The cost of bankrolling Mom

Laurie MacNaughton [NMLS ID #506562]

The topic under discussion was the cost of aging in America.

“How many here want to leave their kids an inheritance?” Nearly every hand went up.

“How many here are likely to have an inheritance to leave?” Not as many hands went up. In fact, not many hands went up, period.

The speaker, a Virginia Circuit Court judge, wasn’t asking these two questions of just any group; this was an assembly of some 200 attorneys, presumably a demographic with greater-than-average net worth.

As a reverse mortgage specialist, I would make this observation: not leaving kids an inheritance is one thing; having adult children bankroll parents as they age is another thing altogether. Zero inheritance looks great compared to adult children prematurely tapping their 401(k) so they can cover a parent’s medical bills. I know firsthand – I’ve been there.

According to a Pew Research study, more than forty percent of adult children with a parent aged 65 or older helped that parent financially within the past year. If percentages remain constant, the number of adult children bankrolling parents is likely to get worse, a lot worse, because by 2030 one in five Americans will be 65 or older.

This statistic becomes important when talking about reverse mortgage because, for many people, the go-to objection to is that the homeowner might not have equity left to leave the kids. But this is very flawed reasoning…on many counts. I’m going to point out just a couple.

First, current federal guidelines make it all but impossible for new reverse mortgages to deplete a home’s equity. But even if a homeowner were to use all available funds, this likely means there were no other funds to draw from – and that the reverse mortgage was a lifeline.

Second, an alternate scenario is that the parent does indeed have other funds but does not want to consume those funds, which presumably will go to the kids. Under either scenario the kids are the big beneficiaries. After all, every dollar of her own money mom can use to meet her financial needs is a dollar the adult kids do not pay out.

Of course, negative equity is by no means a foregone conclusion. There very well may be equity left for the kids. But is it true there might not be equity left for the kids? Yes. The pertinent issue is that the parent relieved the adult children from draining their own financial reserves – or at very least, the parent delayed the time the kids had to step in to help financially.

The critical nature of an aging parent’s financial decisions are likely to become ever more conspicuous as Gen X’ers themselves edge toward retirement and the solvency of Social Security runs low. Anything a parent can do to remain “self pay” throughout the retirement years is a blessing and gift to their heirs. And, thirty years’ worth of data shows that homeowners with reverse mortgages tend to enjoy significantly greater odds of financial survivability in retirement.

If you have questions about how a reverse mortgage may benefit your loved one, give me a call. I always love hearing from you.

 

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No Crystal Ball

Laurie MacNaughton © 2018

“My mother’s home was paid off, and at the time we thought a home equity line was going to be the best way for her to pay medical bills. But at this point she’s 87 and the monthly payment is crushing her. Looking back, what we really needed was a crystal ball.”

If you have an older adult in your life, you’ve heard a similar story a hundred times.

No honest lender is ever going to tell you a reverse mortgage is a universally good fit: there are older homeowners for whom the time has come to sell their home and transition into other housing. Some are better served by doing a traditional home equity line of credit (also called a “forward” line of credit). And there are those who benefit from drawing down their investments.

But for homeowners who wish to stay at home and plan to leave their managed retirement accounts untouched as long as possible, or for those with Medicaid considerations, a reverse mortgage may be the perfect fit.

If you would like more information on how a reverse mortgage might help your loved one with financial needs in the retirement years, give me a call. I always love hearing from you.

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Stick to What You Know, Suze

I don’t own a television – I never have. And, frankly, I cannot imagine any scenario under which I would want one. This fact is material to what I say next:

Suze Orman needs to butt out of discussions on topics she clearly does not know well.

In order here is a bit of background leading up to this admittedly snarky statement.

This past week I attended an event where a woman said to me, “I don’t really know much about reverse mortgages, but Suze Orman doesn’t like them – so that’s enough for me.” I mentioned I didn’t know who Suze Orman was, and the woman, clearly shocked, answered, “Suze Orman? She’s on TV. She’s America’s financial guru.”

STRIKE THREE, Suze. You’re out, girlfriend.

