Sunday, March 23, 2014

Update on Mom's Finances

I haven't written much about my mom over the last 5 years or so since my Dad died. To make a long story short, it's been too painful and stressful to even think too much about her finances. She didn't want to take any of my advice on how to manage her money and I knew things would go badly.

Now I know just how badly they've gone.

After my dad died, my mother would have had about $350,000 in various bank accounts-- CDs, mostly. This was what was left of my dad's 401k and a life insurance payment. She also owned her house, with no mortgage.
Now, according to what my mom told me yesterday, she has about $30,000 in a bank account. She still has the house, and no mortgage. Her monthly income from my father's pension and Social Security totals a little under $3,000. She's only 70 years old.

Somehow in 5 years, she managed to blow through over $450k. I'm still reeling at trying to do the math. I know she did various renovations on the house, and some redecorating. She gave away perfectly good furniture and bought new pieces. She hired people to help her move stuff around and do painting and other minor repairs. But it's not like she gut-renovated the whole house. It's hard for me to get my head around how much all that cost, but I would guess maybe $75,000. Maybe $100,000. Her other major expense has been keeping my grandparents in a nursing home. Although they are quite poor, with no assets other than a small house and a coffee can full of small bills that my mother and her 3 siblings already spent, they'd apparently run into roadblocks in qualifying for Medicaid or any other benefits. (They live in Puerto Rico, where the laws are a bit different.) Just recently it looked like they might actually start getting some coverage due to Veteran's benefits, but for several years, my mother and her siblings have been footing the bill on their own. What's worse is that not all the siblings are contributing equally-- the one who actually has the most money has been delinquent in sending checks and arguing all the way over what kind of care my grandparents should get. Meanwhile the other siblings are dealing with disabled children or spouses with cancer and various other dramas, so my mom feels that she has to step in and do more than her share.
On top of all that, one of the siblings asked my mother for a loan of several thousand dollars to help pay for her daughter's baby shower, which is apparently going to be a rather grand affair practically on the scale of a wedding reception. That sibling will hopefully pay my mom back after a court case she's involved in is over, if the lawyers who have been working on it for years don't take all the proceeds of the settlement first.

Is that enough f**'d up drama for you? But wait, there will be more. My mom wants to sell her house and move down to Puerto Rico to my grandparents', where she can live more cheaply and take care of some of their needs herself. She insists that she will be able to live on her current income if she does this. She also insists that my father intended for my sister and me to have an inheritance, therefore she has been talking to a lawyer about how the proceeds of the house should go into some kind of irrevocable trust that my sister and I will manage, because she got it into her head that her biggest priority right now is to qualify for Medicaid when she goes into a nursing home herself. (She does have some health issues, but I don't see her needing a nursing home anytime soon, though I guess you never know.) The proceeds from the house sale could end up being about $500,000 after all the fees and taxes, perhaps a bit more.
I told my mother that the idea of us getting that kind of inheritance was insane in her circumstances, and that all my father ever wanted was for my mother to be taken care of and not stupidly bankrupt herself. She said that my sister and I could give her whatever she needed from the interest from the investment earnings of the trust, which of course we are willing to do, but if the principal is locked up for some period of time, I just know we'll end up having to dip into our own savings for other things my mother needs or wants. That is theoretically fine if we get paid back from the trust principal at some later time, but I'm not even sure my sister has savings to dip into in the meantime, and she has two kids to put through college in a few years. And even if we're just managing Mom's money to keep her from making bad decisions, that means we're going to end up butting heads whenever she wants to do something we disagree with. I don't know what's worse, the idea of my mother uncontrollably burning through half a million dollars and then being really truly broke, or the prospect of years of nasty arguments. Right now she's acting all saintly about it, saying she knows we'll take care of the money and do right by her and that this is really what she wants to do, but I can see her bitterly regretting it later if she thinks her daughters are denying her needs and forcing her to live like a pauper. The idea of her happily living on $35k a year when she's been averaging over $90k a year lately is just one more indication that my mother has no sense of financial reality. Even without the expenses of the house, I just don't see that working. Either way, she has to sell the house as it's just too expensive for her to manage, but she's already talking about all the work she'll have to do on my grandparents' house to make it a comfortable place for her to live-- like replacing the entire line connecting it to the sewer system because apparently you can't flush the least scrap of toilet paper without flooding the bathroom, which is indeed gross, but could be coped with in other less expensive ways, as they do in entire countries in other parts of the world!

So nothing has been acted on just yet, but that's what's up with me lately! Fun times ahead!

6 comments:

T'Pol said...

It is always nice to hear from you but I am truly sorry for what you have to go through. She is your mom so whatever you do you will end up questioning that action and feel guilty(I know I do.

Would it be possible to relocate your grandparents to another house or an apartment so that they can be more comfortable together? In my country houses are very expensive to own and to maintain. Besides, I think houses are for younger people since they require a lot of work. Would they be more comfortable living at a 3-4 bedroom apartment? They do not have to own either. They could rent a place like that. That would be what I would do but I surely do not know how they would handle this idea. Best of Luck and Lots of patience to you...

Jewel of Toronto said...

I know this is cold comfort, but at least your mother has assets! My MIL has no savings, no pension, no home or other assets and, at 63, she is chronically ill and underemployed. She will likely "retire" at age 70 with nothing but her social security.
I'm not complaining because I married her son knowing full well that we would take care of her someday.
Be grateful your mother has options and good luck!

Kizz said...

I appreciate you writing about all this. My mother is a hoarder and she's in real financial trouble these days. Navigating how to help her without enabling her and how to feel about whatever I choose has been hard. It's nice to hear other people's stories of similar struggles. I hope we all get some relief soon.

Anonymous said...

I'm really sympathizing with you. My MIL was seemingly in control of her life and financials until she suddenly got leukemia in September. Now I find out she's got $40K in credit card debt, $30K mortage on a house worth about $130K, no savings but with her job and pension makes $60K a year. Seeing as she won't be able to work much longer (she's 75) and will now have huge medical bills, something has got to give! Oh, and did I mention her car is 13 yrs old and needs work? I think your mother is smart to try to plan ahead for medicaid, it takes years to hide assets (assuming she can keep some).

Anonymous said...

I read your blog entry and my heart really went out to you.

One thing that really came through in your words was that I felt that your Dad is still helping, even after his death. His hard work over many decades, and his careful financial planning, at least gives your Mom his pension and income from Social Security. That must be a comfort to you, that you are not alone, your Dad is still helping your Mom. I think he also helped you in that you seem to have inherited his careful ways when it comes to managing your money. Thank goodness you took after your Dad and not your Mom in that respect!

I know a person who always had marginal jobs, and then she inherited $50K upon her mother's death. I thought she would be 'set for life' on such a windfall, but within two years it was all gone. She bought a house, and then couldn't afford the mortgage and was foreclosed upon. I don't know why some people can be financially capable while others just seem to be lacking that gene.

I wish you the best in dealing with the financial issues to come. You have your sister, and Sweetie, to help you emotionally. The rest, as my Mom likes to say, "is only money".

Shelly said...

I really, really can relate to this story. My own mom has no idea at all as to how to manage her finances. My 41 year old brother is still living with her and she is paying all his expenses. His car, petrol, food, laundry and even underwear! She has used up all her savings and part of her retirement money for his education (when he was younger). She is now living on my father's pension ($1,700 a month) and has a $600,000 house fully paid. But i doubt the house will be her security in her future as she is already thinking that my unemployed brother should have it. I hope everything works out for u, good luck..:)