Question about paying off dad's mortgage...

[street]

I would find a different place to live/buy and not get involved with paying off the mortgage with your own money. Pay as you go with SS and let the system work as it does when people eventually run out of money and are in a home.

I would be very careful playing this game with Medicaid and mixing money in this scenario.
If nothing else I would be getting a second or even a third opinion from different counsel.

[Sunset]

Quote:

Originally Posted by CindyBlue CardsFan, yours is a valuable opinion. Thank you! I am hoping that my lawyer is right, but who knows? He is a MediCaid specialist, so should know what he is doing, and since the property was in a revocable trust before the switch to the irrevocable trust, and since both are protected from Medicaid claw back, it should be good. But you are right, who knows? We are going to have to pay the loan, whether by monthly payments or by paying it all off at once, so our money will be commingled. We have no choice. It's how to do it...sigh... I've got a lot to think about!

My experience with lawyers has been, while they tell you the truth as far as they know it. Sometimes they lead you down the garden path, and when someone sues you, they help you (for a fee).

But had they been a little more informative, or more careful with advice, you wouldn't need the fee help .

As I see it, pb4uski had excellent advice, as it stops the monthly payments of interest, but does not fatten up the trust property with extra value, which would make it more attractive to contest.

[CardsFan]

Quote:

Originally Posted by Sunset As I see it, pb4uski had excellent advice, as it stops the monthly payments of interest, but does not fatten up the trust property with extra value, which would make it more attractive to contest.

This sounds the the best advice to me, as well.

[ivinsfan]

OP what is your Dad's state of health? If he is liable to live a long time you might do what Mr P suggests and make it a totally hands off transaction. Otherwise just continue to pay the 800 a month and consider the 400 interest and fees rent on the house until it becomes yours...

This can work out several ways for you...the trust is uncontested and you get 5/6th of the house. Your DN contests wins and you get 2/3 of the house minus legal fees or your DS decides to join your DN and you get 1/3 of the house. Just be mindful of these possibilities.

[CindyBlue]

Quote:

Originally Posted by ivinsfan OP what is your Dad's state of health? If he is liable to live a long time you might do what Mr P suggests and make it a totally hands off transaction. Otherwise just continue to pay the 800 a month and consider the 400 interest and fees rent on the house until it becomes yours... This can work out several ways for you...the trust is uncontested and you get 5/6th of the house. Your DN contests wins and you get 2/3 of the house minus legal fees or your DS decides to join your DN and you get 1/3 of the house. Just be mindful of these possibilities.

Thank you for your thoughts!
No idea how long dad might live...there is longevity on his side of the family, so if could be 12-15 years or more.

Yep, I've thought of "notD"N contesting, too, but there's nothing I can do about that, so I'll wait to see what happens (wry smile!) Sister won't join in - she's as disgusted with her as we are.

I'm beginning to lean heavily toward not paying it off...I've done more research and it seems like it's not the best option. But paying dad's Medicaid "share of cost" to the nursing home becomes very complicated if we don't, due to the loan payment being automatically paid from his account (which is in another trust), which is also the account that the social security check automatically is deposited into...and he can't show assets of over $2000, which will happen if we put our money into that account in order to pay the loan payment so there is enough from his SS (after the loan payment is made) to pay the Medicaid "share of cost"...not sure what the rules are about how the payment must be made, from his account (to show that his SS specifically is being used to pay the share of cost) or can I move the leftover SS money to my account and pay his share of cost from there...sigh...

I have a call in to my attorney...it's going to be a long day...

[street]

My advice is do not mix funds, keep them separate. You want a very good legit paper trail of where and how expenses are paid.