Strike one is this: for one television personality to impose her opinion upon her entire viewing audience displays presumptuousness beyond measure. Where does she get off saying the 6,000,000 million Americans over the age of 62 have the same needs, and can be told, out of hand, a reverse mortgage should be a last resort? This is particularly audacious in light of the many scholarly pieces published within the past three years showing so-called “reserve reverse” mortgages – those established early and used to augment other savings – greatly increase odds of financial survival in retirement. She’s out of date, off base, and apparently not well read.

Strike two: in her online transcript Orman says, “I would much rather you base your retirement on other income sources—your savings, Social Security, and a pension.” I would love to meet the person who says, “By golly, I would never have thought of that. Use my Social Security, pension, and savings to cover my living expenses? Thank God for Suze Orman, or I would have missed that altogether.”

To this point I say this: one of the worst things I see in the course of my job is the person doing what I call a “rescue reverse” – the person who has drained all other financial buckets, and is now turning to a reverse mortgage as a last resort. Many times, indeed, perhaps most times, had this person done a reverse mortgage when he still had other monies available, he would not be left wondering if his money would last. This is not hypothetical: the studies have been done, and these by major universities and retirement research institutes.

And…strike three? “America’s financial guru.” America’s financial guru? There are 360,000,000 Americans. That’s a lot of people for one “guru.” I’m surprised Janet Yellen, Ben Bernanke, Harold Evensky, Robert Shiller, or any of the other 54 Americans to win the Nobel Prize in economics didn’t make the list.  And anyway, who says she’s America’s financial guru? It’s like saying Sandra Bullock is America’s sweetheart. Thank you, but I reserve the right to pick my own sweetheart – and my own financial advisor.

No one is going to get by on just their Social Security. No one is going to make it on their 401-K. Few are going to survive on their pension, their annuity, their IRA, their bank account – or their reverse mortgage. But when added together, all these combine to create a long-term means of maintaining dignity and independence in retirement.

If you would like to explore how an FHA reverse mortgage might help with your retirement plans, give me a call. I always love hearing from you.

Laurie

Laurie MacNaughton [NMLS 506562] is a freelance writer and Reverse Mortgage Consultant at Middleburg Mortgage. She can be reached at: 703-477-1183 or Laurie@MiddleburgReverse.com.

Soldiering Through: Men on the Front Lines of Caregiving

Laurie MacNaughton

When my firstborn was barely two she and her best friend, a little boy named Willoughby (really), spent the afternoon playing with an assortment of stuffed toys. While Willoughby practiced drop-kicking the animals against the wall, Jessica sat diapering them. When I fed them peanut butter sandwiches for lunch, Jessica nibbled hers into a rainbow; from his, Willoughby manufactured a gun.

Assertions of my feminist friends notwithstanding, as the mother of girls I firmly believe it is the easy province of a woman to care for the weak, the sick, the young, the aged. And, be it nurture or nature I think these tasks come harder to men. Thus, I have unqualified respect and admiration for what seems to me to be an increasing number of adult sons serving as primary caregivers for aged and infirm parents.

I am just returned from visiting my own mother whose agonizing last chapter is rapidly drawing to a close. Seated beside her, hour after hour, is my oldest brother. A retired Bell Labs particle physicist and former Ivy League professor, this caregiving role is not an easy fit. Yet there he sits, tending her unglamorous, repetitive, relentlessly-increasing needs. I took his place as much as possible during my stay, and invariably he headed for bed in an attempt to catch up on months’ worth of missed sleep.

For my part, when my mother slept I returned phone calls. Back-to-back I spoke with two men, one a prospering real estate broker who, weekends, travels a thousand miles each way to help with his mother’s care; I then spoke with an aging adult son serving as primary caregiver for his advanced elderly father. Not many days earlier an elder law attorney called me in reference to a client trying valiantly to honor his mother’s wish to age in place, despite her degenerative condition.

Then tonight, Thanksgiving night, as I drove home from the airport I took a call. An unspoken universe of sacrifice implicit in the adult son’s one statement hit home in a way he could scarcely imagine: “My concept of normality has gone to pot,” he said simply.

Nothing more need be said, my friend. Well am I aware of what you have forgone to care for your mother. And well I know how meager is the support for a man serving on the front lines in this role as primary caregiver.

Residential managed care has an indispensable function in today’s world. Professional in-home caregivers are invaluable, and hospice a godsend. But rarely are any of these the full solution to aging parents’ needs. It is appropriate that family cares for family – and there simply is no substitute for family.

