Category: Financials

Reverse mortgage basics

Funding retirement and long-term care often includes a blend of savings, social security, pensions and other forms of income, but many people overlook one of their biggest assets: their home.

If you or your parent are wondering how to pay for long-term care, a reverse mortgage is one option that allows an older adult to stay in their home while tapping into its equity to pay for care. That said, it’s important to understand how this type of loan works and the pros and cons of reverse mortgages. In this article, we’ll look at when this financial tool is the right fit and explore other options you might have.

What is a reverse mortgage?

Reverse mortgage loans allow homeowners aged 62 or older to convert a portion of their home equity into cash.

Unlike a traditional home loan, borrowers receive monthly payments – rather than making them – and the loan is repaid when the borrower sells the home, moves out or passes away. At that time, the balance of the loan is deducted from the proceeds generated by selling the house, and the remainder of the value is distributed to heirs.

The Consumer Financial Protection Bureau recognizes three types of reverse mortgages. The most common is a home equity conversion mortgage (HECM) insured through the Federal Housing Administration. The other two types include non-federally insured reverse mortgages, and single-purpose reverse mortgages that can be accessed through local or state governments.

Reverse mortgages rates and terms can vary between HECM and non-HECM loans, making it crucial to compare multiple offers to ensure you get the best rates.

Reverse mortgage requirements

Before you shop around for a loan, you should familiarize yourself with reverse mortgage details so you can assess your parent’s eligibility for a loan and their ability to meet the loan obligations.

Here are the main reverse mortgage loan requirements:

• The homeowner on the loan must live in the residence the majority of the year.
• They must have a low mortgage balance or own the home outright.
• They must pay taxes and insurance, as well as maintenance and repair costs.
• The home must meet required property standards.
• The loan-holder must receive reverse mortgage counseling from a HUD-approved reverse mortgage counseling agency to verify eligibility and ensure they understand the financial implications of the loan.

Benefits of a reverse mortgage and long-term care

As noted above, the main benefit of a reverse mortgage is that it allows people to utilize the equity in their home while continuing to live there. Another benefit is that there are no monthly payments to make because the loan isn’t due until the house is sold, or the person who holds the loan moves or passes away.

Medical and personal care needs can be expensive, and reverse mortgage funds are flexible; they can be used to cover medical bills, specialized equipment and ongoing care costs. If your parent isn’t ready to downsize, a reverse mortgage is one way to fund long-term care at home. Even if they need a short-term stay at a senior living community to recover after an illness or injury, as long as they aren’t away from the home for more than 12 months at a time, they can retain eligibility for the loan.

Finally, there have been recent improvements to reverse mortgages. Historically, this type of loan has been associated with horror stories of spouses being removed from their home when a reverse mortgage comes due. However, as of 2017, the rules have changed to allow surviving spouses to remain in the home, even if they weren’t on the loan.

Drawbacks of a reverse mortgage

As AARP notes, reverse mortgages aren’t cheap.

These loans are based on age, home equity and interest rates; but because the interest is cumulative, over time it can significantly reduce the equity left in your home. If downsizing in the future or leaving an inheritance to heirs are important to your parent, it’s critical to consider how long the loan will be needed.

Also worth noting is that homeowner’s responsibilities don’t go away. Failing to pay property taxes, maintain the home and keep current insurance can result in defaulting on the loan and possible foreclosure. If you’re looking at a reverse mortgage to cover long-term care, it’s important to consider if the burden of home maintenance is feasible.

When not to use a reverse mortgage

While reverse mortgages can be a helpful financial tool for some older adults, here are a few instances when a reverse mortgage might not be the best choice:

• Short-term need. Reverse mortgages are designed for long-term use and initiating one for a short period might incur unnecessary fees and interest charges.
• Limited home equity. Since the loan amount is based on the home’s appraised value and the borrower’s age, minimal home equity may make a reverse mortgage a poor option.
• Plans to relocate. Because reverse mortgages become due when the borrower moves from or sells the home, if you’re considering downsizing in the near future, other financial options may be more practical.
• Ability to meet loan obligations. If you anticipate difficulties in maintaining the property and staying current with property taxes and home insurance payments, it’s important to carefully consider the potential consequences, such as foreclosure, before deciding on a reverse mortgage.

Long-term care options

As noted above, a reverse mortgage isn’t for everyone. If you’re concerned that the loan obligations won’t be met or that the accumulated interest on the loan won’t be worth reducing the home’s equity, it may be time to explore other financing options.

Consider these alternatives to a reverse mortgage:

• 1. Long-term care insurance: Like most insurance, with long-term care policies you pay premiums and then make a claim when you need a service. But it’s critical to review different policies, as some may not cover the care you need and may retain the right to increase premiums after you sign up – making them far less advantageous.
  2. A long-term care rider on a life insurance policy: Adding a long-term care rider to a permanent life insurance policy allows the policyholder to access the death benefit early if they receive a diagnosis of a chronic illness.
  3. Self-insure: Though not technically insurance, investing early can provide an important buffer for long-term care expenses. It’s recommended to save enough by age 85 to pay for roughly three years of nursing care (the average age and duration it’s needed).
  4. Liquidating assets: If the caveats of a reverse mortgage aren’t a good fit for your family’s situation, you can still access the value of a home by selling it. Especially when care is involved, selling a home is a common way to fund long-term care in an assisted living community or nursing home.
  5. Medicare: While some care is covered by Medicare – such as doctor visits, hospital stays, preventative services like vaccinations and some home health care – it does not cover assisted living or long-term care. So, while Medicare may be a piece of financing care, it shouldn’t be depended upon to meet long-term needs.

