Cutting off the gravy train

[The Walk of the Penguin Mich]

Along with the problems with step kids, I think I'm going to have a huge problem on my hands in a few years.  I'll try to condense the story, but this is still likely going to be long.

Earlier this week, my dad just got a diagnosis of pancreatic cancer.  Not unexpected.  We (my siblings and I) in Jan. got wind of this when he first wound up in the hospital.  Long story short, his biopsy and CT scan at the time came back negative.  The only symptom was a constricture of the bile duct (which is what put him in the hospital to begin with).  Stent placed in bile duct, everything's working good and he has had no symptoms.  4 GI docs have said that there is some sort of cancer, they just can't find it.  It took a 5th doctor in NYC to determine how to get a biopsy of it, and it came back positive.  So his time is limited.

10 years ago, he remarried a woman with 4 kids.  This woman has been an utter angel, and I begrudge her nothing.  However, her kids are trainwrecks that make Honey Boo Boo's family look like they have class.  All 4 range between 40-50 and only 1 is employed full time.  One is employed half time and 2 are on disability.  Those that are on disability are on for addiction issues.  One totally burned her bridges with my dad, so there is no doubt in my mind that when she finds out he is no longer there, she'll be there with her hand out.

All are unbanked.  That means, they only work in cash.  It also means that when they need a vehicle, they go to the bank of my dad as no other formal bank will touch them.  He takes a loan out in his name, makes the payment and collects the payment and insurance from them.  This way, his ass is covered.  The one employed part time just finished paying off her car, but 8 months behind schedule.  The other just took out a loan for a pick up that he needs for his business.  This is the one that is fully employed.  He is almost paying on time, but I suspect if he had this loan with a bank himself, the truck would be repossessed.  Over the years, they have asked for various loans for purposes from my dad, and they've always paid him back.

Here are my concerns....
Dad is leaving all of his cash to his wife.  I have absolutely NO problem with this.  The paid for house is her house to live in as long as she wants to live in it, but the house was paid off while my mom was still alive and my mom's inheritance from her mom was the 50% down payment, so the house is willed to me and my sibs.  Personally, I'd prefer that she live there only so much that I know that she would have a good roof over her head.  Me and my siblings have agreed that we'd cover the expenses on the house as long as she wants to live there.  If she is careful, she *should* have enough money with what she has, and what dad will be leaving her, to live fairly well.

I have NO PROBLEM sending money her way if she needs it.  However, I do NOT want to support her leaches of kids.  And unfortunately, I see her as enough of a soft touch that she'd 'loan' her kids money and as my dad would no longer be there, they would consider that this does not need to be repaid.  So I can see her easily loaning out this money and finding herself short.  Ultimately, I'd be supporting the leaches.

I have absolutely no idea how to deal with this.  I want something in the back of my mind so that I am not caught unawares.  I'd bet my ass, hat and gas mask that there will be some permutation of this happen before 2016.

[souldoubt]

Sorry to hear about your dad and I hope he suffers as little as possible.  I really don't know what kind of advice to give regarding the future situation.  I think it's great you and your siblings get along with your dad's wife and want her to live in the house that's been willed to all of you but if she lets any of her kids live there it's possibly going to put a strain on the relationship.  If any of them move in and don't take care of the house it's going to fall on you and your siblings to keep it up.  If she burns through her money taking care of them what are you going to do if you see that she's struggling?  Your options are to kick all of her kids out and make sure she only lives there, continue paying to support her kids or paying her bills directly if she's short on money.  Whatever you decide I would talk about it sooner rather than later with the siblings and make sure you're all on the same page.  Good luck.  

[Bonny]

Is there a formal written Life Estate document or reference in his Trust?

[The Walk of the Penguin Mich]

Jun 11, 2014 14:05:36 GMT -5 Bonny said:

Is there a formal written Life Estate document or reference in his Trust?

Yes, just signed it last month.  I didn't realize that I'd be receiving copies of the insurance papers for it, so it took me by surprise because I received them from USAA.  I don't have property insured through them, just my car.  It took me a few minutes to figure out what was going on.

