Photo: Marc Royce
Q: My 61-year-old aunt mentioned that she wants to sell her condo and have my husband and me buy her another one in our names (she will pay for everything). That way, she won't lose her property if she becomes sick or disabled. Though she's got no one else to take care of her, my gut reaction is not to do it. I know I'll have to help her out physically as she gets older, but the idea of assuming her finances is overwhelming. What can she do to secure her future besides ask us to do it for her?
A: I realize your aunt thinks this is a win-win for everyone, but it could be a no-win situation. Consider these scary scenarios: If you and your husband divorce, you might have to sell the condo as part of the settlement. Or if you or your husband are in a car accident and get sued for damages that exceed the coverage in your auto insurance policy, a judge could force you to sell the property. Where is that going to leave your aunt?
The smarter move is for her to keep the condo and continue building equity in it. If she needs income later on, she can look into getting a reverse mortgage. But if the home is in your name, she's out of luck, since you must be at least 62 and an owner of the property to qualify.
Encourage her to look into whether long-term-care insurance makes sense. The premiums can be a few thousand dollars a year, but it may provide the peace of mind you're all looking for. Your aunt can use her benefit to cover the cost of approved nursing home and at-home care. The American Association for Long-Term Care Insurance (AALTCI.org) has a consumer section where you can search for agents in your area.
I also want you to make sure your aunt has a will and a revocable living trust with an incapacity clause. When the time comes for you and your husband to care for her, that clause is going to make it much easier to step in and manage her affairs.