Professional guidance

One of the first steps to developing a comprehensive plan for covering long-term care costs is talking with a trusted financial advisor who specializes in long-term care planning. Seeking professional advice and conducting thorough research will empower you to make an informed decision that aligns with your financial goals and circumstances.

In addition to being a great place to live, Atria Senior Living offers abundant resources for caregivers. Contact your local Atria community for financial planners in your area and more information to help you along your caregiver journey.

When should you start estate planning? What does family estate planning involve, and how do you decide between a trust and a will? What are the different types of trusts?

It’s no wonder why people find the estate planning process so daunting. To help you on your journey, this article demystifies some of the key steps and considerations that go into making an estate plan. You’ll also learn why it’s important to start planning early.

Writing a will

You’re likely already familiar with the basics of a last will and testament. This document outlines how you’d like your assets to be distributed upon death. Apart from asset distribution, though, a will includes several important sections, such as:

• 1. Your name and a declaration that this document supersedes any previous wills
  2. Appointment of guardianship for minor children
  3. Selection of an executor (and backup executor) and assigning trustee powers to those responsible for managing your assets
  4. Outline of beneficiaries and instructions for distributing possessions among them

You might also include provisions in the event of a beneficiary’s life circumstances changing. For example, if your child is listed as a beneficiary, you could structure the will so that their spouse won’t receive your child’s inheritance in the event of a divorce.

Melissa Negrin-Weiner, Esq. – a senior partner with Long Island-based firm Cona Elder Law – notes that “The importance of a will can vary with age. For example, younger couples with minor children must make sure they appoint a guardian for those children should something happen to both parents. Older individuals may be more concerned with passing along a family heirloom or piece of personal property.”

This is one reason why updating your will is just as important as setting it up in the first place. Before you talk to an estate attorney, think about what you want your will to do. Once you have a clear idea of how you want to distribute your assets, a professional can help you translate those preferences into legal language.

An often-frustrating part of executing a will is the probate process – a long and often expensive court process for “proving” a will. Because this isn’t a private process, assets and their beneficiaries are public knowledge.

Negrin-Weiner points out that naming beneficiaries on assets like IRAs and creating joint accounts is one way to skirt this cumbersome process. “Typically, when one joint owner passes away, the property or account automatically passes to the other owner without any need for court involvement. And naming beneficiaries on accounts such as transfer on death (TOD) or in trust for (ITF) allows for those accounts to pass to the named individual immediately.”

She says another common way to avoid probate is through a trust.

A closer look at trusts

A primary difference between wills and trusts is that wills define your wishes for after you pass, while a trust is initiated while you’re still alive. In a trust, a grantor places an estate under the management of a trustee who is responsible for distributing assets to beneficiaries after the grantor’s death.

When choosing between a will and trust, the size of your estate may be one of the biggest determining factors. Generally speaking, for those with assets that exceed $500,000, a trust is more advantageous. That’s because setting up a trust has fixed costs, so the benefits increase with a larger estate. On the other hand, if the estate has less than $200,000 in assets, a will is typically the better financial choice.

Even so, for many it comes down to personal experience and preference. For those with a smaller estate who’ve had a negative experience with probate, they may still prefer to set up a trust. If you’re considering a trust, you’ll want to work closely with an estate planning attorney to understand which type of trust best suits your individual needs. Some estate lawyers would even advise that you don’t choose between a will and a trust, but use a combination of the two to ensure all of your assets are covered.

To help you prepare, we’ll go over the two most common types of trusts: revocable and irrevocable trusts.

Revocable trusts: Retaining control and flexibility

Revocable trusts, also known as living trusts, are established while the grantor is alive and mentally fit to continue managing assets. By naming themself and their spouse as trustees, a grantor can continue to sell, trade or acquire assets within the trust.

It’s still important to designate beneficiaries, though, as they’ll receive the assets when the grantor passes – at which point the trust becomes irrevocable. Beneficiaries may also be called to manage assets if the grantor is no longer able to do so themself.

While it may be tempting find a quick solution to navigating the challenges of setting up a trust, AARP warns against generic living trust kits found online, which are unlikely to fit individual circumstances. If you’re considering setting up a trust, work closely with an attorney who can customize the document to your specific situation.

Irrevocable trusts: Protecting assets and avoiding taxes

Negrin-Wiener notes that while a revocable trust can help your family avoid probate and limit disagreements between family members, it won’t protect you from creditors or lawsuits. An irrevocable trust, on the other hand, is often used to protect assets so individuals can apply for Medicaid benefits without spending down their assets on long-term care.

Unlike a revocable trust, an irrevocable trust cannot be altered by the owner unless all beneficiaries agree. Numerous state-specific laws govern this type of trust, making it essential to collaborate with an estate planning attorney to ensure compliance with all requirements.