[ivinsfan]

Quote:

Originally Posted by CindyBlue Thank you for your thoughts! No idea how long dad might live...there is longevity on his side of the family, so if could be 12-15 years or more. Yep, I've thought of "notD"N contesting, too, but there's nothing I can do about that, so I'll wait to see what happens (wry smile!) Sister won't join in - she's as disgusted with her as we are. I'm beginning to lean heavily toward not paying it off...I've done more research and it seems like it's not the best option. But paying dad's Medicaid "share of cost" to the nursing home becomes very complicated if we don't, due to the loan payment being automatically paid from his account (which is in another trust), which is also the account that the social security check automatically is deposited into...and he can't show assets of over $2000, which will happen if we put our money into that account in order to pay the loan payment so there is enough from his SS (after the loan payment is made) to pay the Medicaid "share of cost"...not sure what the rules are about how the payment must be made, from his account (to show that his SS specifically is being used to pay the share of cost) or can I move the leftover SS money to my account and pay his share of cost from there...sigh... I have a call in to my attorney...it's going to be a long day...

Yes you need to call to get some specifics, good luck....please lets us know how you work it out someone might learn something from your hassles.

If you are saying you put money directly in your Dad's account to pay his payment that's probably not a good plan for the long term..

[Brat]

I would explore renegotiating the mortgage. The complication might be documenting the source of income to pay it. No harm in talking to a bank. Evidently you are making the mortgage payments now so it may not be an issue.

[Vinnygret]

I'm in the same state of mind as you are without the financial liabilities. So I know how you feel and you need to vent. With a loan against the house (mortage, home equity loan, whtever it is) at 7.5% your money couldn't earn anywhere near the interest you are paying. Can you refinance the loan at a lower rate? Especially if you could pay a chunk of money vs. the whole amount due and retain some of your ready assets. As you have noticed, in this economy, houses will be selling like cold cakes. I took a wonderful course in wills and estates at our local community college. I then consulted with the attorney who taught the class. It was very helpful. My father's house (he is in assisted living) costs him money (maintenance, taxes, utilities) , but I refuse to sell it at a cut rate price. But I don't live there. You have some heavy decisions to make. I have a brother, but he is less than no help. He is minus help. Hang in there and do your best. In the end, everything will work out. That's what I tell myself anyway. LOL, my dad is 94 and going strong, but declining cognitively. Best of luck.

[veganbetty]

If you're not concerned with your sister contesting, maybe you should just see if you can change the title to your name especially as your dad is still alive and he and she both agree. Is he coherent enough to sign papers? You are POA so you have a lot of power here. The hard part would be getting a notary into an assisted living facility. I would try to get everything transferred while he's still alive. It will be so much easier to deal with than a trust when he passes. And yes, so sorry for your loss. My papa died from Covid in April and it's been rough.

[Starsky]

I'm very sorry for your family's challenges. It brings back memories of a similar time.

I'm in the camp of not paying it off - or if you do feel you have to, giving your dad a loan for $80K due and payable upon his passing. (Just to protect your money.) It's not worth putting your hard-earned money at risk, and possibly even changing your current year income tax situation depending on the source of funds. (With a loan, you could justify charging the Trust interest on your money - less than 7.5% - and collecting the interest from the trust before funds are calculated for distribution.)

I don't know if you've considered the option of selling the property now. Since his wife passed, the property's basis has likely been re-upped so there are no capital gains taxes, and you could pay off the loan and have all the leftover cash in a [irrevocable] trust account at the bank to use or distribute as you see fit. Selling now also lets you control the timing of the sale to get the best price, rather than being forced into a quick sale during the winter or at another bad time.

By getting rid of the loan, it would also be a lot easier to settle the trust when it's time. If Dad declines his trusteeship and makes you the [current] trustee of the trust, you should be able to handle the whole thing. Your trust attorney can advise you.

[jazz4cash]

Best wishes to you CindyBlue as you bravely face up to a series of challenges.

I really don’t know but is a reverse mortgage an option here? Has it been considered? I didn’t see it mentioned in the thread.

[Paulz]

I have nothing of substance to add, but wanted to share my condolences for the rough year. Please update us when you get a chance. I've learned so much through this thread. I knew I was ignorant on this topic, but the wealth of knowledge and advice is amazing!

