribution route, get an attorney to help set it up and put the contribution and liquidation rules in place. I'm guessing that a trust might be the right vehicle, but IANAL.
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Old 07-16-2017, 01:15 PM   #7
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[FONT=Calibri][SIZE=3]Would it make sense to start having the siblings contribute now and keep it in a separate investment account in case it is ever needed?
Nope, definitely a bad idea. No upside. Lotsa downside and room for disagreements on how the funds are held and invested.

Since your mom has over a decade before she runs out of money (assuming she doesn't go into LTC), just let things ride and spend her assets down. Make sure your siblings are in agreement they'll help later if needed but collect no money from them now. Wait and see what happens over the decade reviewing things with all involved every year or so.

If your mom does need LTC, she'll wind up on Medicaid. DW is in that situation with her mom now. DW and her siblings worked hard to find and gain access to a quality NH which guaranteed their mother could stay after she transitioned from private pay to Medicaid. Now, they each kick in a kilobuck or so per year to buy their mother incidentals.

The most important thing you can do for your mom is become familiar with the elder laws and policies in your state and share you time with her generously.

Also OP, you post is a bit confusing because of your use of the word "siblings." I think you mean her children, your siblings. Not her siblings. Correct?

Quote:
So I have a couple questions I am seeking advice on:
1. What happens if one or more of the siblings unexpectedly dies before she does? The financial responsibility will then be spread out over fewer people as I expect the remaining spouse will not want to contribute to their late spouse’s mother-in-laws finances.
You and your siblings have no legal responsibility to contribute a penny to your mom. It will be all voluntary. If one dies or just doesn't want to be part of helping your mom, you cannot compel him/her or their widow(er) to do so.

My DW just went through this. There were her and three others splitting their mother's expenses that were not covered by Medicaid (not serious money). One brother died last March. Now there are three splitting the expenses.

Likely, time will become more of an issue than money. Invariably, one child commits much more time than the others when the time comes that the parent needs significant help. This often goes unrecognized and unrewarded by the siblings committing less time resulting in bitterness and some nifty family fights. I would worry more about the time aspect than the money aspect at this stage. If mom breaks a leg and needs someone to stop by everyday for several months, who is going to do it?
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Old 07-16-2017, 01:15 PM   #8
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Looks like you took over the role of quarterback. Did you mistakenly say your moms siblings? , I think we are only talking about your brothers and sisters. You stated your all middle and upper middle class so if mom need 8k a year I think you 4 should put 2 k a year each in. Let mom hold onto her 100k. If one of the siblings predeceases mom then you can take out that ones share from the 100k if the surviving spouses refuses to participate. None of this 200 a month stuff if you guys can afford it. Do it one shot every Christmas.
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Old 07-16-2017, 01:18 PM   #9
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Sorry about your father passing away.

I'm sure you have compared your mother's expenses and total income now vs when your father was alive, as a couple. Although her income likely dropped with some Social Security stopping (the lower of the two) and possibly the pension amount is smaller?, her expenses should be a little less than the two of them needed to spend. Can you see places to cut back a little (reassess cable provider and car insurance coverage/carrier, for example) without affected her standard of living?

She is lucky to have you and your siblings committed to helping her.
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Old 07-16-2017, 01:44 PM   #10
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I think you 4 should put 2 k a year each in. Let mom hold onto her 100k.
I'll disagree. Under the advise of an elder attorney, we spent down my MIL's money first and helped her later. That way we now have Medicaid paying for her NH and we chip in for incidentals. If we had helped sooner stretching her money out longer, her extra money would have simply meant a few additional months before she was broke and Medicaid kicked in.

With OP's mom having over a decade before she'll run out of her own dough, there's plenty of time.
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Old 07-16-2017, 01:52 PM   #11
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Nope, definitely a bad idea. No upside. Lotsa downside and room for disagreements on how the funds are held and invested.