So men – those of you who diaper and dress and swab and shower an aging parent, who mop and launder and scour and scrub until late into the night: you are an example to all of us privileged to know you.

And if you would like to talk about help financing your aging parents’ needs – or would just like to talk – give me a call. I always love hearing from you.

Laurie

Laurie MacNaughton [NMLS 506562] is a freelance writer and Reverse Mortgage Consultant at Middleburg Mortgage, a Division of Middleburg Bank. She can be reached at: 703-477-1183 or LMacNaughton@MiddleburgBank.com.

Adult Children of Aging Parents

The vast majority of aging Americans want to remain in their own home as they age. However, making the necessary home modifications and paying for appropriate in-home care can create a serious financial drain on adult children. Increasingly, long-term retirement planning includes a reverse mortgage as a means to make it possible for our parents to age in place, and to address their income shortfalls in retirement.

Following is some helpful information when considering an FHA-insured reverse mortgage (or HECM) for your parents:

• The bank does NOT get your parents’ home once they permanently leave the home.

• The home always remains titled in your parents’ name.

• If the home goes down in value, neither your parents, nor you, nor your parents’ estate can ever owe more than the value of the home when it is sold. If you or your siblings wish to purchase the home, you secure your own financing and buy the home – just as you would if your parents had a traditional “forward” mortgage.

• Proceeds from the reverse mortgage are tax-free.

There are unique challenges that face families as loved ones age. As the daughter of an aging mother, I know first-hand the challenges of helping an older parent, and I understand what you’re going through as you assist your parents with their financial needs.

Call me at any time with questions…or if you just want to discuss needs, as I maintain an extensive list of aging-related service providers. I look forward to speaking with you.

Laurie

Laurie MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant, President’s Club · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com

There is No Stage 5

I don’t know when I dozed off, but it was sometime after watching the mercilessly utilitarian clock above the door turn one. I do know when I awoke.

The petite night-duty nurse, in for her 3:00 rounds, was saying, “Wait – wait, Ms. Jean. Let me unplug you.”

Unplug? Unplug? Scary things come to mind when that word is uttered in a hospital room.

And as I stirred to wakefulness I saw the unbelievable: my mother, not 10 hours out of surgery – and who had not eaten for two weeks – was struggling to get out of bed to use the restroom. “Lollipop,” she said, using a nickname I probably last heard when I was three, “Lollipop, can you grab the blanket so it doesn’t touch the floor? And see if you can find my robe and slippers.” No wristband ID confirmation necessary here.

My mother has Stage 4, primary-site pancreatic cancer; there is no Stage 5. She has multiple, large liver lesions, “hot-spots” on her bones, and a spot on one lung. When I arrived last Friday she was slipping in and out of consciousness, so jaundiced and gaunt she resembled the figure in Edvard Munch’s The Scream, if someone had taken a yellow highlighter to it.

Four o’clock Wednesday she was rushed into surgery to have a stent inserted into the common bile duct in hopes of making her more comfortable. Now here she was, not just intent on getting up, but on doing so under her own power – and with attention devoted to tangential issues. I half expected her to ask me if there were fresh guest towels in the bathroom and roses in the guestroom.

This woman, my mother, needs no urging from Dylan Thomas: she goes not gentle into that good night. I flew to Arizona assuming I would plan a funeral. Instead I have had truly intimate hours with a woman to whom intimacy does not come easily.

But no matter how feisty, how determined, how strong – or strong-willed – the person, pancreatic cancer always wins. Additionally, her cancer came as no surprise: my mother is a Wasserman, and it’s always cancer that kills Wasserman women.

The surprise came, rather, in what preparations remained unaddressed, issues that almost assuredly would have created unnecessary distress if she had slipped away last weekend as roundly anticipated by doctors and family alike.

The following is not intended to be a complete list of vitally-important documents, but it includes some biggies which can be easy to overlook.

1)      A professionally prepared, recently updated will. My parents have had a will for decades, but it was last updated 10 years ago and was woefully out of date.

2)      Trust documents.

3)      A professionally-prepared power of attorney.

4)      An advanced medical directive, prepared by an attorney.

