Sale of Parent's Home

[2moryrs]

Need some "sage" advice on what to do with the proceeds of the sale of my Dad's home. The proceeds will be approximately $150,000. His assisted living expenses are $3,855. His current income is $4,350. Which leaves him $495 for other monthly expenses, which include tv, phone, internet, medical. Also, he likes to treat when we take him out to eat. He is 82 years old and in okay health. Diabetic, heart disease, high blood pressure, cholesterol, all controlled by meds.

What type of financial products should we consider to beef up his monthly income?

Thank you for anyone willing to make suggestions.

2moryrs

[burrocrat]

fast cars. or else fast women. may you live to regret it.
https://www.youtube.com/watch?v=fFGZufk4HFs&feature=youtube_gdata_player

[tsptalk]

Would dividend paying stocks (or ETF) be too risky? Even something like Apple is paying over $12 a share (about 2.3%), MSFT is paying 3%, McD's 3.3%, Cisco 3.2%, etc.

[Birchtree]

2moryrs,

Think of all the money that could be saved if he lived with you or another sibling. You might be better off just leaving the $150K in his checking account - it'll take a long time to eat that down. Now if he lives to be 102 then a portfolio of dividend paying stocks (discount broker) would bring in extra money. Think in terms of energy stocks and utilities and have the dividends swept each month into a money market fund. You could probably build a nice portfolio with around ten different stocks. A stock like BTE pays a monthly dividend. Anyway it's all a risk of longevity and stocks are the only game in town. Good luck.

[2moryrs]

Thank you for the responses. Good food for thought!

2my

[2moryrs]

BT,
Living with my Brother or I is not an option. He wants to stay with the Docs he knows and who know his health issues. I would love to have him closer to me but I respect his wishes until he tells me other wise.
2my

[2moryrs]

Tom,
Do you think Vanguard has an ETF that pays well from dividend paying stocks?
2my

[nasa1974]

2moryrs, I would look into either a trust fund or some type of annuity that would provide a monthly income for your father. With his current income he wouldn't need much more a month to be comfortable.
Just a note. With your father in assisted living his income is covering everything for now. If he has to go into a nursing home just make sure there is no financial attachment to you or your bother. This way if your father's finances can't cover the expenses they can't come to you for the money. My father-in-law set up a trust fund for him and his wife. When he passed away the trust fund is still providing for my mother-in-law. If she depletes that trust fund they can't come after my wife or her siblings for the money. There is no financial connection. Just make sure everything is in your father's name.

[Cactus]

nasa1974, what constitutes a financial attachment? Are we talking about something like a joint checking account, your name being on their Trust, an inheratance from a will?

[nasa1974]

nasa1974, what constitutes a financial attachment? Are we talking about something like a joint checking account, your name being on their Trust, an inheratance from a will?

Anything with their fathers name on it; savings account, checking account, mortgage even a trust fund will be used to pay for any expenses needed for his care. All of that would need to be exhausted before Medicare took over. As an example if 2moryrs had a joint checking or savings account with this father and 2moryrs was depositing some of his money into that account he would have to prove what was his so that it wouldn't be used for his fathers needs. That just becomes a nightmare. Being a beneficiary doesn't count.

[Cactus]

Thanks for the explanation. That helps. I hate finding out about these things after it's too late.

[2moryrs]

Thankfully, Mom and Dad had set up a trust and put everything into it. I have my name on the checking accounts so that I can pay the bills. House should be sold soon and will be putting most of the money into savings account attached to the main checking account. Still looking at other options after the tax season is over.

2my

[DreamboatAnnie]

I would look closely at rules for Medicare/Medicaid. To my knowledge, Medicare for 65 and older, is just health insurance. It pays for nursing home rehabilitation services after you spend 3 days in hospital and covers 100% for 21 days and thereafter pays 80% for up to 90 days for that stint. Your father would be liable for the 20% coinsurance after 21 days. If he has supplemental insurance, you should look at what they pay on coinsurance and for how long. Example..FEHB- BCBS, which you can keep after retirement will cover the coinsurance but only out to day 30, then you must pay the daily of about $148 per day. And after the 90days it is anyone's guess what the cost is per day since the 80% is no longer paid by Medicare.

Also, if you re hospitalized or must go back for more nursing, the 90 day clock does not restart until you have been out of a facility for 60 days. So when you start getting very sick, this is when the expenses mount. To my knowledge, Medicare does not pay for long-term nursing care at all. It must be associated with a hospital stay.

Regarding Medicaid, for needy, you must meet income eligibility criteria and that program does offer long term nursing assistance. To qualify, you pretty much cannot have much in terms of assets. I believe these requirements depend on what State you live in. Medicaid is a State-administered Federal program (Feds just cost share but have strings on basic program requirements but States craft their own program. I know here in Texas they look back 5 years for assets that were disposed of to determine eligibility.

Also, I'm not sure how one can qualify for need if monthly retirement income is too high. Really need to look into all of that in your State. Now would be good time to look into that before health deteriorates. Many people try to divest of their assets before they get very sick. So for example, cash can be gifted but probably property that would not go to State would be just a homestead. Once home is converted to cash, it can present a problem. it might be best for him to gift the cash to family that will care for him later...up to amounts that avoid taxation if possible. Call your State Medicaid office and they should have brochures and there are likely non- profits that advise public on how to qualify once someone gets very ill/ disabled.

[nnuut]

How can this be, Medicaid is free? They rape our old folks and don't even thank them!