How can I keep my mom from losing her house?
February 20, 2006 8:33 AM   Subscribe

My mom is bad with money. She has asked me and my brother to help her with her financial situation, and my brother wants to have power over her financial accounts at her bank. She does not gamble or have drug problems, she just lives beyond her means and we can't stop her unless we have control of her assets which she has agreed to. She currently holds two known mortgages on the home and we want to be able to keep her from putting on any more against it.

I know this sounds unusual and we love her very much but if something doesn't happen she will lose her home which would be a fantastic loss (We have another brother who is mentally retarded and we feel it would be especially hard for him to cope with). My mom is a widow and relied on my dad to do all of the financial planning, and since his death my mom has been working full time while recieving aid from the government. She owes two months backpay to most bills. I will be meeting with a financial planner within the month, but how can (and should) we agree to move her assets over to another name to prevent future overspending? How does one begin such a process, and how much money should we expect to spend? When I want to look for a financial planner where should I go or look?

Once again, we have tried many times to have her help herself. It doesn't work. She lives beyond her means and this is something we have all agreed to do.
posted by Dean Keaton to Work & Money (24 answers total)
1. Don't do anything until you see a planner. Except, you might as well cut up all the credit cards right now. And redirect her mail to a PO box you control, so you get all the bills and can toss the credit card offers.
2. Look around locally for a Certified Financial Planner. Get references. Talk to a banker or an accountant. Don't go to any outfit that promises to fix your credit, etc.
3. With the planner you'll need to do a budget to see if it is even possible to get out of this. Bankruptcy should be avoided, but could be a necessity. (Two months arrears doesn't seem too bad, however.) Whatever the budget says, stick with it.
4. You won't be able to move assets like a house into anyone else's name, unless you pay off the mortgage.
5. See a lawyer also, and get a durable power of attorney drawn up, and then exercise it.
posted by beagle at 8:54 AM on February 20, 2006

Thank you, excellent answer.
posted by Dean Keaton at 9:05 AM on February 20, 2006

And redirect her mail to a PO box you control, so you get all the bills and can toss the credit card offers.

That's a great idea. Credit card and other offers will probably still make their way to her house, though, unless you make arrangements with the Post Office so that no mail, not even the junk "ATTN: Resident" mail, should go the house, but such arrangements can be made.

I'd also suggest signing yourself up for email notification/online bill paying for as many of her recurring bills as possible.
posted by Gator at 9:14 AM on February 20, 2006

As a possibly easier alternative to that last bit could you just get a lockable box at your mothers home? (With the keys held by you) Is she likely to intercept the mailman for CC offers?
posted by biffa at 9:25 AM on February 20, 2006

I'd also suggest signing yourself up for email notification/online bill paying for as many of her recurring bills as possible.

You should probably do it through a bank, rather then giving various billers all your account information to automaticaly withdrawl from.
posted by delmoi at 9:38 AM on February 20, 2006

I just meant sign up to pay all the bills and keep track of them online, rather than paper bills/mailaways; I'm not a fan of automatic withdrawals either.
posted by Gator at 9:41 AM on February 20, 2006

Also, what is the real problem causing her to live beyond her means? Is caring for your brother very stressful?
I think it is great for you to take care of the technical aspects of her situation but I would also look into getting her some help for whatever is causing her to do this.

Is this more of a compulsion or did she just make some bad decisions?
If it is compulsion then I just worry she will find a way around whatever barriers you set up. Or that once she is out of the clear she will revert to old behavior.

She may not have a substance abuse problem but continually living beyond your means despite understanding the consequences is still a serious problem. She needs to work on changing her behavior, not having you police her spending forever.

Good luck with helping her! She is very lucky to have you.
posted by TheLibrarian at 9:45 AM on February 20, 2006

TheLibrarian's comment reminds me: Has your mom (or you) looked into Debtors Anonymous? Might be worth seeing if there's a chapter in your area, and even if your mom won't go, you might be able to get some great advice and resources from them.
posted by Gator at 9:47 AM on February 20, 2006

Don't listen to a damn thing in any of the other responses. You cannot "gain control" over a person's finances unless you basically have that person committed to a mental institution. Some of what is suggested could border on fraud. You are entering dangerous legal territory here.

There are many misconceptions about a power of attorney. It gives you the right to act in another's name, but does not strip another person of their right to act in their own name. Any competent person has the right to revoke the power at any time, durable or not.

Intercepting someone's mail may be a federal offense. I would never, ever advise a client of mine to do that. I cannot emphasize to you how dangerous that is. You literally have no right to do this.

Let's think this over. You, as the putative heirs of your mom are going in front of a judge and tell him or her that you should have control over her assets, despite the fact that she is a mentally healthy human being. Good luck. Essentially you want to deprive her of her own right to run her own life. Although your motives are pure, you cannot do that absent extraordinary circumstances. No court in the U.S. is going to help you.