While relinquishing control over assets is a drawback, there are advantages in certain situations. The benefits of an irrevocable trust include:

• 1. Protection from taxes: As the assets no longer belong to the grantor, the estate becomes shielded from some estate taxes
  2. Avoiding probate: As previously mentioned, probate can be expensive and delay asset distribution to beneficiaries
  3. Asset reduction: This isn’t just about evading estate taxes – certain government assistance programs have maximum income thresholds for eligibility; placing assets in an irrevocable trust may enable the grantor to access services they otherwise couldn’t afford, such as long-term care

According to the American Council on Aging, older adults applying for Medicaid long-term care generally have an asset limit of approximately $2,000. However, higher valued assets like primary residences, wedding rings and vehicles may be considered exempt. Nevertheless, individuals exceeding the asset limit often still struggle to cover the cost of care. An irrevocable trust helps older adults protect their assets, such as a home, while seeking financial assistance for their care.

It’s important to note that establishing this type of trust doesn’t protect your assets if you require immediate care. Medicaid enforces a five-year “look-back period,” which considers assets transferred to a trust within the last five years as viable for covering care costs. However, if you are in reasonably good health and don’t anticipate requiring skilled nursing care within the next five years, an irrevocable trust can safeguard your assets should the need arise.

Ultimately, working closely with your attorney can help you understand if a revocable or irrevocable trust is the better fit for your situation. In addition to staying in compliance with state regulations and requirements, Negrin-Weiner points out that a knowledgeable attorney can help you make the most of whichever type of trust you choose. “A carefully drafted irrevocable trust does allow for flexibility in your asset protection plan,” she says.

The importance of estate planning

Regardless of whether a will or a trust is a better fit for your situation, there are many reasons to put a plan in place for the future of your estate.

First, life is unpredictable. If you pass without a legal document clarifying your wishes, your assets will be distributed according to state laws, which may not align with your preferences. Moreover, without clear instructions, survivors are left guessing your intentions.

Negrin-Weiner says, “Preparing your will or trust well before a healthcare crisis ensures that your wishes will be carried out and that you will be able to preserve your hard-earned assets.”

Perhaps one of the best indicators of a successful estate plan is avoiding family conflict. Anything you can do to provide clarity and guidance will help alleviate grief, greed and unresolved childhood dynamics.

More information

In addition to award-winning senior living, Atria offers helpful resources on many aspects of retirement. Contact your local Atria Senior Living community for more information on estate planning services in your area.

Discussing money matters is taboo for many. If this rings true for you, then questioning an older parent or family member about how they plan on paying for senior care – no matter how well intentioned – is potentially even more difficult.

“Some adult children say, ‘I really can’t talk about money, it’s not a comfortable topic for us.’ But it’s a necessary conversation,” says Sheridan Daniel, Vice President of Operations and Product Development at Atria Senior Living. “However, with aging parents, the conversation about health and finances will either be done by plan or by crisis.”

1. Consider your relationship dynamics

Take a moment to reflect on your general experience and interactions with your parent, especially around the topic of money. Throughout your life, has your parent openly discussed financial matters such as debt, investments and budgeting? Is your mother or father comfortable asking questions about your future plans or offering advice (both solicited and unsolicited) about money? Have they voluntarily approached the topic of living wills and estate planning?

“You need to know the approach you can take with your parents,” says Daniel. “I remember talking about wills and topics like that with my mother when she was in her 60s. When she worked, I knew what her salary was. I knew what her insurance was. She was open with those things.”

Allow your relationship to craft your approach, and maneuver around any predictable sensitivities. If, despite your best efforts, your parent still resists, there are ways to overcome their reluctance.

2. Understand it’s not all about money

At its heart, a conversation about money is not one-hundred-percent about money. It’s about the life your parent wishes – and can realistically afford – to have. If your parent still works, how do they envision retirement? Generally speaking, what legacy would they like to leave behind? In case of a medical emergency, who is their health care proxy? Have they considered a power of attorney?

“Don’t talk about just money. Talk about the big picture, and make sure your parent feels a sense of control of what’s going on,” says Daniel. “It has to be what they envision. Discuss their retirement goals and what it will take to achieve them, and work from there.”

Open the conversation by asking about their opinion on assisted living. Ask for advice about financial planning for retirement and other relevant topics to get the dialogue flowing. Sharing your own plans and ideas or referencing current events and anecdotes about others are easy icebreakers and ways you can gauge how your parent may feel about more in-depth conversations later.

3. Don’t put off talking about it

If your parent is thriving and handling their finances well, they may feel it is too soon to discuss such matters. However, it’s never too early to approach your parent about finances and care. If possible, do it while your parent is at ease and in the best of physical and cognitive health.

“I either see one or the other: Somebody has planned it out very neatly beforehand or something devastating has happened – and no one wants to discuss finances with a parent who is hospitalized or dealing with a loss,” says Daniel.

Gently explain the importance and advantage of being proactive instead of reactive. Reassure your parent they are still in control of their finances and that you’d like to start thinking about it while they can make clear, intentional decisions and not after something goes wrong.

4. Approach gently and do your homework beforehand

Before digging into your parent’s financial information, do your research.

“If your parent has assets, they got them by being smart and financially savvy. Show that you’ve done some research while taking into account how they envision things,” says Daniels. “They’re going to want to be a part of that. I’ve seen many children foster trust and respect with their parents when they freely share their findings with them.”

