Wednesday, March 7, 2012

Get Out of the House!

Staying in your home when you are elderly can be difficult for you and a nightmare for your kids.

When old folks die, often their adult children have to clean up the messes they leave behind.  And if you decide to "stay in the family home" using a reverse mortgage or whatever, you may be leaving a mess for your kids to clean up.

During the last decade of your life, you should try to enjoy yourself as much as possible.  Get out, see things, go on those damn bus tours that Seniors seem to like.  But don't spend it cleaning gutters, falling off the ladder and breaking your hip, or worst of all, living in your own squalor, when you can't keep up with the maintenance.

There are so many good reasons to downsize and simplify your life, it isn't funny.   Less to clean, less to worry about, less to dust, less to pay for, less to worry about getting stolen or lost.  Just less - it's more.

But your kids will thank you, too.  Less for them to deal with.

I have seen a few scenarios play out, in this regard, and in each case, it either ends up being a nightmare to administer, causes bad blood among siblings, or ends up in the waste of the estate.

1.  The No-Time-For-This Kids:   I went to an estate sale one weekend.   An older couple had lived in a house in our neighborhood for a long time.   They both smoked and first one, then the other, died.  It is not atypical for married people to die within a short time of one another.

Their adult children flew out, arrange the funeral, and then held a yard sale to "clean out" the house.   Everything must go - today - as they were flying back to Albuquerque on Monday.  So everything sold, at fire sale prices.  And much more just went to the dumpster.

On Sunday, they talked to a Real Estate Agent and arranged to sell the house for close to $100,000 below market value, just to "make it go away".  The kids all had high-paying jobs out West, and were not interested in this chore.

So they walked away, leaving money on the table.  And some local investor got a good deal.   He painted over the nicotine stains on the walls, listed the home and sold it in three weeks for a hundred grand more than he paid for it.

What a waste of an Estate.

2.  Too-Much-Time-Kids:  On the opposite end of the spectrum, are the kids who are so emotionally attached to the family home and all the family heirlooms and mementos inside that they cannot bring themselves to unload any of it.  It can take them months, if not years, for them to sort through it all, piece by piece, and decide what to do with all this precious "stuff".  Much ends up in storage lockers, or overflowing their own homes - if they do not in fact move in.

In this instance, the Estate might not be "wasted" but instead of leaving behind a legacy, you've left your children an emotional nightmare to go though.  They don't want to be the ones to throw away your third grade book report.  But on the other hand, did you really expect them to save it?  And why were you saving it?

Downsizing eliminates this chore for your kids.  And makes your life easier, too!

3.  Hoarder Parents:  Of course, this leads to the next problem.    As you get older and start losing your mind (it happens, in about 50% of cases) you will likely start accumulating crap.  And in many cases, the home you leave for your kids will be a nightmare to clean up - if they do not have to clean it up while you are alive, repeatedly.

Again, this often results in a waste of the estate, as the home falls down around the elderly person living in it, as the have no money to keep up a big house.  So the house sells - usually to a local builder or developer, who remodels it and flips it - to the cheers of the neighbors, who lived with your eyesore, lo these many years.

4.  Sibling Rivalry:  Of course, as I noted in an earlier posting, leaving behind a house or houses, furniture, cars, and the like, can cause all sorts of problems for your kids, if they don't get along.   Your legacy to your children may be a bitter and long-lasting feud over your estate.

If one kid lives nearby or is Executor, he may start stealing items from the home.   Cash and jewelry go first.  If it isn't in the inventory of the estate, the other siblings will never know about it.  And then they can delay the probate for months or even years, and use the home (even rent it out and pocket the cash) and your cars and sell off, one piece at a time, your possessions.

The Estate is not "wasted" but one child is stealing it from the others.  Leaving all your crap behind makes it easier for these sorts of scenarios to play out.  And yes, it happens to all sorts of people.  The excuses and self-justifications people use to steal from siblings are very numerous.   Oftentimes, the thief will say they are doing a favor by preventing a "spendthrift" sibling from spending it all at once.   "Better I should have this money, they'd just waste it!"

Yes, people think this way, when money is involved.

So what's a better approach?  Get out of the house!  When you hit retirement age, start thinking about where you want to spend your remaining years.  Do you really want to be mowing lawns all the time?  Cleaning gutters?  Keeping a huge kitchen and four bedrooms and three bathrooms clean?  Is this how you envisioned retirement?

Because, each day you will become more frail and more weak and be able to do less and less.  And a large home turns from an asset to a liability in a real hurry.   And you can get top dollar for a home in good shape, but only "fire sale" prices on a home that is run-down and falling down.

And if you are "put in a home" after they find you babbling on the lawn (seen it!) then your house might get sold at a very discounted price, in a hurry, and your possessions scattered to the four winds.

Many parents think they are leaving an "inheritance" to their kids in the form of the family home and its contents.  But what you may be leaving to them is just a big hassle.

Do you have an heirloom you want your grandchildren to have?   Give it to your children now, rather than hope they find it after you die.  Because likely, they will toss it in a dumpster, not knowing what it was or what it was worth.

It can be liberating to give things like this away - and a good chance to interact with your children and grandchildren.

And as one oldster tells me, "I like going over to my kid's houses and visiting my possessions."    It is not like they are gone, just moved on.