There are extremely important reasons why this is so. Imagine the number of people who'd love to have control over their parent's money. Courts are extremely reluctant to turn over that power to anyone unless the person is totally incompetent.

The only way to help your mother is to have her cooperate with you. I suggest working with her, telling her that you want to help her. You will only be able to help if you treat her as the equal that she is, because the courts will see her as your equal, not someone who you are better than.

This post should not be construed as legal advice, but a mere outline of the problems you and your family face, and I strongly recommend that you see a lawyer to discuss the problem.
posted by Ironmouth at 9:56 AM on February 20, 2006

Except the Debtor's Anonymous comment, which is a damn good idea. The rest is terrible advice bordering on the illegal.
posted by Ironmouth at 9:57 AM on February 20, 2006

But, Ironmouth, Dean Keaton says the mom has agreed to turn these things over to her kids. They're not talking about doing any of this stuff behind her back, without her consent.
posted by Gator at 10:00 AM on February 20, 2006

There's no way to control someone else's accounts to prevent them from doing as the wish. That's the law. A power of attorney will allow them to act in her name but won't stop her from also taking actions in her own name.

Taking control of someone else's mail is really dangerous. She's only two months behind on the bills. That's really not bankruptcy territory.

My other question is whether or not they are aware of the work they are getting themselves in for if they are going to take control of the finances. Its hard enough running your own finances, let alone another's finances.

My mom is in a similar position and my brother started suggesting the same things. My answer is the same. You learn in the first five minutes of Trust & Estates that this is not possible. Its a world of trouble.
posted by Ironmouth at 10:09 AM on February 20, 2006

So Ironmouth, you're saying in effect, she can't be helped, there's nothing you can do? And going to a financial planner is bunk advice, too? I say baloney.
I say, certainly she has to help herself, but you can help her help herself. I proceeded from the assumption, stated in the post, that mom is going to cooperate. If it was my mom, I'd do what I suggested. I'm not suggesting intercepting her mail, I'm suggesting with her approval to set up a way for you to screen it. With her approval to maintain her checkbook. With her approval, chop the cards up. With her approval, put her on an allowance. It's no different from when dad was alive and took care of stuff. It sounds to me like mom's going to be amenable to this kind of arrangement.
posted by beagle at 10:36 AM on February 20, 2006

Probably what Ironmouth has said is accurate, however, I've seen more than a few families with similar arrangements -- the son/daughter handles the financial end of things, and the parent gets to just forget about it, which is nice for some older people who don't want to deal with modern banking (and for some people, it's a real tough change). Redirecting the mail without your mother's consent would be a recipe for disaster, for sure, but if you all determine that the bills should be sent to x and so whatever address, then that is fine. You just have to be sure that your mom is involved and is okay with everything as you go along. If she knows she has a problem, then hopefully she will be amenable to helping you help her.

One thing you should definetly make sure is addressed is her living expenses. You guys need to figure out how much money she needs for just day to day stuff and then figure out how to help her spend only that money whilst the debt against her assets is being paid down. It may be helpful to set up two accounts -- one that she has access to for "every day" and one that is solely for the payment of bills. The account that is solely for the payment of bills can be in all three names (you, your brother, and her) and then the checks (no check card, unless you guys would like to set up bill payments that way) are in your or your brother's hands. No, you can't prevent her from going to the bank and getting a check card for this account, but you can try to convince her that the system will only work if she doesn't "cheat," and since you guys are all doing this together, maybe she will have more impetus to NOT cheat.

I would also involve her in the paying off process, and teach her about what you guys are doing to help her. If she relied on your dad to do all of this before, she never learned it, and that's part of her problem now. Teach her to fish, so to speak. You guys should act as her training wheels. This ALL depends upon your mom being cool with everything, though. The minuit she's not, you guys have to be hands off, unless you actually think she's mentally incompetent.

Finally, your mom could probably benefit from DA, as above, or seeing a psychologist for some behavioral modification / cognitive-behavior therapy, talk therapy, whatever. There is certainly something else going on here, whether it's willful oblivion regarding the state of her finances or just stress from caring for your brother, but it is worth it to see someone to work this stuff out. Good luck!
posted by Medieval Maven at 10:40 AM on February 20, 2006

Also, Dean Keaton stated that mom came to them and asked for their help (in addition to agreeing to give up control of her finances). That's encouraging, and suggests that she's not likely to try and do any end-runs around whatever methods they come up with to help her.

Yes, she could decide to change her mind and want to take back control of her finances, and in that event they won't be able to stop her without going to a collossal amount of trouble. But the fact that she asked for help and agreed to have her kids take over those responsibilities suggests to me that it's not likely going to be an issue.
posted by Gator at 10:43 AM on February 20, 2006

There is nothing wrong with *redirecting* her mail, though, if she actually does it. I have a large portion of my mail sent to my parents home, my parents, at my request, open it, and pay bills. That is different than intercepting mail, which is not a good idea.

