Dealing with $$ and aging parent - when to tap investments?

[Anonymous]

My brother has been managing my 89-year-old mother's finances. She's not wealthy - former nurse, divorced, but she had a small inheritance from her mother that's been invested and is worth about $200K now. My brother wants my other brother and I to start contributing about $100 each to her upkeep, as he's been covering incidentals for her (medicines, Poise pads, haircuts, etc) and is owed about $6K.

My feeling is that her money is there to support her, and some investments should be sold off to help fund her lifestyle. My brother is concerned she may live to be 97 and run out of money if we do that. She's currently living in a nice "retirement" community and she has aides come and help her as needed, eats in the communal dining hall, etc.

I'm embarassed that $100 a month extra would be a strain, but some months it would be. You'd never know that from the outside looking in, but things are tight and we have young kids with orthodontia, you name it....expenses. I'm embarassed to tell my brother that and frankly know that he'd give me a hard time. My husband is already stressed about money.

I'm not expecting an inheritance - and I think it's her money, that's what it's there for. My brother is intent that we "not touch the principal."

Thoughts? Anyone been there?

[Anonymous]

My view would be that the $200k is for catastrophic care or to help care for her when she needs a greater degree of care. I would pay the $100 per month rather than use her investments.

[Anonymous]

She's 89 for goodness sake, I think it's ok to draw down some principal. The rule of thumb for retirees (in their 60s) is that you can usually safely withdraw 4% a year-- which would be about $600/month, so I would think $300/month is not wild or crazy. Even if she lives to 97, that is less than $30k, or about 15% of her savings.

That said, this is also about relationships (you and DH, you and brother), so you need to think about what makes sense from that perspective. You might also consider what happens if she does need nursing home care-- would it be better if she had more savings or if you did (I could see it either way).

Maybe consider offering some smaller amount?

[Anonymous]

I feel you, OP. We also have childcare expenses and elderly parents.

In your place, I would take a hard look and my income/expenses, re-evaluate my priorities, and budget in that $100/month. $200k is not much money, and you really do not want to be tapping it until necessary.

Use your tax return (if you have any), minimize eating out, make use of free activities for your kids, etc, but make it happen. And, it's totally fair for you to ask your brother to keep your mom's extraneous expenses to a minimum, too.

[Anonymous]

What about a compromise? Given her advanced age, you should be able to conservatively withdraw 1% a year (which is $2000/year, or about $166/month), and the three siblings will each contribute $50/month. That's a touch over $300 right there.

That will put less of a burden on each of you, and should still leave a huge percentage of the money should she live for another 8 years, or need catastrophic care.

[Anonymous]

I was in your brother's position so I feel for him and don't doubt his claims of being owed $6K. That said, I personally don't see why you can't tap into the principal. Let's say she lives until 100. That's 132 months from now. That means you could draw $1500 a month, break even on investments, and it would still last until she turns 100. Your brother should be willing to clarify specifically what her income and expenses are each month. Your mother collects social security income, how much is that? Does she have any pension from her nursing work? Any other assets or sources of income besides her $200K inheritance? You could also agree that any amount each of you ends up contributing to her care now should be offset against your share of future inheritance, should there be any.

[Anonymous]

PP here. Also, does your mother pay rent, or own a condo at the retirement community? If she owns, she can get a reverse mortgage.

[Anonymous]

Anonymous wrote:My brother has been managing my 89-year-old mother's finances. She's not wealthy - former nurse, divorced, but she had a small inheritance from her mother that's been invested and is worth about $200K now. My brother wants my other brother and I to start contributing about $100 each to her upkeep, as he's been covering incidentals for her (medicines, Poise pads, haircuts, etc) and is owed about $6K.

My feeling is that her money is there to support her, and some investments should be sold off to help fund her lifestyle. My brother is concerned she may live to be 97 and run out of money if we do that. She's currently living in a nice "retirement" community and she has aides come and help her as needed, eats in the communal dining hall, etc.