Whether your parent envisions a retirement community, living in the family home for the rest of their life or uprooting to the Caribbean, lay out that research for them.

Where’s the easiest place to start? The Internet. Start with a simple search: “Is there financial planning for assisted living?,” “How much does it cost to live in a senior living community?”, “Real estate in Jamaica,” “The cost of at-home senior care,” and so on.

Consider these relevant topics as you research:

• Senior living costs compared to current costs of living
• Assisted living compared to current in-home senior care costs
• Paying for senior care
• Long-term care insurance
• Veterans benefits
• At what age to consider appointing a power of attorney
• The importance of having a health care proxy

5. Consult with your family and supportive network

Your parent shared their vision for retirement and granted you financial access. Now what? Even with all of the knowledge about what an older adult wants, there’s little one can do without being appointed as power of attorney (POA) and/or health care proxy.

If your parent hasn’t appointed a POA and/or a health care proxy and the family has conflicting opinions and expectations, it’s fair for these emotions to be amplified when the topic is approached.

“When you don’t communicate with the full support structure, it can turn into a quagmire. Also, you may think, ‘I’m the oldest son in my family. I have decisions that I can make,’ but your mother has a sister, and if you don’t talk to her, then it’s going to be a battle,” Daniel says. “Then, the power of attorney process turns stagnant. Nothing happens.”

If you’re able to approach these critical topics while your parent is in good health and emotionally stable, do so gently. Remind your parent that you want what’s best for them and, ultimately, it’s about what they want. Manage your expectations and encourage other relatives to do the same. Don’t assume the responsibility will be handed to you.

“Some older adults may say to their child, ‘Hey, I don’t need you to control my money. I have an accountant who I trust, so the money’s fine. But I don’t trust my accountant with my health. So, here’s my health care proxy,’” Daniel says.

If this happens, give it a week or two and schedule time to revisit the conversation in person with all involved parties until a decision has been made. Tap into their doctor, financial adviser, elder care attorney and geriatric care manager for support and expertise when planning what’s best for your parent and their finances.

6. Handle crisis directly and with care

Hopefully, you can approach your parent while they are making well-informed financial decisions on their own and able to engage in meaningful conversations about their future. However, be aware of these signs that indicate more immediate action is needed regarding an older adult’s care and finances:

• You’re worried about their safety when alone
• You’re worried or concerned about their health, especially if they have a progressive disease or they’ve had a recent accident or fall
• The condition of their home has become concerning or unsafe
• They often forget to pay bills or seem to be struggling financially
• They are possibly exhibiting early signs of dementia or cognitive impairment

“Being direct is going to be important. Sensitive, respectful, but direct,” says Daniel.

“If someone is in the early stages of dementia, then I will direct the family to speak to their doctor and a geriatric care manager, and then an elder care attorney. This is a scary thing for an aging parent. They know what’s happening to them and they still have very clear moments. When they have those clear moments, you have to express what the plan is.”

Atria is always here to help

Allowing another person to comb through their personal financial details – even a well-intentioned adult child – can be difficult for your parent. Allow your parent time to work through this process, even if they are reluctant to share details.

Also, anticipate having this conversation more than once. Financial planning for retirement is a lot of work and it’s unlikely to accomplish everything in one day. If you need assistance, tap into the trusted professionals at Atria Senior Living. The dedicated employees at our senior living communities have connected thousands of families like yours to the expertise they need. Stop by for a visit or contact your nearest community for a personal consultation.

Guide to Discussing Senior Living Financing with your Parent (PDF)

While many older adults sell their homes to help finance the costs of a senior living community, it is often a very complex and emotional decision even for those who have planned for it. Here are some tips to better navigate the challenges and deep feelings that come with helping your parent sell their home.

Help your parent embrace a new experience

Many older adults selling their homes have lived there for 25 years or more. Their homes are familiar and hold many cherished memories, so it’s understandable that moving somewhere different with new people and experiences can be fraught with anxiety.

Whether your parent is selling their home to pay for independent living, assisted living or memory care, helping them understand what to expect in their new surroundings will make the transition easier. Once your parent has chosen a senior living community, it helps to learn and experience more than either of you may have gathered from your initial tour.

• Living space – Become familiar with the new apartment’s safety features and make sure they know how to operate the thermostat, lighting and any appliances. Take photos and measurements of their new apartment so you can plan what furnishings to bring and where they will fit. Help them display cherished items safely and securely in prominent areas to make their new apartment feel more like home.
• Meet and greet – Before moving in, make sure your parent is introduced to key staff, like the community director, chef and care team. Already knowing some familiar faces when they move in goes a long way to easing stress. Many senior living communities offer in-depth tours on the resident’s first day – consider joining your parent to address any additional questions either of you may have.
• Mix and mingle – Attending some events and having a few meals in the community will help your parent meet some of their fellow residents and get a feel for the community atmosphere and lifestyle. Being familiar with the residents, staff and surroundings will make their transition from home to community smoother. At Atria, resident ambassadors greet new residents with gifts and invitations to upcoming events to help make them feel like a welcome member of the community.

