Yes I will go to an Al-Anon meeting after I post this
November 3, 2017 10:08 PM   Subscribe

Please help me think out how I can help my parents buy my disabled and unemployed sibling a house.

I am a co-trustee, with my parents, of their property including a house that is paid off and some retirement accounts. They are starting the process of transitioning out of their house, into assisting living, which blessedly they have insurance that will mostly pay for.

I am planning to talk a financial planner within two weeks to see if we're thinking about this right but.. when they move they will either sell their house or rent it out. Either way, but definitely if they sell, they will have some money they could use to buy a small house for my sibling.

I came up with this suggestion because he has been dependent on them for a couple decades. They send him a small monthly stipend which is not enough for him to live on. He seems to have no other income (maybe GA/welfare). He is constantly in debt and crisis. I don't want to speculate too much but I believe he has some mental health issues. He has mobility impairments. I doubt he will ever agree to have a job. He may be applying for SSI, I know he was declined in the past. He is not a clear communicator and is sometimes quite manipulative so hard to get meaningful information out of. He is very isolated living in a rural area and a filthy house full of horded stuff. He and I have a very strained relationship.

He is willing to move closer to my folks and to civilization, and was very excited when I brought up the idea, which is, The Trust (which for practical purposes I administer) will buy a house and rent it to him for a nominal monthly rent. The Trust (me) will pay property taxes and insurance. When both my parents die, the trust is dissolved and distributed, and he gets the house and I am then out of the picture.

I am aware the idea is full of potential extreme pitfalls! But for a moment, just assume I'm going to go ahead and do this... how can I make this work as least-badly as possible?

(Alternate to this plan is basically we keep things as they are, in 3-10 years or something my parents die, he gets half the estate, and based on previous experience he is likely to blow all the money within a couple years and then have zero and becomes homeless. Part of why I want to do this plan is, I want to avoid "solving" this later when there are fewer resources and things are much worse. For the sake of this ask, please just know I don't find letting him become homeless an acceptable outcome.)

So how can I make this work with the least badness happening? I know I'd need him to sign a lease with clearly defined rent (even if it's just a symbolic amount). What else??
posted by latkes to Human Relations (26 answers total) 1 user marked this as a favorite
Hmm, in addition to a bunch of pitfalls, based on his past history doesn't it seem likely that a) he won't pay any amount of rent, no matter how nominal b) once he owns the house, he will then lose the house and then become in the same bad situation he was in previously? Seems like a good idea if you want him to have stable housing to keep the trust as the owner of the house and have the trust pay for a property manager/executor who is not you to deal with the business end so you can (to the extent you desire this) focus on having a relationship with your brother.
posted by arnicae at 10:40 PM on November 3, 2017 [16 favorites]

Why a house and not an apartment? The house just means someone has to deal with gutters, trash collection, lawn maintenance, etc.
posted by DarlingBri at 11:27 PM on November 3, 2017 [25 favorites]

Can't the will somehow stipulate he never gets more than a monthly stipend? That the rent then comes out of, plus living expenses?

Why would your parents ever consider giving this person a lump sum if they are concerned for his wellbeing? Let alone YOUR wellbeing after they are gone.

No. This person never gets a lump sum and that's that. It's the safest way to insure your brother has his basic needs met. There is no other sane way fo do this.
posted by jbenben at 11:34 PM on November 3, 2017 [21 favorites]

I am mentally ill and disabled and my parents originally set up my brother to be a trustee that would send me money as I required it above and beyond whatever monthly payment I would receive from a stipend based on half of their investments. They changed their minds after they noticed that I didn't spend my disability back payment with wild and reckless abandon, but it was the arrangement for several years. They used a lawyer who specializes in estate planning for parents of disabled children.