[The Walk of the Penguin Mich]

Jun 11, 2014 14:04:28 GMT -5 souldoubt said:

Sorry to hear about your dad and I hope he suffers as little as possible.  I really don't know what kind of advice to give regarding the future situation.  I think it's great you and your siblings get along with your dad's wife and want her to live in the house that's been willed to all of you but if she lets any of her kids live there it's possibly going to put a strain on the relationship.  If any of them move in and don't take care of the house it's going to fall on you and your siblings to keep it up.  If she burns through her money taking care of them what are you going to do if you see that she's struggling?  Your options are to kick all of her kids out and make sure she only lives there, continue paying to support her kids or paying her bills directly if she's short on money.  Whatever you decide I would talk about it sooner rather than later with the siblings and make sure you're all on the same page.  Good luck.  

These thought have gone through my mind as well.  In reality, I probably wouldn't have any problem with one of her kids living in the house with her, but you're right, that would be diverting money that she needs to support herself.

Another thing....all of them are smokers.  Right now, all of them do respect his wishes not to smoke in the house.  But with dad gone, I do NOT want them smoking in the house.  Both my parents smoked and it took years (and a lot of $$ in carpet/furnishings) to finally get the smoke smell out of the house.

[Gardening Grandma]

Mich,
I am sorry about your dad. And kudos to you and your siblings for looking out for your step mother's best interests.

If you do feel a need to help her in the future, I think the best approach would be to pay some of her bills directly rather than give her cash. Another option might be (if she looks to you for advice) for her to buy an immediate annuity that would give her an income (and deplete cash that could be given in handouts).

And I see nothing wrong with making a "no smoking" policy very clear and firm with everyone... It IS your (and your sibling's) property after all.

Best wishes to your dad.

[Bonny]

I'm really sorry to hear about your dad. As you may recall my mom passed from Pancreatic cancer. Hers was quite advanced by the time they found it so it was only 45 days from diagnosis to death.

Life Estates can be a real PITA. We briefly dealt with one when DFIL passed. Thankfully there was still a private family mortgage on the home which wife #3 could not afford to pay. In essence we did a deed in lieu of foreclosure and cleared the title. Our issue was a little different. We were pretty sure DFIL's home was going to be the party house for her kids while Wife #3 lived in her Palm Desert condo (that DFIL also bought).

The life estate document should spell out some things such as it needs to be her primary home, maintenance responsibilities, who pays for insurance and taxes et cetera.

If it's a large house I think one of your biggest risks is that those kids are going to move in and "help" her. And that will be a mess to deal with. I hate to be so negative but you're likely to wind up with a worn out house and multiple eviction actions when she passes.

This sounds a little cold but it would probably be in you and your siblings' best interest to encourage her to downsize to a condo (even if you guys donate a down payment) and separate your finances from hers.

[milee]

Sorry to hear about your dad.  I hope you can enjoy the time with him and not worry too much about these issues, which will still be here later.

Bonny's advice on handling things is spot on.

[The Walk of the Penguin Mich]

This sounds a little cold but it would probably be in you and your siblings' best interest to encourage her to downsize to a condo (even if you guys donate a down payment) and separate your finances from hers.

Yeah, this is at the back of my brain. However, what she'd receive from 1/4 the sale of the house would not cover 50% of a mortgage payment on a condo (I anticipate that the sale of the house would probably be <$200K, probably closer to $150K).

While stepmom is not unbanked, I have no idea as to whether or not she could get a mortgage for the balance.

My dad has really done a lot on the house over the last 5 years in order to make it relatively trouble proof. New windows, new furnace, new siding, new roof. New bath, new appliances, carpeting and furniture. The septic system is in very good shape and they're on city water. I anticipate living expenses would probably be less than $300/mo (and that includes taxes), and I don't think she's going to get them cheaper elsewhere.

[Bonny]

Jun 11, 2014 14:39:24 GMT -5 The Walk of the Penguin Mich said:

This sounds a little cold but it would probably be in you and your siblings' best interest to encourage her to downsize to a condo (even if you guys donate a down payment) and separate your finances from hers.

Yeah, this is at the back of my brain. However, what she'd receive from 1/4 the sale of the house would not cover 50% of a mortgage payment on a condo (I anticipate that the sale of the house would probably be <$200K, probably closer to $150K).

While stepmom is not unbanked, I have no idea as to whether or not she could get a mortgage for the balance.