Downsizing

Chances are your parent has accumulated more furnishings and household possessions than their new senior living apartment can accommodate – but deciding what to keep can be very emotional. Here are a few ways to make downsizing easier for you both:

• Ease into it – Your parent’s household possessions likely took decades to acquire, so don’t plan on going through everything in one weekend. Start the process by asking your parent to make a list of their most treasured items, noting what they hope to keep and what they wish to donate. If your parent intends to give items to siblings or other family, plan on having them available to review the list with your parent so there are no misunderstandings that could lead to hard feelings later on.
• Preserve the past – Encourage your parent to keep items that help them fondly recollect their lives, such as photos, family heirlooms and other special keepsakes. Consider storing some cherished seasonal belongings – like clothes and holiday decorations – in your home (or other family members’ homes) so your parent will still have access if needed.
• Empathize – Sorting through a lifetime’s worth of possessions can be taxing, but it can also be very freeing. It’s an opportunity for your parent to let go of things that have been weighing them down or keeping them from making new decisions. It’s important to offer sympathy but also discuss how much they’ll enjoy having a fresh start in their new home with opportunities to engage with new friends, rekindle their passion for a past hobby or learn something new.

Downsizing can be physically demanding and, as your parent is leaving a part of their life behind, will inevitably entail a mix of emotions. If either of you start to feel overwhelmed by the process, consider hiring senior move managers to help.

When to sell your parent’s home

Once you and your parent have made the decision to sell their home, you may wonder whether it’s better to sell before or after they’ve moved into their senior living community. Financial needs, stress and timing are key factors to consider.

Selling before moving to senior living – If the sale will be used for the primary funding of their senior living, it makes sense to sell before moving. If it takes longer than expected to sell the house, you might be facing extra costs on top of the senior living costs, like mortgage payments, utility bills, insurance and any ongoing maintenance. Be sure to discuss this with a trusted financial advisor.

Selling after moving to senior living – If your parent is unable to live alone or has had a recent accident or health issue that benefits from having more immediate care, then moving to a senior living community before their house is sold may be the best option. What’s more, living in their new community reduces any stress they might have felt trying to keep their house clean and vacating the premises while it was being shown – plus an empty house can often be more appealing to buyers.

Selling your parent’s home if they have dementia

A parent dealing with memory loss poses additional challenges for families when selling their home. Typically, only the homeowner can legally transfer their home to a buyer, but obtaining power of attorney (POA) and guardianship can allow you to make decisions on behalf of your parent.

• Power of attorney – This requires your parent to sign a document granting you permission to make decisions on their behalf. While often simple to establish, there are different types of POA, so plan on consulting an elder law attorney to assist you with the process. Be aware that you will not be granted POA if your parent is deemed incompetent, in which case you’ll have to petition for guardianship.
• Guardianship – If a POA is denied, you’ll have to prove that your parent has significant memory loss which requires having a legal guardian to manage their property. While this may be your only option, know that it can also be a more extensive and expensive process.

Your local Atria community director can answer any additional questions you may have and connect you with a financial advisor.

Choosing Atria

At Atria, we understand the difficulty involved in selling your parent’s house and all the financial and emotional complexities that come with that decision. Learn more about the prices and tax benefits of moving into a senior living community, and plug some numbers into our affordability calculator – which can help you compare the costs of senior living with the costs of staying at home – it may be more affordable than you think.

As a leader in the industry, Atria Senior Living is happy to share our expertise and offer any support we can – even if the support you need is from someone other than us. We can call on our trusted relationships with financial advisors, real estate professionals and resources to put you in touch with the best solution for you and your family, whether you’re moving to Atria or not. Feel free to reach out to your local Atria Community Director today.

Our Guide to Help Your Parent Sell Their House (PDF)

Many adult children eventually have to address this question for the sake of their parents’ financial and emotional well-being, not to mention providing peace of mind for any safety concerns. Moving elderly parents out of their home can be an overwhelming prospect, especially if their home has been in the family for years. Yet it may be the right decision, depending on whether a parent has fallen recently, is unable to safely navigate their home, is experiencing loneliness, contending with memory loss or other issues that could jeopardize their health and safety. Read on for some thoughts on when your parent should downsize, when seniors should sell their homes, and what to look for when considering senior living communities.

Determining what’s best for your parent

One of the first questions to ask when wading into this process is “Would my parent benefit from moving into a senior living community?” The answer to that likely depends on your parent’s current quality of life.

• Are they still able to take care of themselves, or do they need help with activities of daily living such as grooming, bathing, etc.?
• Are they socializing with other people, or do they mostly keep to themselves?
• Do they make use of all the floors of their house, or has their routine narrowed to one or two rooms?
• Are they still able to go grocery shopping and cook on their own or would they benefit from chef-prepared meals?
• Are they driving, or are they relying on you (the adult child) to take them to doctor’s appointments, pick up prescriptions and grocery shop?
• Does winter still mean a season of get-togethers and festivities in their home, or is it fraught with the stress that comes from the risks of potential hazards of slips and falls?

If the answers to these questions highlight a growing concern that your parent is better situated in a senior living community, then you may consider discussing the topic of choosing a community for a short-term stay (often referred to as “respite care”). Short-term stays can smooth the transition of moving elderly parents out of their home and into a safer and more active environment.

