My in-laws have disclosed that they are having money troubles. They are in their seventies and are pretty healthy. They are not frugal by mustachian standards, but they have enough income to live on comfortably if they would just tighten up their belts a little bit, IMO.
Income is $2900/mo from social security and IRA distributions.
They own a home worth approximately $275,000. They have a home equity loan of approximately $100K, with a payment of $300/month. Not sure of the terms.
I'm honestly not too sure about the specifics, and I'm not sure that I'll even be able to get the full picture. My husband went over last week to look at everything and I only know what he's telling me. I'm better with budgeting and finances than he is, but we felt that my presence would be embarrassing for them, so I'm trying to work behind the scenes.
He has a brother and 2 sisters, and his brother has come up with an idea that the siblings should split the home equity payment (or I guess potentially take out a new mortgage for $100k), and in exchange, the parents will put the house into their children's names. Everyone except me (parents included) thinks this is a win/win. I'm concerned that the parents are giving up too much with this arrangement. Right now, they have quite a bit of equity in the home which gives them the ability to downsize, or move to a senior community. They aren't interested in either of those things, but I think taking the options away from them altogether is a poor decision. Also, if things become more financially difficult for the parents, for example if one of them dies resulting in less SS for the surviving parent, and they don't have their home equity anymore, I doubt that any of the siblings would be willing to give their parents money to live on. I say this based on history of watching the family dynamics, particularly regarding the brother who has come up with this plan. I see this as a power play on the part of the siblings to preserve their inheritance. They are terrified that the parents will take out a reverse mortgage.
IMO, it will not be difficult to find $300/month to cut from their parents' budget. The main problem is trying to get grown adults to control their spending. If we were to have the home in our names, the parents would likely just see that they have an extra $300/mo to spend and would promptly buy a new car, which they do not need.
What do you all think? I would like to be able to articulate as many pitfalls with this plan as possible to my husband.