My dad has really done a lot on the house over the last 5 years in order to make it relatively trouble proof. New windows, new furnace, new siding, new roof. New bath, new appliances, carpeting and furniture. The septic system is in very good shape and they're on city water. I anticipate living expenses would probably be less than $300/mo (and that includes taxes), and I don't think she's going to get them cheaper elsewhere.

But won't your stepmom have your dad's SS and/or military pension to make payments on a small mortgage?

[emma1420]

Jun 11, 2014 14:39:24 GMT -5 The Walk of the Penguin Mich said:

This sounds a little cold but it would probably be in you and your siblings' best interest to encourage her to downsize to a condo (even if you guys donate a down payment) and separate your finances from hers.

Yeah, this is at the back of my brain. However, what she'd receive from 1/4 the sale of the house would not cover 50% of a mortgage payment on a condo (I anticipate that the sale of the house would probably be <$200K, probably closer to $150K).

While stepmom is not unbanked, I have no idea as to whether or not she could get a mortgage for the balance.

My dad has really done a lot on the house over the last 5 years in order to make it relatively trouble proof. New windows, new furnace, new siding, new roof. New bath, new appliances, carpeting and furniture. The septic system is in very good shape and they're on city water. I anticipate living expenses would probably be less than $300/mo (and that includes taxes), and I don't think she's going to get them cheaper elsewhere.

I think the condo idea is a pretty good one.  Is there anyway, if she couldn't get a mortgage, that you and your siblings might be willing to take on a mortgage?  Granted you would still have the same sort of dangers as the house, but a one bedroom condo is cheaper on the utilities and far less appealing to try and move into under the guise of "helping" mom.   My grandmother lives in a condo designed specifically for people over the age of 65.  It was significantly cheaper than a regular condo, and it eliminates the possibility of unwanted pets and children moving in.  There might be more options out there than you think.  Of course, she'd have to want to or be willing to move.

[The Walk of the Penguin Mich]

But won't your stepmom have your dad's SS and/or military pension to make payments on a small mortgage?

Only his SS. When my dad retired from the military, they choose not to take the spouse provision for the military pension. Her SS payout from my dad's will probably be less than $1000/mo.

The only thing I do not know about is his disability. My dad retired with virtually 100% disability from the USAF and receives VA disability, and I do not know how that is dealt with from a spouse standpoint. It looks like the pension will be about $8500/year, if I am reading this information correctly. That, with his SS gives her an income of about $1500/mo.

[The Walk of the Penguin Mich]

Is there anyway, if she couldn't get a mortgage, that you and your siblings might be willing to take on a mortgage?

I could probably cover it, if I was not on disability myself. Until I crosstrain into another field where I do not have to be on my feet and get a job, I cannot commit to a mortgage. My sister is a SAHM and has no income herself. My brother wouldn't be able to cover one either.

IMO, it is not a bad idea but it would be several years out.

[Bonny]

Jun 11, 2014 15:16:57 GMT -5 The Walk of the Penguin Mich said:

Is there anyway, if she couldn't get a mortgage, that you and your siblings might be willing to take on a mortgage?

I could probably cover it, if I was not on disability myself. Until I crosstrain into another field where I do not have to be on my feet and get a job, I cannot commit to a mortgage. My sister is a SAHM and has no income herself. My brother wouldn't be able to cover one either.

IMO, it is not a bad idea but it would be several years out.

No way would I do this. The goal is to decouple your finances.

It crossed my mind that you all could give her a mortgage (from the house proceeds) which would accrue interest and would get paid upon her death. As I understand it private mortgages are not governed the same as institutional mortgages so the kids couldn't just take over the mortgage. But you'd need to see a lawyer blah, blah and it starts to get complicated.

[The Captain]

FWIW I am sorry about what your Dad is going through, but respect the fact that you want to do right by his current wife.

[The Walk of the Penguin Mich]

Jun 11, 2014 15:26:50 GMT -5 Bonny said:

Jun 11, 2014 15:16:57 GMT -5 The Walk of the Penguin Mich said:

Is there anyway, if she couldn't get a mortgage, that you and your siblings might be willing to take on a mortgage?