How to pay for senior living

There are many ways to pay for senior living, but the most common method is to use private funds, such as savings, investments and selling high-value items such as antiques, automobiles, furniture or even selling your parent’s home. Other sources of funding include:

• Pensions
• Social security and retirement accounts (IRAs)
• Loans
• Life insurance policies
• Long-term care benefit plans
• Veterans benefits

For more information, read this “How to pay for senior living” blog.

Deciding to sell the family home

If, after considering all of these options and talking to a financial advisor, you decide that selling the family home is your best option, then the next step is talking with your parent about how they want to sell their home. This is often a very emotional issue, so be patient and mindful of your parent’s feelings as you discuss the details, and read these tips for further insights.

Gathering financial information

As you can imagine, selling a home involves many financial details. Here’s a quick refresher on mortgages and tax laws you’ll want to familiarize yourself with before moving forward.

• Mortgages – If your parents took out a standard mortgage or a reverse mortgage, it helps to understand the difference. A standard mortgage means you pay the lender every month, paying against the principal owed on the home until you own it like any other asset. A reverse mortgage allows you to convert the equity in your house into cash (generally tax-free) without having to sell your house. So, in a standard mortgage, the mortgagor pays the lender. But in a reverse mortgage, the lender pays the mortgagors. If your parents did take out a reverse mortgage, the lender may send them a letter demanding payment within 30 days upon discovering that the house is no longer occupied (although those terms are often extended).
• Taxes – Let’s assume your parent put their house on the market and earns enough money on it to subsidize their care in a senior living community. Depending on the size of their profit, they may have to pay the IRS in capital gains. As with nearly all things tax-related, the specifics involved in the tax implications for your property can get quite complex, so consult a financial advisor or a tax specialist before making any long-term decision. 

Assigning a Power of Attorney (POA)

If you and your parent have agreed that a senior living community is the best choice after reviewing all of the options – and your financial advisor agrees that selling the family home is the best way to finance this cost – there are more details to you’ll need to consider.

One of the next decisions that may crop up is who is selling their home. One option would be for your parent to handle the process of selling their property – provided they are not facing the challenges of memory loss or dementia, and are otherwise able to manage the details of the selling process, of course. If they’re already in a senior living community, they can work with a notary to finalize the required documents that the title company requires to complete the sale.

If your parent does not want to dedicate themselves to all the time involved in selling their house, or if they have been deemed incapable of overseeing the sale, you or someone else who your parent trusts may need to consult an attorney and discuss assuming power of attorney (POA) to sell it for them. AN attorney can walk you through the steps required to assign POA and draft the appropriate documents to ensure authorization is correctly and legally delegated.

Selling the house

Even if you and your parent have sold homes before, you may find that the process of selling their house and moving into a senior living community is different than moving into the next subdivision over. You may be familiar with working with running the comps on your neighborhood, listing your house, paying off any outstanding liens, staging the property, transferring the title, and so on. But if you sell your parents’ house, you and your family will probably need to address one final concern: What real estate agents sometimes call “the stuff.” And while it may be tempting to do it all on your own, hiring a real estate professional who has experience in helping older adults with the transition to senior living is a crucial step.

It bears repeating that, from the start of the discussing selling your parent’s home and throughout the process, you involve your parent in all decisions and take time to calmly and thoroughly address their questions and concerns. This can be a substantial amount of work, so be sure to request help from other family where appropriate.

Making sure it’s the right fit

Moving an elderly parent out of their home is a big decision, and you want to make sure that, if they decide to move into a senior living community, then it’s the right senior living community for them. A few matters to consider when conducting your research and taking tours:

• First impressions – Are the lawns mowed and the grounds maintained? Can you picture your parent walking into the apartments and the dining room and feeling at ease? Is the overall vibe caring and positive?
• Value communication – Does the community respond to your questions and requests in a timely manner? Were you sent a satisfaction survey that asked for your feedback? Do the staff members speak to you, each other, or the residents with courtesy?
• Assess the culture – Try to pick up on the clues that give you insights into the community atmosphere. Do the comments you hear about the residents indicate that they’re treated with respect? Can you get a sense of whether the staff collaborates as a team? Be sure to read reviews about the community. Is their reputation stellar, or do they have affiliations and partnerships that seem unsavory?

Choosing Atria

This is a lot of information to process, but answering all those questions can help you find the right community for you and your parents. Once you decide to make the move, be sure to read our tips on downsizing.

At Atria, we understand the difficulty involved in selling your parents’ house and all the financial and emotional complexities that come with that decision. Learn more about the prices and tax benefits of moving into a senior living community, and plug some numbers into our affordability calculator – which can help you compare the costs of senior living with the costs of staying at home – it may be more affordable than you think.

As a leader in the industry, Atria Senior Living is happy to share our expertise and offer any support we can – even if the support you need is from someone other than us. We can call on our trusted relationships with financial advisors, real estate professionals and resources to put you in touch with the best solution for you and your family, whether you’re moving to Atria or not. Feel free to reach out to your local Atria Community Director today.

Our Guide to Help Decide if You Should Sell Your Parent’s House (PDF)

As you provide care for your aging parent or family member, you may discover the cost of in-home assistance is growing along with their needs, or perhaps their needs are increasingly straining your mental and emotional well-being. Either way, you’re considering senior living as a possible alternative. However, cost is an important factor. Whether or not you or your parent can afford senior living is a question you cannot avoid, but you shouldn’t let assumptions about cost cause you to jump to any conclusions. Thoughtful and careful planning may take a bit of time, energy and discussion with your parent, but it may be worth the investment.

