Helping the in-laws with their living situation, retirement, etc?

[jeromedawg]

Hey all,

I've posted here and there about my in-laws and how terrible they are managing money and decision-making. They have a house they took a 30yr loan out on back in 2004 (it's a 3bed 2bath home, and the current value is maybe only $40k more than what they originally bought it for in '04 - it was originally priced at $525k back then and is around $565k now), and they have about $250k in principal left on it. Today, my wife and I discussed with my parents the potential option of having them move into the place we're currently in (owned by my parents) where we pay $700 a month for (it's a great bargain for us). After further discussion, my parents came to the conclusion that they would want to ask for $1500 rent (which is still well-below market rental pricing) from my in-laws if we wanted to do this. As it is, they collect somewhere in the ballpark of $2000 for social security. I don't think that number goes up either once they stop working and 'retire' (they own/run a restaurant business). On a sidenote: she thinks that they won't be able to sell the restaurant because they are in a month-to-month lease with the landlord and that it is highly unlikely that someone will take over the business without a lease contract in place. That said, it seems they may will walk away from it at a loss. At best, they could try to liquidate the restaurant equipment and furnishings but they probably wouldn't get much back for it either way.

Once they have walked away, they'll have no other source of income other than the money they receive from renting out two of the other rooms in their home to single-tenants and social security. My wife has a heavy-burden on her heart to help her parents out at least with a decent living arrangement that is closer to us if possible. Since my parents aren't willing to involve themselves (despite being given the impression that they might in earlier conversations) at this point, we have to rule the option out that my in-laws could viably move into our place (and that we would have to find another place). Plus, it seems like it wouldn't benefit them OR us (as we have been able to save quite a bit with 'rent' that low)... not to mention, if they moved into our place, it is assumed that we would have found another place and whether we're renting or will have bought, it will definitely be more expensive regardless.

So the following thought came to mind.... what if we helped them pay off the remainder of their mortgage OR help with mortgage payments? That way they could just keep living where they are comfortably without having to make changes. Basically, we would co-own the property with them and then I suppose the other half of it would be our future 'inheritance'. The only difficult part of this would be that they live an hour away from us (Orange County) in Chatsworth (San Fernando Valley in SoCal). With nothing better to do, they'd probably find themselves constantly driving down to visit us to see their grandson and soon-to-be granddaughter. Then we could just figure out how to split the rent money from the tenants they rent to so that they have 'enough' for themselves (in addition to social security). OR we could potentially have them still move closer to us in housing that's as affordable as can be found in our immediate area, and rent out the Chatsworth house completely.

If nothing changes and they just walk away from the restaurant, I suppose they could just keep living at the current place as long as they continue renting out rooms to those tenants, but that seems a bit risky given that the tenants are pretty much free to leave when they want (I'm pretty sure they don't make them sign any sort of contract on length of stay or whatever - it's a very informal rental arrangement).

Cost of living up there is definitely lower than in Orange County but not by a ton. We certainly have the capital to help pay off the mortgage and the home is in pretty good condition overall. Given my current work situation with 100% telecommute, we could  move up closer to them or even into their place (though, we'd then have to find affordable housing for them, which I don't think would be as hard as in our current area) if we wanted or needed to as our family grows. But I really like living in Orange County in addition to the arrangement we have with my parents as far as low-rent is concerned. With another kid on the way though, space will be getting tighter in our condo but it should be manageable. If we decided to have 3 or even 4 kids in the long run though, it would be getting really tight in there. Of course, I don't know if the 'solution' is as simple as moving into the Chatsworth house. This part is all rabbit-hole digression and speculation anyway...

Any suggestions or thoughts?

[historienne]

It seems like the obvious answer is for them to sell their house (they have $300k in equity, right?) and buy something smaller/cheaper near you and your wife.  No need for you to entangle yourselves financially with them, no need for you all to live in one household, no need for you to tie up your own money for an indefinite amount of time in someone else's house.   

Is there a reason this isn't the clear choice?

[jeromedawg]

It seems like the obvious answer is for them to sell their house (they have $300k in equity, right?) and buy something smaller/cheaper near you and your wife.  No need for you to entangle yourselves financially with them, no need for you all to live in one household, no need for you to tie up your own money for an indefinite amount of time in someone else's house.   

