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RE got moved up ten years and I have a conundrum
Old 08-28-2013, 05:57 PM   #1
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RE got moved up ten years and I have a conundrum

I'm not certain whether this post belongs in FIRE and Money. If it doesn't, would a moderator please move it to the correct area?

Retirement has been moved up about ten years due to my dad's health issues. We have an offer on our home in NY (we go into contract tomorrow) and have found the home in TX (we go into contract next week) so things have moved very rapidly this month. All the home listing/property listing/home purchasing began four weeks ago!

Step 1: We've decided to take a mortgage out on the TX home. That means that we have to finagle the closing dates for both houses so that we close on the TX home before I resign from my job and have to close on the NY home at least two weeks after closing on the TX home. It's doable, but it's going to create more stress for me as timing has to be perfect. The buyers of our NY home want to be here as quickly as possible since they needed this address to register their kids for school. They currently live about 45 minutes away, so a commute for school days is difficult. I feel bad that now I need to intentionally drag my feet on this closing because my employer has to NOT know I intend to resign while I buy the TX house. (OK. Yes, I have a reasonable story built for them.) I have the financing for the TX home lined up, but I have to be employed the day we close on that home.

Step 2: While we're going to be a bit tighter than we wanted to be financially, DH plans to work for a few more years assuming he can find a job. He's already begun applying. Running FIRECalc and I-Orp, we should be OK, just tighter than we wanted. Having said that, we'll have between $150K and $200K to invest from the proceeds of our NY house sale. I plan on investing that in 75% Wellington and 25% Wellesley. Any thoughts, input, questions on the allocation?

Step 3: I have to keep our "income" at least as $25K per year to qualify for ACA. I've been reading, but not really absorbing, rules, requirements, regulations, etc. Do Roth conversions count as income in this matter? I admit my head is about to burst as I thought I had a lot more time to do all this research and everything is moving faster than I could ever dreamt.

Step 4: We are moving my parents into our home in order to help take care of my disabled father. The obvious things (walk-in shower, handicapped toilet, hand rails in the bathroom, tacking down rugs, etc.) are pretty easy for us to think about. What are we NOT thinking about when dealing with someone who is blind and has limited mobility? The hallways of the TX home are wide enough for us to get a wheel chair down them, it is a single story home, and there is no carpet in the house. We may have to put in wider entry doors, but my DH will be measuring while he's down there next week to see. Anything else we need to think about and/or look at? Mom insists on paying us rent, so we plan to "charge" them about 1/2 of what they currently pay for rent and utilities plus have her pick up some of the grocery bill each month. Do we need a written agreement for this?

Is there anything else I am not thinking about? This has all happened so fast that I know I'm missing some key points and would truly appreciate any input/questions/thoughts on what we are doing.

Thank you all in advance!
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Old 08-28-2013, 07:28 PM   #2
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I wish I had some information for you but I don't. I just want to say that you are good people, and doing something like this garners a lot of good karma.

My parents took care of my disabled grandmother for years, and all us children (4) feel that it made better family and we all benefitted form this.

Ha
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Old 08-28-2013, 07:55 PM   #3
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Ha, thank you for your wonderfully kind thoughts! It's something that has just been a given, to be honest. My brother and sister both live there, but they both have children, homes, and truly cannot provide the care my dad needs. My mom is over the moon with the home we've chosen, so it seems to be some how blessed.
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Old 08-28-2013, 08:01 PM   #4
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Originally Posted by BuysToys View Post
Mom insists on paying us rent, so we plan to "charge" them about 1/2 of what they currently pay for rent and utilities plus have her pick up some of the grocery bill each month. Do we need a written agreement for this?

Thank you all in advance!
Wow you have a tremendous amout of moving parts. In reference to the question, while you may not ever need it; If you get to the point of needing medicade, it may be very good to have to prove there was no gifting.

Thank you for all the support you're giving your family.

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Old 08-28-2013, 08:02 PM   #5
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I have the same basic comment as Ha. Just moving and trying to line up house closings like it seems you are trying to do is stressful enough. Add in your father's health situation and you really have to make sure you two take care of yourselves as well. Keep organized and let the little things slide off your back and get through it all. Put off decisions that don't have to be made right away, like what to do with the house proceeds. Money is easy to move from one fund to another, even if you have to take some short term cap gains.
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Old 08-28-2013, 08:13 PM   #6
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MRG, thank you for your thoughts! Should we draw up a rental agreement? I'm not really ready for these questions.

