Children of seniors are more concerned with doing what is best for their parents in retirement and less concerned with receiving an inheritance according to a May 2014 study conducted by Toronto, an Ontario-based Home Equity Bank.
The survey found that 94% of participants who did expect to receive an inheritance from their parents would willingly give up half of their inheritance if it meant improving the lifestyle of their parents.
These “adult children” aged 45+ are at an expensive part of their lives where they are responsible for providing for a family. The responsibility to put children through school, finance everyday expenses, medical costs, home updates, and that well-deserved vacation are all expenses that come with being an adult. By this time, adults have their own expectations for retirement and as a result have become more generous when it comes to providing for their parents.
How to work with your siblings to care for mom and dad
Caring for aging parents can resurface sibling rivalries. If you find yourself feeling competitive over which family member makes the caregiving decisions, which siblings pay for what, and who doesn’t contribute, then you’re not alone. To avoid arguments try to approach the situation with an optimistic attitude -more likely than not your siblings are just like you and are only trying to do what is best for your parents. And if that doesn’t work, here are a few tips to avoid family tension when helping your aging parents:
1. Avoid guilt-tripping – defensiveness is the instinctive reaction to guilt and will only make it more difficult to work together
2. Don’t let one sibling become the “default caregiver” – this person could end up feeling resentful and can also make siblings who live out of town or are otherwise unable to be as involved feel shut-out and helpless
3. Play your strengths – when you work together and coordinate care for your parents the overall care will evidently be better
4. Make a caregiving plan – it is unrealistic to assume that each sibling can equally contribute to the care of your parents. Making a caregiver plan will generate expectations for care, assign caregiving duties, and build a supportive approach to care while ensuring that every sibling contributes to helping your parents in some way
Take advantage of a reverse mortgage
Many siblings recommend a reverse mortgage to their aging parents to provide financial comfort during their retirement. A reverse mortgage allows the seniors in your life to access the equity in their home and convert that equity into tax-free cash* that can be used to pay off a mortgage, debt, medical bills, or simply be used for travel and leisure activities to make your loved one’s retirement more enjoyable.
How will my parents’ reverse mortgage affect me and my siblings?
The myth that “the borrower’s children will be responsible for the repayment of a reverse mortgage loan” is a common misconception of the reverse mortgage program.
The loan only becomes due when the last remaining borrower passes away, sells the property, or otherwise permanently leaves the home. When this happens people often falsely assume that the borrower’s children and family must sell the property in order to repay the loan. Instead, the decision for how to payback the loan is up to you and your family. The heirs have the option to sell the property and keep any excess proceeds if proceeds from the sale exceed the amount of the loan. A second option is that as the heirs, you can refinance the amount of the existing mortgage balance if you wish to keep the property. (Click here for more questions heirs have about reverse mortgages )
It is important to understand that reverse mortgages are non-recourse loans. This means that the Federal Housing Administration will absorb the remaining balance of the loan if the sale of the home does not cover the loan balance. This is done to ensure that your parents nor you and your siblings will ever be required to pay more than the sales price of the home.
When you call One Reverse Mortgage, a licensed banker will answer any of your questions about the program as well as recommend whether a reverse mortgage loan could be right for your loved ones.
*Please consult with your financial advisor.