Is there a reason this isn't the clear choice?

It's mostly my wife wanting to carry the burden. Maybe she needs to let go - she has been doing a lot of things 'on their behalf' for a long time now. I'm sure they could figure things out on their own.

Selling their house and "buying smaller/cheaper" near us is a possible option that we will investigate - even if not in the same city, I think they could potentially find a 1 bed studio or condo in that price range. I'm not familiar enough with the home-selling/buying process to know if $300k in equity would actually be the true amount of equity after factoring in additional fees, taxes (on the sale), etc... do you happen to know how that plays in? Or is it nominal compared to the overall amount of proceeds from the sale?

EDIT: just from a quick search around, there aren't a ton of options in the immediate vicinity, other than moving them into one of those senior communities (which they would hate). But lower cost homes are pretty much in not-so-nice areas of the surrounding cities. The most viable option it seems are 1000~sq ft apartment units that are $300k in a run-down part of Tustin... that would definitely be a downgrade [as far as surrounding neighborhood area] in addition to downsizing. I'm guessing most folks wanting to retire AND downsize want to leave out the option of downgrading in terms of the neighborhood.

Also, the other 'benefit' I could see as far as paying off the remainder off their mortgage, is that the house will essentially be ours later on after they've passed. But we would need to make that agreement with them now as part of their inheritance in that they the deed would be passed on to us and that my brother in law would be out of the equation (since he's not even down there and wouldn't be helping with paying anything off anyway). So in the long-term this would help us in terms of building equity, I would think. But we're looking at maybe 10-20 years I'm guessing - they're both around 70.

[deborah]

If your wife isn't an only child, arrangements like this always involve friction with siblings. 'You got a better inheritance by being "given" the house...' It doesn't  matter how you argue the matter, it won't work - even if they appear happy with it now.

[jeromedawg]

If your wife isn't an only child, arrangements like this always involve friction with siblings. 'You got a better inheritance by being "given" the house...' It doesn't  matter how you argue the matter, it won't work - even if they appear happy with it now.

Yea, that's what I'm afraid of in the back of my mind. He's 15 years older and barely ever helps out with stuff like my wife does. He only talks on the phone with them and costs occasionally but yea... I think my in laws want to ultimately give more to my wife but just not say anything to him. For property that would be a little trickier. Thing is, we're expecting very little of their "inheritance" to begin with... they just don't have a lot of money saved up.

[jeromedawg]

You should have them check out Leisure World in Seal Beach www.lwsb.com or its more expensive cousin Laguna Woods. Leisure World has 1 bedroom co op apts starting in the $100K range and 2 bedrooms starting in the $150k range with assn dues around $350/month including prop taxes, insurance and some utilities. My Mom lived there for over 10 years and enoyed it. Lots of services and activities. Buses. Medical center. Gym. Etc... And 2 miles to the beach.

ETA I just saw where you said your in laws would hate a seniors community but you really should check it out. Its not an old folks home and most people still work full time and are very active. Many just use it as a second home and travel or live elsewhere. The gut who bought my Mom's place was a 55 year old FIREee surfer dude who just wanted to spend his days surfing rather than working. The low cost buy in and monthly fees allowed him to retire and do that.

Lol so we spent half a day touring the laguna woods leisure world with them and they staunchly were against the idea of living there. I dunno, maybe they'll change their tune when they realize there aren't really any other options. I think it would be fine if they lived there, but yea I can see why they may not want to as it can feel pretty geriatric.

[Playing with Fire UK]

A word of caution from my experience that my apply to you:

We went through a phase of helping my in-laws a lot. They were unable to meet mortgage payments and minimum payments and food and fuel bills. We paid off a chunk of the bills, bought them a big monthly food shop and contributed towards the mortgage payments while we arranged a refinance.

They then used the 'extra' income to buy us ridiculously expensive (but well-meaning) Christmas presents and to take out a huge loan for some house improvements (IMO unnecessary). It made visits pretty tense and was difficult for us to see them spending money that we had given them on things that we wouldn't buy for ourselves. It was really tense when they cashed out the money we'd put into the mortgage to give to another sibling. 

Part of the issue was that also we could just about afford it, we also weren't in a great place financially at the time. Now I'd only give 'surplus' money that I had no need for and wouldn't be bothered if it was spent entirely on luxury cat food.