5)      A letter of competency, prepared by a medical doctor who has known the patient dating back to the time the patient was mentally competent. I highlight this because this letter of competency can be almost impossible to obtain once the patient has lost mental competency – whether it’s due to the onset of dementia, a coma, or any other condition that might render the patient unable to make his/her own legal, medical, or financial decisions. I have included two samples, below.

6)      Home mortgage information.

7)      A list of bank and brokerage accounts, life insurance policies, annuities or other managed accounts, along with user-names, passwords, and account numbers.

8)      The whereabouts of the key to the safe deposit box.

9)      The whereabouts of any handguns. When my father died I thought ours was the only family who struggled to locate the handgun. I have since heard from many others who have had similar issues.

10)   Funeral and burial instructions, and documents for any pre-paid arrangements.

There is not much one can do to make the loss of a parent easier. But, there are many ways to make it harder – and a frantic search for crucial items can be a monumental source of distress.

Against all odds, against all professional assumptions, my mother came home today. But we all know the day is hard upon our heels when she will not come home at all.

But now at least we can devote these last days to her, rather than to a mad scramble to assemble critical documents.

If you have stories or experiences you would like to share, give me a call. I always love hearing from you.

Laurie

Laurie MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant, President’s Club · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com

Below are sample letters of competency. I typically encourage family members to print these off for the attending physician so s/he is sure to include necessary elements:

Physician’s Letterhead Here

Date

To Whom It May Concern:

Jane Doe (DOB 06/06/30) has been a patient under the care of this medical practice since 19**. She has been seen on a regular basis throughout this time. Medical records indicate that at no time during her care has she lacked capacity to make independent legal, medical, and financial decisions.

Ms. Doe was diagnosed in (month, year) with _________. However, it is the professional opinion of this medical practice that this has in no way impaired her ability to make her own legal, medical, and financial decisions.

Feel free to contact me at (000) 123-4567 if you require further information.

Sincerely,

­­­­­­­­­­­­____________________________________

John Brown, MD

Or:

Date

To Whom It May Concern:

Jane Doe (DOB 06/06/30) has been a patient under the care of this medical practice since 19**. She has been seen on a regular basis throughout this time. Medical records indicate that until (month, year) she had mental capacity to make independent legal, medical, and financial decisions on her own.

Ms. Doe was diagnosed in (month, year) with dementia. It is the professional opinion of this medical practice that she no longer has the ability to make independent legal, medical, and financial decisions.

Feel free to contact me at (000) 123-4567 if you require further information.

Sincerely,

­­­­­­­­­­­­____________________________________
John Brown, MD 

Did you hear the one about the lawyer?

Laurie MacNaughton

Friday I ran into the office to pick up some papers when the phone rang. It was a Virginia attorney with a knotty case involving a profoundly handicapped, aging client. “I’ve looked at many options,” the attorney said, “and I’m wondering if a reverse mortgage might be a solution.”

After describing the situation, the attorney mentioned, “This person has no one left who cares, and for my part, he’s really become more family than client.”

Not the first time

This was far from being the first time I have heard a similar story, so perhaps it was the direness of the client’s situation that made me reflect – reflect on the unwavering, unflagging, relentless effort Elder and Disability Law attorneys expend advocating for their clients. Reflect on the extraordinary measures attorneys go to in seeking justice for the vulnerable. Reflect on the care and concern – at times without pay – attorneys pour out protecting the seemingly forgotten members of our communities. I probably know a hundred Elder Law attorneys, and I can honestly say I can’t name one I would not entrust with the affairs of my own family.

I’m not naïve – I know there are bad lawyers, just as I know there are bad doctors, teachers and clergy. We all know there are bad loan officers – I’ve known some of them. Heck, over the years I’ve worked with some of them. But as a group, I would have to say lawyers get a disproportionately bad rap.

So here’s an open letter of thanks to the attorneys of our communities, those who spend time, talent, and at times even their own treasure, advocating, protecting, interceding on behalf of those whom many of us will never meet.

As one who also spends countless hours working out solutions for our seniors, personally I thank you. And please know I consider you among the unsung heroes of our age.

Laurie

Laurie MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant, President’s Club · Middleburg Mortgage · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · Laurie@MiddleburgReverse.com

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