I gotta be honest, I'm not sure a house is the best idea. I can barely take care of my apartment and I'm not as disabled as your sibling is. If you DO go with a house, you would need to also hire some sort of a caretaker to make sure it is cleaned and the exterior is maintained. One alternative possibility might be some type of condo or townhome with an HOA that takes care of the exterior.
posted by xyzzy at 12:02 AM on November 4, 2017 [14 favorites]

You need to see a lawyer. There are spendthrift trusts that can be set up but there may also be trusts for disabled people. A lawyer or accountant is needed here.
posted by Coffeetyme at 3:22 AM on November 4, 2017 [2 favorites]

The best way to do this is for your parents to talk to a lawyer who specializes in special needs trusts. There are ramifications from a tax and healthcare perspective that make buying property a possibly bad idea. It also sounds like you want to wash your hands of the situation when your parents pass on; that’s your right but your parents need to know that so they can make decisions accordingly.
posted by snickerdoodle at 4:39 AM on November 4, 2017 [5 favorites]

Parents have refused to put the money in a trust. But I could look at a condo?
posted by latkes at 4:47 AM on November 4, 2017

Yes, your parents need to see a lawyer. Best case scenario for you is that you get to go along to the meeting with the lawyer, and - after hearing input from you about what you are willing and not willing to do - the lawyer firmly advises your parents on the best way to proceed.

Psychologically I also suggest detaching your thoughts about this from your negative thoughts about how your brother lives now (rural, hoarding, dirty). It sure is cheaper to live rural and dirty than to have a condo near "civilization" as you put it. So one solution may be to get him a trailer on a little piece of land out where he lives now, and enough money in trust to pay the taxes and to buy a new trailer in 20 years if it comes to that.

But there is no solution that guarantees that you won't have to "solve" his problems later, if you put that role on yourself. A lawyer will probably tell you that a trust that survives your parents is the closest thing to such a solution.
posted by sheldman at 5:13 AM on November 4, 2017 [2 favorites]

This is a pretty terrible idea because you mention he is living in a filthy hoarder home and is continually in debt and crisis. What will happen is you will be dealing with the debt and crisis AND you will be responsible for a filthy and badly kept property. That includes condos where the condo association will be fining /you/ for your sibling’s hoard.

I have an in-law like this and from years of experience: let him rent. He will trash places, have conflict with landlords and neighbours and then...the cost will only be a fresh deposit, which is a lot cheaper than bedbugs or cockroaches or a flooded place because a window wouldn’t shut. Plus then you are both the upset landlord and the sibling. Instead, be the sibling. Let someone else be the landlord. If you must, buy a place, rent it to GOOD tenants and use the income.
posted by warriorqueen at 5:14 AM on November 4, 2017 [12 favorites]

Oh gosh. Educate your parents about living trusts. They're practically magical compared to alternatives. Then once convinced do the apartment with a property manager to administer rent and pay utils taxes etcv out of a manged trust account. Eventually if the sibling owns the home per se the trust keeps paying expenses otherwise the trust contains the home which follows succession to next beneficiary.
posted by chasles at 5:24 AM on November 4, 2017 [1 favorite]

Ok, I totally totally understand the sound advice to Not Do This.

Unfortunately, when I was helping my folks get their estate in order, including going to a lawyer who set up our current trust of their property, my parents absolutely refused to put money for my brother in any kind of special needs trust. I advocated for this and they refused.

So even though buying him a property (a trailer is a good idea) is probably inadvisable, I think it might be the solution most likely to keep him from being homeless. So my question is, is there any way to see this up to mitigate the possible badness?
posted by latkes at 5:24 AM on November 4, 2017

What are the terms of the existing trust? As a trustee you may have a legal duty not to do this. You need a lawyer’s advice.
posted by Rock 'em Sock 'em at 5:36 AM on November 4, 2017

The nominal, symbolic rent... is this your parents' idea or yours? Seems like a needless impediment to getting to a win-win.

Why are your parents opposed to setting up an estate for the liquid funds, but ok with an estate for the house?

Does your sibling have any notion of the size of the estate? Hopefully not. Could you convince your parents to give you 80% of the estate, and sibling 20%, with the proviso that you'll use 50% of your 80% to care for the sibling? Then the sibling gets their windfall, either blows it or doesn't, and is no longer begrudgingly tied to you financially (as far as they know). But you and your parents know that the sibling is being taken care of long term.
posted by at at 6:38 AM on November 4, 2017 [4 favorites]

I would buy a condo or hire a management company for the house as step 1. Then, ask your parents to leave their remaining money to you and then you can set up the trust for your brother. I believe you can specify how often he is paid and all of that. I’m not quite sure why your parents are against a trust, but perhaps if you do it after they are gone you can work around their wishes.