Some people who are bad with money will spend every cent you can give them, there is no 'enough'.

As I said, this may be totally different from your in-laws, I don't know them and am not trying to insult them.

[mustachepungoeshere]

It was really tense when they cashed out the money we'd put into the mortgage to give to another sibling. 

:O

Some people who are bad with money will spend every cent you can give them, there is no 'enough'.

"Givers have to set limits because takers never do."

[Playing with Fire UK]

It was really tense when they cashed out the money we'd put into the mortgage to give to another sibling. 

:O

Some people who are bad with money will spend every cent you can give them, there is no 'enough'.

"Givers have to set limits because takers never do."

I was fuming. The thing is, they are great people, wonderful and generous. They genuinely didn't think about this being a problem, because their answer to 'should I buy/give this' is the same as 'can I obtain credit for this and afford the first payment'. There is no concept that if I have to pay £1000 of bills before payday and my balance shows £1100, the money available to me is £100, not £1000.

I thought that the advice I'd heard in the past about not mixing money and family only applied to people with awful, mean, horrible families and that I would be fine. Lesson learnt.

[mustachepungoeshere]

It was really tense when they cashed out the money we'd put into the mortgage to give to another sibling. 

:O

Some people who are bad with money will spend every cent you can give them, there is no 'enough'.

"Givers have to set limits because takers never do."

I was fuming. The thing is, they are great people, wonderful and generous. They genuinely didn't think about this being a problem, because their answer to 'should I buy/give this' is the same as 'can I obtain credit for this and afford the first payment'. There is no concept that if I have to pay £1000 of bills before payday and my balance shows £1100, the money available to me is £100, not £1000.

I thought that the advice I'd heard in the past about not mixing money and family only applied to people with awful, mean, horrible families and that I would be fine. Lesson learnt.

If they consider that an act of generosity on their part, does that mean they see you as ungenerous for objecting to it?

[Playing with Fire UK]

If they consider that an act of generosity on their part, does that mean they see you as ungenerous for objecting to it?

They think I'm cold hearted and love money and maths more than Jesus and people. They also think that there is no link between spending £10 on 10 occasions and the bank saying they have £100 less to spend. Maths isn't looking so bad now is it?

They definitely think I'm ungenerous for suggesting that possibly their cat shouldn't be eating better steak than me. That is well grounded, I dislike that cat greatly.

[jeromedawg]

A word of caution from my experience that my apply to you:

We went through a phase of helping my in-laws a lot. They were unable to meet mortgage payments and minimum payments and food and fuel bills. We paid off a chunk of the bills, bought them a big monthly food shop and contributed towards the mortgage payments while we arranged a refinance.

They then used the 'extra' income to buy us ridiculously expensive (but well-meaning) Christmas presents and to take out a huge loan for some house improvements (IMO unnecessary). It made visits pretty tense and was difficult for us to see them spending money that we had given them on things that we wouldn't buy for ourselves. It was really tense when they cashed out the money we'd put into the mortgage to give to another sibling. 

Part of the issue was that also we could just about afford it, we also weren't in a great place financially at the time. Now I'd only give 'surplus' money that I had no need for and wouldn't be bothered if it was spent entirely on luxury cat food.

Some people who are bad with money will spend every cent you can give them, there is no 'enough'.

As I said, this may be totally different from your in-laws, I don't know them and am not trying to insult them.

Wow, that sounds like an awful situation. They're not quite at the point of needing money for food and everyday living expenses. The idea about paying their remaining loan was sort of a "help them out and benefit ourselves" kind of idea where we would eventually own the property, but deborah makes a really good point about that perhaps being a good idea only if my wife was the only-child. Given that her brother is 15 years older you'd almost think she is. However, after thinking about it more and also recalling that her parents told her they want to give her more $$$ from whatever inheritance they have, and that they would just not say anything about how much they're giving her to the brother, I think it would be a good idea not to involve ourselves in this 'venture' haha.
The whole Leisure World thing is starting to sound like a better idea, especially if they are wanting to be closer to their grandkids. But yea, I would definitely avoid contributing much money to them for daily expenses at least on a regular basis because I could totally see something like what you experienced come up. My mother in law can be an extravagant spender when she has no money. And my father in law will go buy what he needs without price comparing or shopping. It makes for an awful combination - they buy us Christmas gifts that they shouldn't have paid that much for and we usually end up making them return it. And anything they buy, they'll justify it by saying "oh we made extra money this month from the restaurant so why not?" - smh... this is what got them into this situation to begin with. No foresight to plan ahead and wanting to keep up with what their friends have... Lately they've been talking about getting themselves a minivan (yes, a minivan. for the two of them), and then justifying it with their idealistic daydreams which include all of us going on roadtrips together all the time. *sigh* of course, the other justification is that they need a bigger vehicle for transporting stuff to/from the restaurant (the restaurant that they talk about retiring/walking-away from in a matter of years).

