Real estate strategies to help fund long-term care for family members.

Many familes struggle with ideas and best solutions when it requires long-term care for our loved ones. Many costs are associated with this. Some family members have prepared themselves with annuities which allows individuals to convert a lump sum into guaranteed income to help cover long term costs.  This should be discussed first with a financial advisor as to what accounts the individual may have that helped prepare them as they are aging out of their home.  But what if they don’t have this?  There comes a time when choices are considered.

Here are some real estate strategies that may be helpful to you when considering:

• Home Sale: A sale of the home allows the family to use the proceeds for long-term care and allow loved ones to move into a long-term care facility. I advise speaking with an elder attorney if you decide this choice to understand state-specific rules and asset protection strategies. Home sales can incur capital gains tax however there are exemptions that need to be discussed with a tax professional. If your family member is a veteran and qualifies for benefits, it is important to consult with a Veterans Service Officer to help loved ones still qualify for VA benefits. Last, if the home is part of an estate for inheritance. Legal documents need to be reviewed and updated before the sale is considered. An Estate attorney is recommended to consult with and to help align homeowners’ wishes.  
• Aging in Place:  I can offer many ways to prepare your family home for readiness when it comes to aging in place with nurses around the clock to assist your family member.  If this is a route you wish to consider I have a wonderful checklist of changes and updates needed in the home to secure.  It is always important to speak to an agent because there can be remodels that can help, or harm, home value. Renovation costs can lead one to spend $20,000 to $50,000 or more to change and potentially harm you instead of helping.   This is important when the time comes to sell your family home.   
• Reverse mortgage:  A reverse mortgage may help with costs associated with health care and the support needed for your loved one to stay in their home. A reverse mortgage is borrowing against the equity in the home. The loan is then repaid upon death but the monies are generally not taxed and can be taken when homeowners reach 62 years of age.  Consult with a mortgage lender to learn more.
• Bridge loans:  Bridge loans provide short-term financing to cover long-term care.  This is secured by using the value of a home or other assets as collateral. I recommend speaking to a mortgage lender and other financial advisors before making this decision. It is important to understand that if the decision is to live in place and to take a bridge loan, and the bridge loan later is defaulted, this could leave you in even more financial distress leaving one to foreclose and without a home.  Consult with a financial advisor to learn more.

It is my pleasure to bring this information to you.  If you’d like to learn more about selling your home, please feel free to contact me at 914-498-6060 – Anna Hawley, Realtor, SRES Senior Real Estate Specialist.