Best of luck in this tough situation.
posted by Sockowocky at 9:21 AM on November 4, 2017

Nthing all the "consult a layer" advice.

Another thing I don't think has been mentioned: If you own a property and rent it to someone at below market rates, you'll be hit with a tax penalty on the difference. Again: Lawyer. Consult.
posted by helpthebear at 9:45 AM on November 4, 2017 [1 favorite]

Is it the 'special needs' designation that your parents are chafing against? They've been supporting him for decades, but don't seem to realize how much assistance he requires. Or is the eventual lump sum the vision of somehow turning things around for him, and eliminating ongoing caregiver tasks for you?

Your brother needs a maintenance situation, with nothing in his name. A trust with a good manager, that exists now and after your parents pass away (and after you're gone, too, should you predecease him), is the safest route for him.

I came up with this suggestion... You can walk back from it.
posted by Iris Gambol at 9:48 AM on November 4, 2017

You're parents are setting you and your brother up for utter failure, they seem to be shifting present difficulties and guilt that is theirs onto your future.

It's pretty clear the only emotionally healthy thing to do is to make clear the consequences of their financial choices to your parents and then step waaaay back from their relationship to your brother. When the inevitable awful results of their choices come to pass in your brother's life, that will be his problem.

Your other choice is to seek competent professional personal and professional legal advice to help you avoid this outcome. Asking MeFi does not replace taking meaningful action specific to your jurisdiction.

If you can't change their minds, you can refuse the inheritance, the trust, and disengage entirely from all of their finances, just walk away entirely from anything to do with money.
posted by jbenben at 9:59 AM on November 4, 2017 [3 favorites]

I think the real question is, as others have said, why your parents are so reluctant to have a trust administered after their death? Because that affects your options.

My husband had a family member who had exactly this situation happen to him. The house the family member was left got sold for taxes. Because the thing is - if your brother is incapable of paying taxes and insurance now, he’s not going to get magically better at it after your parents death. He also might well take out a mortgage on an unmortgaged property because he wants money, thus resulting in it being lost to the bank.

The best solution is some sort of separate account your brother cannot touch directly, that is set up to pay taxes for a certain length of time, depending on the size of your parent’s estate. But you really have to examine your parents reluctance here.
posted by corb at 10:27 AM on November 4, 2017 [1 favorite]

If you own a property and rent it to someone at below market rates, you'll be hit with a tax penalty on the difference.

No, you won't, at least not in the U.S. However, you can't take the deductions which might otherwise be possible if the property were categorized as a rental property rather than a personal residence (as it will be if you charge below-market rent). If a trust is the owner, this may be less important.

Nthing everyone else: this is practically what T&E lawyers were invented for. Take your parents. The lawyer will explain all available options and may be, as a perceived third party with expertise, more able to persuade your parents of the desirability of using a living trust (if that's the best option, which it sounds like it may be to me).
posted by praemunire at 10:40 AM on November 4, 2017 [2 favorites]

A non-fancy condo. I have a disabled sibling on disability. I think my parents' trust owns the small house he's in. He does little maintenance and has hoarding tendencies. His friends move in, sometimes with kids, often with dogs. It has occasionally become mired in squalor. If he were in a condo, there would be maximum occupation rules which would help, and maintenance would be done. My brother's a great guy, just disabled and lonely and easy to take advantage of.

I really recommend a lawyer and the correct type of trust. If your brother owns a house, he may very well be defrauded of it, or not pay taxes, insurance, etc., and it could be a mess. The rules around SSI are byzantine. A small condo and a trust to make the condo payments would make his life pretty manageable.
posted by theora55 at 11:40 AM on November 4, 2017 [4 favorites]

If your brother is not capable of responsible living in a single family home, he's not going to be successful in a condo either; those have rules about clutter, smell, noise, etc. that it sounds like he is unlikely to follow. Does your area have supportive housing? That's basically an apartment with some wraparound services. If those rental costs were paid by your parents, would they be on board with that? It would basically guarantee that he'd never lose his house, and get some help at the same time. As a long term solution, it's better than giving your brother a house or condo that he'd be at risk of losing.
posted by juniperesque at 2:08 PM on November 4, 2017 [4 favorites]

I can (sort of) understand your parents not wanting to involve a trust, since trust administration can eat up a bunch of money. Good investments in a principle sum can alleviate that, but you really need to have things nailed down. Knowing more about how living trusts work might help all of you make decisions.