[mustachepungoeshere]

If they consider that an act of generosity on their part, does that mean they see you as ungenerous for objecting to it?

They think I'm cold hearted and love money and maths more than Jesus and people. They also think that there is no link between spending £10 on 10 occasions and the bank saying they have £100 less to spend. Maths isn't looking so bad now is it?

They definitely think I'm ungenerous for suggesting that possibly their cat shouldn't be eating better steak than me. That is well grounded, I dislike that cat greatly.

Jesus fuck, I would be apoplectic.

How's your blood pressure?

[Cassie]

Spartana had a great suggestion and I would not pay for things for them. They need to learn to live within their means.  I would stick myself in the eye with a sharp stick before i would take $ from any of my kids.  If you don't rescue people they figure it out.  It is great to offer solutions but then let them be in charge and live with their choices.

[Playing with Fire UK]

If they consider that an act of generosity on their part, does that mean they see you as ungenerous for objecting to it?

They think I'm cold hearted and love money and maths more than Jesus and people. They also think that there is no link between spending £10 on 10 occasions and the bank saying they have £100 less to spend. Maths isn't looking so bad now is it?

They definitely think I'm ungenerous for suggesting that possibly their cat shouldn't be eating better steak than me. That is well grounded, I dislike that cat greatly.

Jesus fuck, I would be apoplectic.

How's your blood pressure?

My blood pressure is improving, thanks. We had a change of circumstances which provided a convenient hard stop (SO got a new better job with lower pay). Now we help them out with organisational things (putting them on a cheaper gas deal) but won't give them any money. We say that we can't afford it but what we mean is we choose not to spend our money on luxury cat food.

[Playing with Fire UK]

... The idea about paying their remaining loan was sort of a "help them out and benefit ourselves" kind of idea where we would eventually own the property, but deborah makes a really good point about that perhaps being a good idea only if my wife was the only-child. Given that her brother is 15 years older you'd almost think she is. However, after thinking about it more and also recalling that her parents told her they want to give her more $$$ from whatever inheritance they have, and that they would just not say anything about how much they're giving her to the brother, I think it would be a good idea not to involve ourselves in this 'venture' haha. ...

Yep, I'd second your decision here. If you have excess money that you can't spend and will never need back in inheritance and the in-laws need it and it will actually help them then carry on. If you would need or want the money back via inheritance then it could go horribly wrong.

[Linea_Norway]

My blood pressure is improving, thanks. We had a change of circumstances which provided a convenient hard stop (SO got a new better job with lower pay). Now we help them out with organisational things (putting them on a cheaper gas deal) but won't give them any money. We say that we can't afford it but what we mean is we choose not to spend our money on luxury cat food.

Smart choice. You could also by checking if they can get cheaper insurances. These tend to go up in price if you don't shop insurance company for many years.

[Playing with Fire UK]

My blood pressure is improving, thanks. We had a change of circumstances which provided a convenient hard stop (SO got a new better job with lower pay). Now we help them out with organisational things (putting them on a cheaper gas deal) but won't give them any money. We say that we can't afford it but what we mean is we choose not to spend our money on luxury cat food.

Smart choice. You could also by checking if they can get cheaper insurances. These tend to go up in price if you don't shop insurance company for many years.

Solid point. We identified a bunch of overlaps in their warranties and insurance policies (they've basically been taken advantage of by scuzzy salespeople). We tried to get them to drop some policies then but they weren't having any of it. It's one of those 'so expensive to be poor things', because they can't afford to replace an appliance, they get policies on everything. If they could drop the non-essential policies, they could quickly save up enough to replace any appliance (possibly not the boiler), but of course they wouldn't save the money, so would end up in the shit.