[CindyBlue]

Thank you, everyone, from the bottom of my heart. You are right, it's a very difficult time. I'm still juggling like crazy - dealing with the trust and loan issues, and dad and his physical and mental health, and his new nursing home and how to make the payments, dealing with MediCaid, and putting the property back into shape after years of neglect (he wouldn't let us do much of anything. It's actually in pretty sound condition structurally, just a lot of mowing, and fences and barn doors to fix, endless trips to the dump to clean out the house, barn and property, etc. Already got the line from the well to the houses replaced and the septic field replaced and repairs to the septic tank and his house plumbing done...sigh...) This is family property - not long in the big scheme of history, but we've lived here in the valley since 1958, and if at all possible, we hope to remain here, as long as we are physically capable of the upkeep. There are two houses on the property, and in case anything happens to my sister's finances (they are independent contractors, and who knows what will happen in this new economic reality!), we always will have a place for her here. That was always our parents' plan, and we think it's a good one. We all aren't getting any younger!

We have finally made the decision. After seeking a lot of advice, from our lawyer, my sister, friends, and including the invaluable thoughts and advice from the members of this forum...we have decided that we will pay off the loan.

Our lawyer told us to write a both a letter of intent and a promissory note to be signed by us and by my sister, who is in complete agreement and grateful that we are doing it, stating that we are paying the loan off with our personal funds and that those personal funds (plus other property expenses) will be paid to us before the valuation of the property for division and disbursements of funds to myself and my sister. The part about property expenses being taken off the value of the property before evaluation for fund disbursement is also clearly stated in the trust. It's a big chunk out of our savings, but we believe we can survive without it.

Paying off the loan solves a lot of other problems in dealing with the payments to MediCaid. It will save us a ton of interest. The only downsides that we could see are the possible problem of making sure we get it back eventually, and not having it in case we need it for a financial emergency. We've decided that we do have enough in cash to cover a property emergency (such as the well failing and having to drill a new one, God forbid.) We hope we have enough for any of our medical emergencies that might arise and we've done the best we can to plan for that, but who knows...sigh... We've made lists and planned as best as we could for each possible extra expense. If a natural disaster destroys the houses, we could be in trouble (hope the insurance comes through! I will contact the insurance and and see about updating the property insurance plan) but we decided that we have to take some things on faith after doing everything we can to plan and prepare.

Making and executing the plan to pay off the loan has been a real hassle, what with the virus shutdowns and not being able to get ahold of anyone at dad's bank. The fellow at his local branch who was helping us for the past two years of dad's decline is amazing, but I just could not get ahold of him, since our local branch had closed and he'd been reassigned...and then that bank had a fire and he was moved again...OMG, what a mess. Took me two weeks of calling every day, every phone number I could find that was related to that bank, to finally connect with him...but then he had the whole thing set up and ready to go in less than two hours. We will pay it off, if nothing goes wrong, on the 28th of this month, before the next automatic payment is due (which would mess up dad's account and the MediCaid payments and limits yet again. It's so complicated!!)

You people here keep me sane. I just don't know how to adequately tell you how much I appreciate your thoughts and help and advice. I've learned so much since I started reading the posts on this forum back in 2014 as I started to seriously plan for retirement (not anticipating this latest mess, of course!) Whether I agree with a post or not, I always learn something. I am so very grateful!

We plan to make a copy of the payoff receipt and have a "mortgage burning" celebration with my sister (socially distanced, course, down in the corral!)

And, of course, I will post here to celebrate with you!!

[pacergal]

Best of luck to you. It is always nice to have a thought out plan.

[Gremlin]

You made your decision after careful consideration and examining the pros/cons to the best of your ability. You can’t do any better than that! Good luck to you.

[CindyBlue]

...paid off the loan this afternoon.

I felt very relieved after...I’m as sure as I can be that it was the right decision. Time, of course, will tell.

Now we just have to wait for the final documents from the county, which will be delayed, I’m sure, due to the virus situation. Hopefully, it will be done within a month. Then I will have a mortgage burning ceremony (copies, of course!!)

If dad was aware, I know he’d be happy, and glad that the property is fully paid off. I sure wish he could understand...sigh...

Thanks, everyone - I sure appreciate you all!!