I could probably cover it, if I was not on disability myself. Until I crosstrain into another field where I do not have to be on my feet and get a job, I cannot commit to a mortgage. My sister is a SAHM and has no income herself. My brother wouldn't be able to cover one either.

IMO, it is not a bad idea but it would be several years out.

No way would I do this. The goal is to decouple your finances.

It crossed my mind that you all could give her a mortgage (from the house proceeds) which would accrue interest and would get paid upon her death. As I understand it private mortgages are not governed the same as institutional mortgages so the kids couldn't just take over the mortgage. But you'd need to see a lawyer blah, blah and it starts to get complicated.

I'm not sure how us giving her a mortgage from the house proceeds would decouple us from her finances.  It would seem to me that this would bring us even further together instead.

[Bonny]

Mich,

In the life estate document does it spell out who is responsible for payment of maintenance, taxes et cetera?

If it's silent, the normal default in CA is that the holder of the life estate is responsible for those items. If that's the case, I know this seems mean and calculating but I would wait until there's a problem and uphold the terms of that contract. It's probably the only leverage you will have to move her and her deadbeat kids out. Don't set a precedent of picking up her bills. If her kids move in they can help her with those items or she'll need to downsize to something she can afford. And again if it means you guys gift her some of your inheritance than that's what you should do.

I know I sound like a cold-hearted b*tch but I think life estates are granted with the best of intentions but are really complicated in real-life. I'm sure your dad does not mean to leave you guys on the hook to support her sponging kids.

[Bonny]

Jun 11, 2014 15:45:52 GMT -5 The Walk of the Penguin Mich said:

Jun 11, 2014 15:26:50 GMT -5 Bonny said:

No way would I do this. The goal is to decouple your finances.

It crossed my mind that you all could give her a mortgage (from the house proceeds) which would accrue interest and would get paid upon her death. As I understand it private mortgages are not governed the same as institutional mortgages so the kids couldn't just take over the mortgage. But you'd need to see a lawyer blah, blah and it starts to get complicated.

I'm not sure how us giving her a mortgage from the house proceeds would decouple us from her finances.  It would seem to me that this would bring us even further together instead.

You guys wouldn't be the legal owners of her home. It's a little more arm's length.

[The Walk of the Penguin Mich]

OK, I may have misspoke. The papers I have are for a real estate transfer from my dad and his wife to his wife and me and my sibs as joint tenants with the right of survivorship.

All that the document says is that "The Parties of the First Part (my dad and his wife), in compliance with Section 13 of the Lien Law, covenants that the Parties of the First Part will receive consideration of this conveyance and will hold the right to receive such consideration as a trust fund to be applies first for the purpose of paying the costs of the improvement and will apply the same first to the payment of the cost of improvement before using any part of the total of the same for any other purpose."

Clear as mud.

I don't know if my dad sees her kids as sponging kids. He feels sorry for them and tries to give them a leg up. I think he is finally beginning to see that his helping them is just making them more dependent upon him, rather than less. None of them have a shred of incentive to help themselves.

[milee]

Ouch. That sounds like it could be more complicated and you may be splitting costs of repairs and maintenance.

Thinking outside the box, but are you or your sister depending on your portion of the house inheritance as part of your retirement plan? If not, the cleanest thing (even if it's expensive up front) might be to gift her your portions of the house/refuse to accept the inheritance. If she owns the house outright, she can get a reverse mortgage if needed to help with her expenses if the pension isn't enough. That way it's all in her control and you're not entangled in it.

But yes, having step and full siblings in a similar situation, it's a good assumption that at least 3 of the 4 and their assorted boyfriends/girlfriends/pets/kids/friends will all be living with her in the house before long.  They'll be there to "help" her out with the house and "keep her company" through her grief.  You're smart to get a plan in place to deal with this in advance rather than react as it gradually happens. 

[milee]

And to be clear, this is just a possibility not a probability or definite, but if the addiction issues are drugs, that can add some huge additional risks to the situation:

- If they deal from the house or possess significant quantities (RX drugs and meth are often found in these quantities) and the house is raided by government, it's possible that the house may be seized under the drug laws.

- If the addiction issues are meth and they cook their own, your house could at worst explode or at best be contaminated with hazardous chemicals requiring expensive decontamination and remediation.  If you think it was tough to get smoke smells out of the house wait till you see what they do to remove the residue from a meth cook.