I'm embarassed that $100 a month extra would be a strain, but some months it would be. You'd never know that from the outside looking in, but things are tight and we have young kids with orthodontia, you name it....expenses. I'm embarassed to tell my brother that and frankly know that he'd give me a hard time. My husband is already stressed about money.

I'm not expecting an inheritance - and I think it's her money, that's what it's there for. My brother is intent that we "not touch the principal."

Thoughts? Anyone been there?

$200,000 is what's left of her inheritance. How is the assisted living paid for? Did she own a house? I assume she's not deemed incompetent so talk to her about the expenses. I'm in a similar situation. Is that brother the Power of Attorney? What about her social security, any pension, any required distribution from an IRA?

[Anonymous]

Anonymous wrote:I was in your brother's position so I feel for him and don't doubt his claims of being owed $6K. That said, I personally don't see why you can't tap into the principal. Let's say she lives until 100. That's 132 months from now. That means you could draw $1500 a month, break even on investments, and it would still last until she turns 100. Your brother should be willing to clarify specifically what her income and expenses are each month. Your mother collects social security income, how much is that? Does she have any pension from her nursing work? Any other assets or sources of income besides her $200K inheritance? You could also agree that any amount each of you ends up contributing to her care now should be offset against your share of future inheritance, should there be any.

I just posted -then read the above. The brother might be concerned about the mother needing a higher level of care. Medicare covers 100 days of skilled nursing maximum and patients can get bumped long before that. Check out the medicare insurance. It also doesn't restart the day count unless one has not had skilled nursing or a hospitalization for 60 days. Skilled nursing [non medicare] can be 12,000 monthly excluding copays etc.

Sounds like the brother has been paying whatever expenses occur monthly not covered by the mother's income.

[Anonymous]

Anonymous wrote:I was in your brother's position so I feel for him and don't doubt his claims of being owed $6K. That said, I personally don't see why you can't tap into the principal. Let's say she lives until 100. That's 132 months from now. That means you could draw $1500 a month, break even on investments, and it would still last until she turns 100. Your brother should be willing to clarify specifically what her income and expenses are each month. Your mother collects social security income, how much is that? Does she have any pension from her nursing work? Any other assets or sources of income besides her $200K inheritance? You could also agree that any amount each of you ends up contributing to her care now should be offset against your share of future inheritance, should there be any.

I agree with this.

I managed my mother's finances until she died at 84yo last year. Each month I drew about $500 from principal to meet her needs. According to her financial adviser, this was a reasonable approach.

[Anonymous]

Is $50/month a stretch for you? I'd find a compromise. I frankly see your brother's perspective and think he's being reasonable to ask for a contribution and trying to keep her investment intact. You never know what other expenses related to her health down the road. Keeping that money will ensure that you might not have to contribute much in the event that she needs long-term care...

[Anonymous]

Sounds to me like brother is preserving principle of the investment for himself. Sorry, but there is no reason to not start drawing down the principle for an 89 year old woman. In fact, it's the smartest thing to do.

[Anonymous]

Talk about money is usually cover for not talking about emotional issues. Your brother feels like he's doing everything and you are doing nothing. He wants yo to contribute and the only way you can is by writing a check.

Talk about other ways you can help. Can you take over for a week or two while he takes a break?

[Anonymous]

"Sounds to me like brother is preserving principle of the investment for himself. Sorry, but there is no reason to not start drawing down the principle for an 89 year old woman. In fact, it's the smartest thing to do."

As long as they are all okay with the scenario of the mother going into a nursing home that accepts medicare, as $200K is not going to cover much time in a home and once they run through the 200K that will be the only option.

[Anonymous]

OP, I've been somewhat near both sides of this argument - watched my mother take sole responsibility for her own mother with Alzheimers and then a decade later her MIL with dementia. Now I'm the slacker sibling, mainly by virtue of geography, to an 80yo father who lives in the same city as my two siblings. I sympathize with your brother, and wonder if the monetary contribution is as much about the specific accounting as it is a means of trying to develop a shared sense of burden among the siblings. Talk to your siblings, but I'd try to find a way to help out either financially and/or with handling some of the medical appointments etc etc etc.