^Bingo. There in lies the biggest concern of mine. Would there be a way to structure anything to eliminate this risk? Even if there was no mortgage and the house was owned outright, by parents and sister, it ses.there are all kinds of scenarios that could lead to her needing to or having to sell.
Would any kind of family trust make it untouchable until their death?
^*it seems
I can’t type on my phone
We moved my mom when she was in her 70’s from the place where she had lived for 30 or more years…to a place nearer to us.
She wanted to move…and we wanted her to.
It ended up NOT being so easy. She gave up the familiarity of her home, and neighborhood. She said she wanted to make the move…but in retrospect…WE wanted her to make the move…and she went along with it.
I would suggest that your sister put her house on the market. Before she lists it with an agent…see if your oarents want to buy. No suggestion that they do so…just the info that it is going on the market.
If they jump all over it…and say they want to move…fine. Strike up a deal. Otherwise…I would let it go.
^have no intention of trying to talk them into anything. If they hear our proposal and decline, we will let it go. But, they have already been really clear about their desire to have sister and I own their current home. For the first few years, I declined for financial aid reasons. FA hasn’t been an option the last couple of years so they are pestering us to talk to our lawyers again about having us take possession of their current home. So, the idea of having one of us own 1/2 of their home isn’t such a radical idea here.
If they do move, it won’t be an unfamiliar area. This is a neighborhood where they do all their shopping, where their library and drs. offices are, where my mom worked for a decade and where a couple of their good friends are. They know every nook and cranny of the neighborhood. I have no concerns at all about that.
They spend several months each year traveling throughout the US. My dad is a runner. These are not in any way feeble people. But, their current home is a raised ranch. When you walk in the front door, you immediately have to walk up a flight of stairs to get to the living area. They are aware that chances are eventually one or both of them won’t be able to handle those stairs (which are too narrow for a chair lift and room to walk). I think given time to stew on this idea they might think it makes sense.
I want to propose the idea to them. My question is how to structure the finances so it is fair and secure.
Scubasue,
why not propose the idea with the suggestion that the 4 of you make a visit to an estate planner/attorney to figure out the fair, smart and secure financial plan?
^definitely will be doing that either way. I just thought I might get some ideas here that would help with the initial conversation.
To me it seems kind of early to be thinking about needing a one story house. Especially since they are only 71 and from what you have said they are in good health. If you had said they were in their 80’s then I could see pushing it more. Have they said anything about finding the stairs difficult?
Nope. It is early. But I know my parents. In the past they have said they are overwhelmed by the hassle of moving and didn’t want to move until they were forced to do so. If they decide not to move into this house, they will not move until there is a some kind of crisis.
I am 100% OK with them declining the option, but I would not be considering the idea at all if I didn’t think that they might have a different attitude about the opportunity to move into a home they already love in as hassle-free, no-rush situation as they are ever going to have.
Like I said upthread…my mom has said many times she would love to live in this house.
Any chance she said that thinking that they would live with your sister?
no. none of us would ever think it was an option or a preference to live with anyone else. My parents have made it clear to both of us many many times that they NEVER want to live with either of us. 
I believe them.
It’s a great, beautiful house. It has some features that make it perfect for them. (Her assessment, not mine.) They already host all family and friend functions there. And requested for us to host their 50th anniversary party there.
They may decline the whole idea. But it will be because of financial issues or their aversion to hassle with moving. It will absolutely not have anything to do with it not being the “right” house. I couldn’t be more confident in that.
So…as I suggested earlier.
Have your sister talk to your parents. Tell them that she is putting the house on the market, but she wants to give them the right of first refusal. See what they say. If they are all over the idea of having that option…then discuss financing etc.
If they are meh about even being given the option of first refusal, you might just have your answer.
My mother talked about icing nearer to us for decades…but really, when she did, it was not the right move.
^if we present it to them like that they will for sure say no.
IF we say: “Hey the house is going on the market soon. Sis might be interested in keeping at least partial interest in it though for investment and tax purposes. Any chance you’d be interested in moving into that house IF Sis stays on as a half owner? Or maybe the two of us could own that house together instead of your current home as you want us to do. Either way, there are a couple of ways you could do live there without spending any more than the value of your current home and we could take several months to sort, pack and move”, there is a chance they will think about it.