QUESTION: Can you afford a senior living community?

ANSWER: The average cost of assisted living or senior living can vary depending on your desired location, what level of care is needed and what type of community is desired.

Modifying your parent’s existing home for safety and paying for in-home assistance, utilities, mortgage, transportation and other necessities adds up quickly. You may find that senior living actually saves you and your parent money because it covers many living expenses in a single monthly rate.

QUESTION: How do you pay for assisted living? Is there a list of resources?

ANSWER: Early research and planning are key parts of preparation. While many people prefer to not contemplate or discuss this until much later in life, planning early could potentially save you money in the long run.

Below, you will find ideas, resources and tools that can help you cover the cost of assisted living.

1. Traditional resources
2. Veterans benefits
3. Loans
4. Life insurance policies
5. Long-term care benefit plans
6. Real estate

Working with a financial professional can help you identify the best course of action for your situation, which may include a combination of options.

Traditional resource

There are many ways to pay for senior living, but the most common method is to use private funds, such as savings, investments and selling high-value items such as antiques, automobiles and furniture. Pensions, Social Security and retirement accounts (401ks and IRAs) can also help pay for senior living.

Veterans benefits

Is your parent a veteran? The Department of Veterans Affairs has established the Aid and Attendance Pension for veterans and their surviving spouses. This program can help fund senior living. To qualify, a veteran must have:

• At least 90 days of active military service with at least one day of service during a period of national conflict, with honorable discharge, or be their single surviving spouse
• A medical diagnosis requiring assistance with two or more activities of daily living
• Insufficient monthly income to purchase required care
• Limited liquid assets, such as savings and retirement funds

If this may be a viable option to help cover the expense of senior living, please contact your local Veterans Affairs office for more information.

Loans

Your parent may consider tapping into their home’s equity as a possible resource for additional income; it may also be tax-deductible. A home equity line of credit is similar to a home equity loan; however, the line of credit allows you to borrow from an available pool of money as needed and only pay interest on the money borrowed. A reverse mortgage works in some situations, though it requires at least one homeowner to continue living in the house.

Personal loans may be a good short-term option, although interest isn’t tax-deductible and rates can be high, so they generally aren’t suggested. Talk to a trusted financial advisor to explore if this option is potentially useful for your family.

Life insurance policies

There are several ways your parent can use their current life insurance policy to free up cash that can be used to help fund their living needs. Here are a few things to consider:

Your parent can take a loan from their current life insurance policy, with the understanding that it will reduce their policy benefits accordingly

A life insurance policy can be surrendered to receive a cash payout

Learn if their policy features an accelerated death benefit rider, which may give your parent access to a portion of the death benefit if they become terminally ill

Your parent can take a life settlement, where he or she can sell their existing life insurance policy to a third-party company that typically pays more than the surrender value

Your parent may be able to convert their life insurance policy to a long-term care benefit plan

Before making a decision, talk to your trusted health insurance professional or financial advisor.

Long-term care benefit plans

Long-term care insurance covers individuals who need care or assistance with several activities of daily living, such as bathing and getting dressed. Coverage of expenses begins after a designated waiting period.

If your parent needs assisted living, nursing home care or in-home care services and does not have long-term care insurance or the funds to cover associated costs – and they do not qualify for Medicaid – they may be able to convert their existing life insurance policy to a long-term care benefit plan.

This plan covers assisted living and long-term care expenses at the time services are needed, without requiring your parent to spend down their financial assets to qualify for Medicaid coverage.

For more information on converting a life insurance policy into a long-term care plan, contact your trusted insurance professional or financial advisor.

Real estate

While listing and selling your parent’s home through a real estate agent is a good option, many families capitalize on real estate investments without giving up their homes. Your parent may consider selling their home to a family member to keep it in the family, or they may want to rent their home to a family member until everyone is ready to make a long-term decision.

It’s important to keep in mind that the sale of a property could also include a tax payment resulting from appreciating over time. Be sure to consult with a financial advisor or certified public accountant to fully understand the tax implications of selling a property.

These options are simply a starting point for you and your parent. Explore all possible options with a trusted tax professional or financial advisor to determine which options work best for you and your unique financial situation.

The number of Americans aged 65 and older is expected to nearly double by 2060 – a shift that will increase demand for senior housing. In the coming decades, more people will ask themselves: “What is the cost of senior living communities?”

That’s a complex question, and our immediate answer is that it varies according to location, the level of care required, and other factors. In a June 2010 report, the US Government Accountability Office identified some top-level national averages:

• Assisted living options: $1,500–$6,500/month
• Memory care units: Price varies according to location
• Skilled nursing units: $1,500–$10,700/month

The same report also found that all-inclusive retirement living can cost anywhere from $1,800–$600,000 in entry fees alone. The range of that dollar amount is so vast that, in effect, it means that the amount you can expect to pay can vary substantially. Still, what do those dollar values mean? What do you get once you pay them? Let’s delve into the numbers, detailing the costs associated with the type of community so you can get a clearer idea of which option is right for you and your family.