Again, not trying to make a bad situation worse, just throwing out reasons why the situation may be serious enough to consider walking away from some money in order to insulate yourself from future issues.  Sorry you're having to deal with this now. 

[Bonny]

Wow. So when your dad passes everyone (2 sibs?) get a 1/4 interest. And the last person alive gets the whole thing.

If the property is sold or leased, the initial monies are used to pay back any costs of maintaining and improving the property.

That's not a life estate.

BTW You can force a sale of the property through a partition lawsuit.

I'm in the middle of painting my front deck. Let me get back to you in a little bit.

[The Walk of the Penguin Mich]

Thinking outside the box, but are you or your sister depending on your portion of the house inheritance as part of your retirement plan?

I was not so much, but my siblings are. My finances took a hit recently too and if I was working, I could have weathered this loss. Not so much anymore. I'm going to be losing 2 years where I am not going to be contributing to my retirement while I crosstrain. At this point, those 2 years is a lot.

And quite frankly, there is the issue that this house was my mom's hourse as well. If we gifted the whole portion of the house to her, then her kids will ultimately receive both the inheritance that my grandmother left to my mom, and that my mom left to my dad. Yeah, I know it's just a house but the idea of this galls me.

[zibazinski]

What does your dad say to do? Have you discussed your concerns with him?

[The Walk of the Penguin Mich]

- If they deal from the house or possess significant quantities (RX drugs and meth are often found in these quantities) and the house is raided by government, it's possible that the house may be seized under the drug laws.

That was something I really don't want to think about. Meth I'm not so worried about but I AM worried about narcotics. Right now, my dad is having no symptoms from his cancer, but I understand it can be quite painful towards the end. With 2 narcotics addicts in the mix, I'm worried that they'll be tempted to siphon off his drugs.

[The Walk of the Penguin Mich]

Wow. So when your dad passes everyone (2 sibs?) get a 1/4 interest. And the last person alive gets the whole thing.

That's the way I read it.

However, in the back of my mind I had the idea that my dad's wife could live in the house as long as she wanted to or until her death. At that point, the house would be put on the market as neither me nor my siblings (yes, I have 2) have any interest in maintaining a stake in upstate NY with my dad no longer there.

[The Walk of the Penguin Mich]

Jun 11, 2014 16:30:27 GMT -5 zibazinski said:

What does your dad say to do? Have you discussed your concerns with him?

I have some.  His wishes are that his wife lives in the house as long as she wants, then it will be sold.  

I've not told him my worries about her kids potentially mooching the remainder of the estate's cash off their mom and leaving her short.

[zibazinski]

Well, I would. I'd also mention your concern about drug use, them moving in and trashing it, and all the rest. While he is still able to do something about it.

[milee]

Jun 11, 2014 16:27:29 GMT -5 The Walk of the Penguin Mich said:

Thinking outside the box, but are you or your sister depending on your portion of the house inheritance as part of your retirement plan?

I was not so much, but my siblings are. My finances took a hit recently too and if I was working, I could have weathered this loss. Not so much anymore. I'm going to be losing 2 years where I am not going to be contributing to my retirement while I crosstrain. At this point, those 2 years is a lot.

And quite frankly, there is the issue that this house was my mom's hourse as well. If we gifted the whole portion of the house to her, then her kids will ultimately receive both the inheritance that my grandmother left to my mom, and that my mom left to my dad. Yeah, I know it's just a house but the idea of this galls me.

It is galling. And it stinks. Sorry.

How old is your step mom? Is she in good health?  Not to be horrible, but how many years do you think you'd need to wait for each of you to get your share? 

Not that $50k ($150k worth divided three ways) is something to sneeze at, but it may be less than you think if you have to wait through years of splitting maintenance costs, paying for taxes and insurance, repairs, etc.

[The Walk of the Penguin Mich]

My step mom is about 15 years older than I am. She's in fairly decent health, so it could be awhile.

It might make more sense in the long run to sell the house and just let her take her 1/4 of the proceeds and be done with it, but I do not think that she has the other finances to be able to compensate for a place to live...at least not without dipping into the cash my dad will be leaving.