Ok…you can say that…BUT I would add…if they say YES…you must see a financial planner who deals,with seniors, and estate planning. You want to make sure you get this right…financially.
From what you are posting here (and yes, I know it’s hard to really know from text communications), it sounds like your sister and you are very enthusiastic about this move…and you are hoping that your parents will be also.
Just be prepared…they might not be as enthusiastic as you hope. Up until now…this has always been what if talk. When presented with a real possibility of moving…they may not be so enthusiastic.
^we will be seeing an attorney before we propose the idea to them. If there is not a way to structure a deal(trust maybe?) so that there house would be protected from any financial disasters sister or I could have, we would not even consider bringing it up.
We’re going to give them the option. Though I think there is a possibility it would be an interesting idea to them, I will be (pleasantly) surprised, no shocked, if they go for it. Likely, they will think even this is too much hassle.
Also, I live in a retirement community (different state from sister and parents) and in the most popular neighborhood for retirees in our community. I have several neighbors who moved here in their 70s and they all love it, including two couples from out of state (so everything is new). Our next door neighbors are three years younger than my parents and just moved here from UK (no family in town). They are over the moon happy to be here. Many (most even?) 70-somethings note only cope, they are thrilled that they moved.
They would love to live in the house and neighborhood. They will not love to move there. But, no way will my parents move unless they decide they want to.
It seems to me that if your parents didn’t feel their current home was good enough, they would have moved already. They’re frugal and debt-free, and could have purchased a home for the price your sister’s house is listed at. It’s very telling to me that they’ve chosen to remain in their current home debt-free for so many years.
I’ll reiterate that I think you should leave them alone and not open this can of worms-you are not doing them any favors.
I think I agree with MOD here, insofar as it seems that they value frugal and debt-free (and with that, the knowledge that they have a house they can live in the rest of their lives, and which isn’t physically unmanageable at this point) over the amenities of your sister’s home.
71 is so young and you said they are physically still mobile / active.
Update: When I went home in July, I offered to help my parents buy my sister’s house, and as expected they balked at the idea. Fortunately, she procrastinated several months with putting it on the market. The house went on the market last week and she had a ton of interest. I sent my parents an email at midnight and told them the offer still stood. At 10am the next day, they called me and asked if I would be interested in buying it myself and renting it to them. Apparently they had each been thinking about it for 6 months. I could not believe it. I said absolutely, I would love to do that for them.
Flash forward a week, they’ve already moved quite a few things in, and have not been this excited about anything in years. The only concern either one of them had about the house is that there is an electric cooktop. So, my sister and I have already quietly arranged to have new gas piping installed and my mom will be getting a really nice gas range as an early mother’s day gift. Their current home is really nice, and completely updated, but very small. They’ve never had 2 bathrooms, or a dishwasher, or even a queen size bed. Even though they are in the frigid midwest, they have never parked inside (they had to use their single car garage for storage and workshop space). The new house has a four car garage and a huge shop space for my Dad. And, all important living areas are on ground floor if they ever can’t manage the stairs, they won’t have to leave their home.
Regarding the financial arrangements: since we originally all decided this was going to happen, I have learned that per IRS rules, if you rent a home to a family member at less than fair market value, it’s technically considered a second home and not a rental. I told them they would only need to pay the actual house payment + taxes and insurance, which will be quite a bit less than FMV (so not even the chance to stretch the rules) Then I learned that if you buy a home for your elderly parents, you can actually buy it with primary home underwriting, which will save 3/4% on the loan rate and make up for not being able to claim the depreciation we’d get as a rental. If it appreciates a lot, we also will have the option to use one of our capital gains exclusions, whereas if we classified it as a rental, we’d get hit with a hefty captial gains tax upon the sale.
End result: parents are going to sell their house and gift me the proceeds, which I will invest with help of our financial advisor in low risk investments. They will report the gift, but there will be no tax liability for either them or us. I will then draw the monthly house payments from those funds for the rest of their lives. I am meeting with a CPA next week to get some help figuring out what will be fair for my sister if they both pass away before the current equity they are going to “gift” me is gone.
Thanks to all of you who gave me advice. SO happy to be able to do this for my parents. I tread very gently with the first offer and then shut up and let them think about it with no other pressure or input and everything has worked out great.