I'll have another go at this when we visit over the holidays - thanks for the reminder!

[Villanelle]

Leisure World may not excite them, but if it's what they can afford, then, well... it's what they can afford.  They weren't responsible with their finances, and that means they already spent the option to live in the place of their choosing.  They need to live within their means and helping them avoid that doesn't do them or you any favors long term.  It isn't as though Leisure World is a cardboard box on a shandy street corner.  It's safe and clean and not especially sparse, so it's not as though it's some cruel fate to which you are sentencing them with your refusal to help. 

[Playing with Fire UK]

Leisure World may not excite them, but if it's what they can afford, then, well... it's what they can afford.  They weren't responsible with their finances, and that means they already spent the option to live in the place of their choosing.  They need to live within their means and helping them avoid that doesn't do them or you any favors long term.  It isn't as though Leisure World is a cardboard box on a shandy street corner.  It's safe and clean and not especially sparse, so it's not as though it's some cruel fate to which you are sentencing them with your refusal to help.

You are 100% right Villanelle, but parent dynamics can be difficult. If Leisure World is presented to them as the only choice the in-laws may hate it as a matter of principle. If the OP and spouse are responsible for the decision or realisation then the in-laws could see this as 'my child put me in a home'.

I'd try looking at housing as part of the overall budgeting puzzle. Take the minimum spend for each category and compare to what they have available; so they can live at Leisure World and have money for holidays and not have to work at the restaurant or stay in their current house and work x hours in the restaurant a week or live in a downsized house and spend whatever is left over.

[mozar]

OP, I've been reading your posts with interest for a long time now. I think its time to let go. If they want to work and spend all their money until they drop dead, or more likely, become disabled, let them. They're not going to change until they are forced to. You can bemoan all the ways they are wasting money, but its their money. And estate planning only works if the people whose estate it is will participate in the planning. Worst case scenario is that they have to sell their house, downsize, and have to live off ss. They'll be doing better than a lot of people if they can only afford a condo in Leisure world.

[TrMama]

OP, I've been reading your posts with interest for a long time now. I think its time to let go. If they want to work and spend all their money until they drop dead, or more likely, become disabled, let them. They're not going to change until they are forced to. You can bemoan all the ways they are wasting money, but its their money. And estate planning only works if the people whose estate it is will participate in the planning. Worst case scenario is that they have to sell their house, downsize, and have to live off ss. They'll be doing better than a lot of people if they can only afford a condo in Leisure world.

^^ This. I've also been following your posts about your ILs. As a card carrying member of the sandwich generation I can definitively say you are trying to get involved way, way too early. Both of your ILs are mobile and working for goodness sake. They have a positive net worth and multiple income streams. They still have each other. They are fine.

If you really want to help someone, the best possible thing you could buy is some therapy for your wife so she can figure out how to put down the burden of guilt she feels.

If you must get involved financially, the only thing you should do is to research whatever government subsidies exist for your ILs and help them apply. Do not, under any circumstances, pay for anything for them. There isn't enough money in the world to plug that hole.

[Cassie]

I totally agree with the above 2 posters. Time to let it go.....................

[iluvzbeach]

I agree with the posters above, with a caveat...although it's their money (or lack thereof) and you want to distance yourself as much as possible, there is the risk that they would do a re-fi or reverse mortgage on the house and take cash out, which when spent would leave them with nothing and then the OP and his wife pretty much have no choice but to help out with housing and whatnot.

I'm not familiar with LW in Laguna Woods, but the one in Seal Beach seems like a great option. I've seen the property before and it looks like a lovely option. Could you sell them on the idea by posing it as a way for them to have a carefree life with little concern for exterior maintenance and the ability to travel in their new minivan (god forbid) at the drop of a hat? My dad and stepmom had to downsize a few years back because of finances and at the time they weren't willing to go with a low-maintenance option, yet four short years later they are questioning their decision and are thinking of moving yet again to something that doesn't require them to deal with maintenance. Keep in mind the exterior maintenance is not only a time suck, but also a hit on the pocketbook.

Best wishes!