Likewise, my mother is a joint owner on my checking accounts. This allows her to put money into the account, and take it out. Again, as I've requested.

Certainly this takes a certain level of trust, but it works for us. So if you get a post office box, and your mom voluntarily has her mail forwarded there (or, easier, just to your house), and you think that will help, go for it. She can easily stop having it forwarded becuase the bills should remain in her name (you don't want to take them over by putting your name on her debt).

The house is more complicated, as pointed out above.

There may also be complicating factors becuase of your brother - that's where I see the need for advice of an attorney and financial planners. Is she improperly spending the money that is intended for his care? Can a trust be set up? There are attorneys (I work with several) who specalize in planning for the disabled. Find one who cares. Good luck - and good for your mom for asking for help, and you for being willing to help!
posted by dpx.mfx at 11:11 AM on February 20, 2006

What I'm trying to say is that you can't do what the poster asked for: "but how can (and should) we agree to move her assets over to another name to prevent future overspending?"

The only way this is going to happen is if Mom agrees to get joint bank accounts, allow the kids to pay the bills etc.

But the poster and some of the answers said that "we can't stop her unless we have control of her assets." If you can't stop her unless you have control of her assets, you won't be able to stop her. This has to be a cooperative process.

One cannot get control of another persons assets in such a way that the other person gives up control. If she was mentally disabled, a power of attorney would work just fine, because she wouldn't be engaging in any transactions anyway. But you cannot prevent a competent person from engaging in financial transactions using his or her own money. Although the brothers might be able to make transactions as well, they can't stop the mom from doing so too.
posted by Ironmouth at 11:14 AM on February 20, 2006

Ironmouth, that makes sense. I do agree that the "gaining control of her assets" notion is misguided, though it may just be awkward wording by the poster. But that's why I said, don't do anything till you talk to a planner.
posted by beagle at 11:32 AM on February 20, 2006

I'm no expert, and you would certainly want to talk to qualified professionals before you do anything, but isn't this exactly the sort of situation that trusts are supposed to cover? There will be tax and legal considerations, but that's what professionals are there for.

If all major assets are owned by the trust she is not in a position to borrow against them. If she is the beneficiary to the trust for her lifetime she can easily get the benefit of living in the house, and things can be explicitly set up to take care of your other brother later when she no longer needs the house.

You and your brother get legal control in a structured way, with a fiduciary responsibility to do the best for the beneficiaries of the trust, so any other family members are less likely to think you are just swindling your mom.

This will only take care of any assets that get transfered to the trust, her income and ongoing bills are a different matter; you may be able to help her with her consent, but as pointed out above, you can't legally prevent her from spending her own money how she likes or stop her from incurring new debts.
posted by Quinbus Flestrin at 1:01 PM on February 20, 2006

Would your mother agree to just hand over all her bills, income, cheques, credit cards, instant teller cards, bank account numbers, and the like? In that case you could pay her bills for her and put her on an allowance. Perhaps she has access to one bank account and an instant teller card for it. You put her allowance (whatever she needs to cover her cash expenses like groceries or whatever) in the account every week/two weeks/month, and she gets to spend that, but she knows if she runs out there's no more coming until the start of the new term. Not illegal, and quite simple.
posted by orange swan at 1:36 PM on February 20, 2006

A trust would work. Costs might be high, but banks have no problem with it, and less hassle than a power of attorney. More importantly, he'd have to basically control his mom's entire life then. That's going to be a headache nobody wants, especially if they live far away.
posted by Ironmouth at 3:06 PM on February 20, 2006

She should create a trust, naming her kids as co-trustees, which can only be used for her benefit during her lifetime. All the assets get titled as "Dean Keaton, as Trustee of the Mother Keaton Trust dated March 1, 2006, or his legal successor(s)." Talk to the mortgage holders on the house beforehand, they might want her to execute some sort of guaranty on the mortgages.
posted by MrZero at 4:11 PM on February 20, 2006

I am going to speak with a financial planner sometime this week to seek our options. The support everyone has given is very much appreciated and I want to make it clear that she did come to us first and wants to help. When my dad was alive he took care of that stuff, and since his death (about 10 years ago) it has been getting slowly out of control. I want my mom to not have to worry about her mortgage, hell I am willing to help her out financially in the future but right now it's a bad situation.

Also caring for our brother is stressful, but he is able to mostly care for himself which is a blessing. She is stressed for many reasons, and with the family history to consider it's no surprise. Hopefully with some basic planning it will be easy to take care of.
posted by Dean Keaton at 5:54 PM on February 20, 2006

Oh, the trust can also be set up to provide for your brother down the road. It can also accept contributions from other people to be distributed for his benefit as well.

The more I think about this, the more I think your mom should set up a trust - to keep her out of debt now, and to help provide for your brother down the road. Look into a trust even if the Financial planner doesn't talk about it.
posted by MrZero at 6:05 PM on February 20, 2006

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