Since your mom has over a decade before she runs out of money (assuming she doesn't go into LTC), just let things ride and spend her assets down. Make sure your siblings are in agreement they'll help later if needed but collect no money from them now. Wait and see what happens over the decade reviewing things with all involved every year or so.
annot compel him/her or their widow(er) to do so.
Agreed. This is a case where kicking the can down the road makes sense. There is so much time left before she runs out of money - wait and see what happens. Then, if necessary be prepared to step up.
I don't think you should assume upfront that the spouse of a predeceased sibling will not be willing to chip in. Really depends on the situation (and you, of course know the situation best). Personally, I would have absolutely no problem chipping in for my in-laws in that unfortunate circumstance.
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Old 07-16-2017, 01:52 PM   #12
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Looked at immediateannuity and if you bought one for TX... the payments are $766 per month for the rest of her life... that is over the $9K max you say you need...

This would last her WHOLE life... no worry that the market goes down etc... (I would not put much in the market anyhow... maybe 30%)....


That means the kids will not have to kick in anything for a few years until inflation ups her expenses...


I would not be putting money aside for a potential problem that could be years in the future.... yes, if one sibling dies then the burden falls on the remaining... that is life...

BTW, at some point in time she might get medicaid (or some other gvmt payments) when she is broke....
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Old 07-16-2017, 01:58 PM   #13
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I'll disagree. Under the advise of an elder attorney, we spent down my MIL's money first and helped her later. That way we now have Medicaid paying for her NH and we chip in for incidentals. If we had helped sooner stretching her money out longer, her extra money would have simply meant a few additional months before she was broke and Medicaid kicked in.

With OP's mom having over a decade before she'll run out of her own dough, there's plenty of time.
Im sure your right, but using this theory, then give away her 100k now to the kids, and get medicaid and food stamps now. why wait?
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Old 07-16-2017, 02:09 PM   #14
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Im sure your right, but using this theory, then give away her 100k now to the kids, and get medicaid and food stamps now. why wait?
Gifting her $100K away now to get her on Medicaid may not work due to the 5 year look back period. If she gave it away, Medicaid may make her wait 5 years before qualifying.
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Old 07-16-2017, 02:16 PM   #15
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Im sure your right, but using this theory, then give away her 100k now to the kids, and get medicaid and food stamps now. why wait?
You've mentioned you're living a nice ER on only a fraction of your pension and SS income, so it's understandable you're not familiar with elder law as it applies to the indigent. No problem. I've been through it because my MIL became a widow in unfavorable financial circumstances and lived long enough to run out of money and I tried to become informed and help.

It's hard to answer your question because I don't know where to start. I never mentioned Food Stamps which would be a completely different, state dependent scenario primarily controlled by OP's mother's income. So, I can't comment on that.

In terms of Medicaid, you could do some research on "look back period" and what kind of needs and expenses might qualify for Medicaid help. Unless LTC becomes a part of the picture later, likely Medicare would be more involved for OP's mother than Medicaid and might provide "Extra Help" with her Part D and perhaps some help with her premiums. OP didn't say what her income is, so who knows.
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Old 07-16-2017, 02:17 PM   #16
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... give away her 100k now to the kids, and get medicaid and food stamps now. why wait?
Absolutely don't do anything like this without a thorough consultation with an elder law attorney in your state who is an expert in spend-down strategies.
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Old 07-16-2017, 02:18 PM   #17
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Gifting her $100K away now to get her on Medicaid may not work due to the 5 year look back period. If she gave it away, Medicaid may make her wait 5 years before qualifying.
And she doesn't NEED Medicaid now. She's on Medicare and living actively on her own. If she needs LTC someday, then that's a different issue.
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Old 07-16-2017, 02:21 PM   #18
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Besides being ethically wrong to give away $ and then expect government help yes there is a 5 year look back requirement. I was guardian for a good friend of mine after her DH died. I and his family helped him liquidate everything and put it into an account to pay for her to go into a home. Once her medical needs escalated and she needed care that cost double the $ was quickly gone and we applied for Medicaid to pay her bills. You have to be able to show them where the $ went which I was prepared for because at one point in time I was a social worker.
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Old 07-16-2017, 02:25 PM   #19
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Im sure your right, but using this theory, then give away her 100k now to the kids, and get medicaid and food stamps now. why wait?
Why should taxpayers be responsible for her care when she has money to pay for it if it becomes necessary?
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Old 07-16-2017, 02:27 PM   #20
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This is an interesting thread that many of us may face, so might I suggest getting off the Medicaid discussion, which is not part of the OP, and getting back to the OP 's question about his DM's finances.
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