Also sounds like your parents might be opposing the trust because they want YOU to be involved in a lifetime of caring for your brother, and tossing the financial burden on you also wraps you in a web of guilt so that you can't distance yourself in the future.

If your parents would agree to providing him with either a very small house or to buying land with a trailer, and this is paid for free and clear in his name, perhaps they would allow you to manage a lump sum of money to go towards utilities, taxes, repairs, and a property management company, and a second amount that allows him to have his monthly stipend, perhaps with x amount going for necessities and food. Once your parents pass, you personally could roll all that over into a trust that would care for his housing situation and his expenditures and leave you out of the financial works.

Everyone wants him housed and fed, and given that he is hopeless in caring for himself, some sort of administration has to happen before that's a guarantee. (Although there are no guarantees in life.--you could predecease him. If the house is in his name, he could sell it or lose it to debt. He could do something that lands him in prison. He could predecease your parents.)

I think you and your parents need to sit down with a third party--perhaps a family counselor--and talk about expectations. Your parents have to understand that you need to live your own life without being burdened unduly by your brother's problems and continual bad choices. They may think as his brother that you will make everything peachy after they're gone. This is highly unlikely to happen.
posted by BlueHorse at 3:51 PM on November 4, 2017 [4 favorites]

I've posted before about a not dissimilar situation. My mother had a grand, convoluted plan about how this would all shake out when she died. Her plan was giving me honest to god palpitations any time I thought about it. In the end I sat her down and said "I will not do this thing, I will walk away from the entire situation, I do not need your money. If you want him protected, do it this way, I will be a part of that". She agreed and now we have a really stable, sensible arrangement planned that al three of us feel secure with. Have a come to Jesus talk with them, explain the burden they will place you under.
posted by Iteki at 1:06 AM on November 5, 2017 [4 favorites]

Hi all. Just to clarify, I tried really hard when we were first creating a family trust for them and getting the will done etc to get them to create a special needs trust. My parents completely refused because they want my brother to get to choose how he gets his money. They did not listen to any argument I made including that he will end up being a burden to me. There's sexism for you. Very frustrating. I also learned from the lawyer and other research that given the small size of my parents estate (think retired middle class university employee), a special needs trust would be kind of expensive to maintain. Also, brother can subvert the trust by suing, or could be taken advantage of by unscrupulous company or individual who could 'buy out' the trust. Despite these warnings, I did advocate hard for it and parents refused.

Having said that, after reading the advice here I walked back the offer to my brother which I foolishly brought up with him already and made clear I need to do a lot more research to learn if it's even feasible. This gives me the space to look more into the advice you've shared here.
posted by latkes at 9:00 AM on November 5, 2017 [4 favorites]

Please don't move him into a condo. To live in a condo successfully a person has to be able to live near other people without intruding on them. If he cannot maintain his living space, it's likely that it will end up infringing on other residents. In my condo building we have a couple of problem people whose families purchased their condos. The families end up paying large fines when the resident causes other units to reek of foul odors, clog pipes, create messes in the common areas, or act in a loud an obnoxious manner. These problem residents cause misery to people who actually worked hard to pay for their units. I know not all people whose families buy them condos act in this way, but it sounds like your brother is unable to care for himself in a way that would allow him to live in a condo peacefully with his neighbors. I like the idea someone had of buying him a trailer. Then, he can move the trailer to a secluded area and live his life as he pleases without intruding on other people.
posted by parakeetdog at 10:17 AM on November 5, 2017 [1 favorite]

Your parents are forcing you into a really hard situation. Please put your own oxygen mask on first. You are not obliged to stop them from coming up with a poor plan. They can do whatever they want with their money but they can’t force you to spend the rest of your life dealing with the mess they are creating. Seek legal advice on your own and be prepared to walk away from whatever money they are trying to motivate you with.
posted by koahiatamadl at 11:52 AM on November 5, 2017 [2 favorites]

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