The Cost of Independent Living Communities

Independent living communities are best suited for seniors who are able to live on their own without assistance provided by the community. With that said, many residents of independent living communities do have care needs and often choose to contract with outside home care providers. They may make this decision for any number of reasons – including the benefit of selecting services on a more a la carte basis than an assisted living community might allow for. (Many independent living communities also offer the option of moving to assisted living housing whenever residents are ready.)

The exact figure for how much independent living communities can cost varies according to where you live and the services and amenities that you can access. Upscale dining options, resort-quality features like swimming pools and wellness clinics, chauffeured car services and on-site medical concierge suites will all add to the cost of a lease. A community without any of those perks might not be as expensive.

The median monthly cost of senior independent living in the US was $2,552 in 2018, but many senior living communities do not display their rates and require anyone interested in moving in to speak to someone at the community. At Atria, we’re upfront about our prices, tax and veterans benefits that older adults might be able to access, and we also provide an affordability calculator that makes all the costs of our services transparent.

The Cost of Assisted Living Communities

Seniors often choose an assisted living option to maintain their lifestyle and independence in their own apartment, while benefitting from round-the-clock support whenever they need it. Assisted living costs can vary, but as of 2016, the average rent of a one-bedroom assisted living apartment with a single occupant was $3,628 per month.

Assisted living communities also include fees for care services based on an assessment of residents’ needs. The most frequently requested services include medication assistance and reminders, as well as personal care such as bathing, getting dressed, and scheduling appointments with physicians. Meals, laundry, and housekeeping are generally all included, and residents can still enjoy the ongoing programs, events, and workshops that the community hosts. Assisted living communities may also offer memory care neighborhoods for residents with Alzheimer’s or dementia.

The Costs of Continuing Care Retirement Communities (CCRCs)

Continuing care retirement communities (or CCRCs) are designed so that residents can access higher levels of care when they need them without having to move to an entirely different community. They generally offer three levels of care: independent living, assisted living, and skilled nursing units. As with assisted living, some CCRC facilities offer memory care for residents with Alzheimer’s or dementia – a service that incurs an additional cost.

Since CCRCs do offer so many thresholds of care, they tend to be more expensive than communities that offer only assisted or independent living services. CCRCs usually charge an initial entrance fee, which starts around $100,000 for a non-purchase (or rental) arrangement, but they can climb to $1,000,000 depending on the size of the living unit and the community’s location. They also charge monthly service fees that typically range between $1,000–$5,000.

The types of services that assisted living communities and CCRCs offer often overlap, so it’s worth noting a few differences between them:

• CCRCs generally ask residents to sign a sizable long-term contract and pay a hefty buy-in fee. Assisted living communities typically rent on a month-to-month basis and charge a minimal new resident service fee. (Similarly, CCRCs ask for a lifetime commitment, whereas assisted living communities rent monthly.)
• CCRCs may rely on continued care service contracts with other providers at off-campus locations. Assisted living communities generally have an in-house staff who maintain the consistency of care.
• Most activities at CCRCs are resident-organized. Assisted living communities tend to hire professionals who specialize in developing monthly calendars of events for the residents. These events might include fitness classes or guest lectures.

The Costs of Living at Home

We realize that we’ve blitzed you with a lot of numbers that, by this point, might beg the question: “Isn’t it cheaper just to live at home?” That all depends on your circumstances.

Do you own your house or are you paying off a mortgage? Is your house or apartment equipped with aging-in-place modifications, or is that another investment that you’ll have to pay down soon? Are you able to perform maintenance or upkeep on your home, or do you pay someone to mow your lawn, rake your leaves, fix the backyard gate, and so on?

Answering those questions can help you determine how much you’re really paying to stay at home rather than move into a community. With that said, bear in mind this analysis that the costs of aging-in-place modifications (such as installing ramps, grab bars, better lighting, and safer flooring options) total about $20,000–$30,000. Other estimates peg that figure much higher.

The total cost of living in an assisted living community is around $48,000 per year. Compare that to some of the fees that can accrue when we choose to stay at home:

• The average cost of hiring a private duty aide who performs tasks such as cleaning or cooking is around $48,048 per year.
• Employing a full-time home health aide costs about $50,336 per year.
• Adult day health care typically runs around $18,720 per year.

As we age, the costs associated with ensuring that we’re receiving the care, social support, and daily maintenance we need can all add up. Older adults often find that paying one lump sum for peace of mind is worth the cost. With a provider like Atria, that sum pays for all these features that comprise an active, engaged life:

• Social Life: Social, cultural, and educational events to look forward to every day.
• Transportation: Car or bus service that couriers residents to outings, errands, and appointments.
• Dining: Chef-prepared meal options that meet residents’ dietary needs.
• Housekeeping: An attentive staff handles all maintenance requests and keeps apartments tidy.
• Emergency Assistance: Access to on-site help 24/7 in the event of an emergency.
• Exercise / Fitness: Daily opportunities to improve strength, flexibility, and balance with other residents.
• Independence: Assistance from a discreet staff to help residents live on their own terms.

Determining Senior Living Costs

Making sense of the costs that bubble up as we answer the “moving to a senior living community vs. staying at home” question can be overwhelming, but reviewing our financial resources is a great place to start.

If you or someone you know wants to learn more about Atria, visit AtriaSeniorLiving.com/FindACommunity to discover the location nearest you.