RunningBum, thank you! We are trying very hard to focus on only what is critical today. We have the seller's disclosure and now have to research retrofitting the aluminum wiring in the house. We've found a way to do it, now we just have to find an electrician who is certified to do it.
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Old 08-28-2013, 08:29 PM   #7
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MRG, thank you for your thoughts! Should we draw up a rental agreement? I'm not really ready for these questions.
You're very welcome, day one it probably doesn't matter. It doesn't have to be perfect or stressful; pretty sure others will agree that soon after you've moved get to TX. consult an elder care attorney. I wouldn't personally go to an attorney that 'also' does elder care, get one that does elder care.

FYI I'm not an attorney, nor do I have any connections in the legal field. Unfortunately what I think came from the 'school of hard knocks'.

MRG
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Old 08-28-2013, 09:10 PM   #8
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A couple of comments.

Read your mortgage application and other mortgage papers carefully to make certain there are no questions asking if your income is likely to change within the next X years or anything else which might relate to whether your employment might change.

With regard to the parents, I agree that the concern would be whether the rent might cause an issue if your parent needed at some point to go onto Medicaid. I highly recommend consulting with an elder care attorney in Texas to get advice on this issue. I do not recommend just doing your own rental agreement. Medicaid planning is very specialized and you should get specialized advice.
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Old 08-28-2013, 09:53 PM   #9
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Man lives can be stressful, you seem to be dealing with it pretty darn well.

Regarding your existing house. I'd ask the buyers if they'd be ok with closing on time and renting the house back to your for 1 to 3 weeks. It seems like there big issue is getting it recorded in time for them to register their kid once they own the house, they shouldn't have an issue registering the kid.

To echo what Katsmeow said read the fine print on the mortgage contract carefully. I am not sure I understand what the bank is doing, they are lending you a NY resident money for house in Texas that I assume is going to be owner occupied. But you are employed in NY?!. Anyway I'm pretty sure that any human banker looking at this application is going to figure out that unless you and DH are being transferred by your companies or are planning on telecommmuting you are going to need a new job in Texas.I'd talk to both the real estate agents involved and see what their take on the situation is.
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Old 08-29-2013, 01:03 AM   #10
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I am not sure I understand what the bank is doing, they are lending you a NY resident money for house in Texas that I assume is going to be owner occupied. But you are employed in NY?!. Anyway I'm pretty sure that any human banker looking at this application is going to figure out that unless you and DH are being transferred by your companies or are planning on telecommmuting you are going to need a new job in Texas.I'd talk to both the real estate agents involved and see what their take on the situation is.
That's a good point. I would expect there would at the very least be a question asking you to explain how you are going to work in NY will living in Texas.
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Old 08-29-2013, 06:46 AM   #11
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BuysToys, to answer one question, yes, Roth conversions count as income for ACA subsidy. Rental income would also count.

Once you buy the house in Texas and you and your parents moved in, you can then determine how to set up and formalize the rental arrangement. There is no need to do that right now, and it might affect their Medicaid eligibility down the road, so as others have pointed out, it needs to be done carefully.

One question. Do you have a firm commitment for the mortgage in Texas?

Good luck with your parents. This arrangement works well for some families and always involves some trade offs, but is both generous and kind.
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Old 08-29-2013, 07:13 AM   #12
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Thank you Katsmeow and clifp for your help! Here's how the TX mortgage is going to be written (I believe): I am working in NY and purchasing the home in TX as an investment property. Our interest rate will be a little bit higher doing it this way, but it's the easiest way for us to move forward. DH will begin collecting his pension next week, so we do have some monthly income already set up. I'll also be setting up our Wellington/Wellesley investments to give us a monthly disbursement from Vanguard to our checking account. We have some other funds (DH has a pension annuity, I have the Roth funds) we could tap and begin taking monthly disbursements on but I'd rather not do that if we can avoid it. Once the NY house closes, we can make certain we have enough monthly "income" to satisfy the TX lender. It's just going to take me some time to set it up and I don't have the time to do it in advance.

The point about Medicaid in my parent's future is a good one and I will look for an eldercare/Medicaid attorney once we've relocated.

Since we go into contract on the NY house today, the buyers can use this address to register their kids for school. Their difficulty is going to be the daily commute (45 minutes each way) to transport their kids to and from school. DH and I discussed this more last night and if I have to stay with friends/his family for a few days to meet the two week notice, that's what I'll have to do. The other option is to just quit my job with no notice, but I'm not really thrilled with that action.
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Old 08-29-2013, 07:15 AM   #13
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Thank you MichaelB! You have given me an answer on the Roth conversion that just lifted a weight from my shoulders!

I believe we do have the TX financing set up. I'm supposed to receive the document package today.
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Old 08-29-2013, 07:43 AM   #14
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If any of the parents served during a time of war (do not have to have served in combat), they may qualify for VA Aid and Attendance. It is means tested but test is unusual. It is income less care expenses must be less than $19,000. So, if they make $30,000 but have $32,000 in care expenses they qualify. Benefit is a monthly check but also incredible medical resources, maybe even home improvements.
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Old 08-29-2013, 07:47 AM   #15
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Thank you Z3Dreamer! I will look into the VA Aid. Dad is already having his medical treatment through the VA, so he would probably qualify for the time of war clause. I'll have to look into how much they pay for his medical care. I know the chemo is pricey, but haven't asked Mom just how pricey it is.
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Old 08-29-2013, 07:57 AM   #16
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Aid and Attendance is a totally different program. It will pay for home improvements and don't forget the monthly check. VA medical treatment, which you mention, does not cover this. In my research, Aid and Attendance is called the "Veteran Administration's best kept secret". Google my quote and see. The person who turned me on to this told me that the local VA resource folks would know nothing about it and I would be told "No" over and over, but I did not give up and Dear Mom, got a lot of help. She was a typist during the early '50s. She did not serve in combat, but she served during war time.
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Old 08-29-2013, 08:12 AM   #17
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I wish I had some information for you but I don't. I just want to say that you are good people, and doing something like this garners a lot of good karma.


Ha
+1. Glad to hear your mom is happy with the house you have chosen. That should make the transition much easier for everyone.

Best of luck.
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Old 08-29-2013, 09:57 AM   #18
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Good luck in this transition.

We went through something similar, but with a slightly different solution. When the care of my FIL became harder for my MIL, we built an accessible "casita" granny flat. (1br, 700sf) in our backyard. A separate structure gave them privacy that they wanted, but we were 50 feet away if they needed us. This was a very good solution for many years. It's amazing how having the right infrastructure in a home can make caring for a wheelchair bound person easier. And my kids were fortunate enough to have their grandparents living on the same lot as us - and available for card games, meals, cuddles.

Now it's providing us rental income. Definitely a helpful income stream in our retirement planning.

I'd like to second the info about veterans services. I found out about that here at ER.org. Unfortunately, because my MIL refused to have hired help - they didn't qualify. (Income was slightly to high, and medical expenses were almost zero.)

There are a variety of resources available to veterans. Like your father, my FIL received most of his medical care through the VA. Additionally, most states have state run (NOT VA) veterans nursing homes. These are much cheaper than regular nursing homes. (In our case it was a savings about 2500/month!!!) But they need to do a deep dive on the finances of the patient and spouse.

Additionally there are rehab and hospice facilities. The hospice facility that my FIL was in was amazing. He passed this morning ( ) but while he was there soldiers and personnel saluted him as they passed. This was especially touching for the family sitting vigil. He was enlisted (not officer) but earned a purple heart at the battle of the bulge - so the respect/honor was especially touching.

And I second the suggestion to research the elder care/medicaid spend down issues for the state. It varies a bit from state to state. Some key terms to look at are "community spouse"... and how assets are handled for the spouse not in a nursing home.
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Old 08-29-2013, 10:35 AM   #19
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Rodi, my condolences on the passing of your FIL. Thank you for all your suggestions! It looks like I will have some research ahead of me once we get moved and settled.

I just got off the phone with the mortgage broker. We are going in a different direction now on the financing and calling it a second home. Since all my immediate family lives in the area, it's easy enough to claim a reason to want to buy in the area and since DH is retired, it's easy to show that he has the time available to be in the home on a regular basis. The rate is better than the investment property rate, but a little worse than the rate for a primary home. I'm fine with that!

DH just signed the contract for our NY house. The attorney believes we'll be closing here in late October, so things seem to be falling into place on the timing.

My head is still spinning as this is all happening so quickly. I truly appreciate all the wishes for success and helpful comments here!
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Old 10-05-2013, 05:10 PM   #20
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Wanted to post a quick update for anyone who is interested....

We closed on the TX house this past Monday. DH is in TX now and has found someone to do part of the remediation/redecorating/corrective work. He's meeting with an electrician on Monday and that should be the final pre-move work to be done. I gave my resignation and my final work day is 10/15.

It's been a heck of a roller coaster ride and continues to be chaotic. My job wants me to stay longer (I've told them that isn't possible, but my boss continues to ask), the buyers for our NY home want to move up the closing date, we have another offer for our building lot, and I still haven't found a home for our cats. I just fumble through each day as I can, make certain I tell DH how much I love him, and we slog forward.

Thanks to all of you who posted to give me advice. I still need to look into an elder care attorney, but will do that next month once we're in the new home.

Z3, a special thank you to you. I have sent links to my mom for the Aid and Attendance organization. I will work with her to see that she follows through on the application. Since dad is blind, it looks like they may qualify for benefits that could go a long way to improving their quality of life. While DH and I can absorb aids such as grab rails in the bathroom and handicapped toilets, there are many expenses we can't help them with. Your direction is so appreciated!
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