February 6, 2025 • 43 mins
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Planning and Financing Senior Care: Insights with Erin Thompson
In this joint episode of the 'On the Mark Podcast and Financial Forum,' and Aspire for More with Erin podcast co-host and guest Erin Thompson and Mark Maimon discuss the complexities of planning and financing senior care. Mark and Erin shares their vast experience in senior living, emphasizing the importance of early, tough conversations and proper planning. The discussion touches upon the high costs of senior care, the impact of real estate decisions, and alternative financing options including cash-out loans, rental property income, and reverse mortgages. They highlight the tax implications of selling a home before and after a senior passes away, and the potential benefits of strategic debt use. Both Erin and Mark stress the significance of employing trustworthy professionals to navigate these financial waters, ensuring the best outcomes for seniors and their families.
00:00 Welcome and Guest Introduction
01:33 The Rising Cost of Senior Care
02:15 Planning for Senior Care Expenses
06:47 Common Financial Challenges for Seniors
11:23 Tax Implications and Financial Strategies
15:55 Alternative Financing Options
21:24 Emotional and Psychological Aspects of Senior Care
23:02 Real Estate and Rental Income Strategies
30:22 Disaster Relief and Senior Care
33:57 Final Thoughts and Resources
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
Hi, everyone, I hope you aredoing well, thank you for
spending this time with metoday.
I wanted to give you a heads upand say that this episode is a
little bit different because Iwas a guest on Mark Maimons on
the mark podcast where wediscuss.
Financial matters and ways forour residents and prospects to
(00:22):
afford senior living.
So I got to discuss a lot ofbest practices.
I saw families.
Bring into tours and differentconversations.
Got to talk about my own story alittle bit.
He got to talk about his and Ithought this is just a great
conversation that every seniorliving leader needs to hear.
And so that's why I'm bringingit to you on this podcast.
(00:46):
you know, it's hard to havethose money conversations.
And here is just a little bit ofa, a window into how I handled
money conversations and somefunny stories regarding our
residents and money and uniqueways that are out there that our
residents and prospects can usethe, the house that they're in
(01:12):
as a way to pay for seniorliving and not sell it.
And that's kind of new.
So, I hope you enjoy thisepisode.
I hope it brings you value andat least a good step in having
the hard conversations withfamilies about money.
And as always, aspire for morefor you.
We're starting in right at acertain point of the
(01:33):
conversation.
We skipped all the niceties.
Your time is valuable.
Hope you enjoy it.
Mark (01:39):
Yeah, absolutely.
And I, and I checked out yourcontent and I really enjoyed it.
And, I'm glad we connectedbecause I think we, we share a
similar values in wanting toserve coming from a place of
service.
And, I think that's so importantspecifically within the senior
community.
So thank you for all you do andfor the, for the knowledge that
you share.
And I'm looking forward tosharing that with the, with our
(02:02):
audience as well.
So, so I think one of the thingsthat We often come across,
obviously we do financing for aliving, so people usually ask us
about financing is one of theissues is that the cost of care
has just risen so much over theyears and what we often find is
that people aren't planning.
(02:23):
Necessarily for that.
They don't really have a planfor how, how are we going to
cover the cost of care becauseit's always feels like it's
something so far in the future.
And I will deal with it then.
And, you know, maybe we'll justpull out some money from our
accounts or something like that.
But I think people reallyunderestimate how much care can
cost.
so I'm curious to get yourthoughts on that.
Erin (02:45):
Well, care costs a lot of money.
and honestly, that phase of lifecan happen to us at any given
moment.
And so, a perfect, a perfectexample is when my grandmother,
who lived to be 96, who thought,Because she had health issues
when she was younger she livedher life thinking this was gonna
(03:06):
be her last year, and she didnot plan financially,
conversationally, emotionally,psychologically about what this
looks like.
She never in her mind thoughtthat she would live till 96
years old.
And so we can take from her thatyou don't give your money away.
(03:26):
because you're going to need itbecause she just felt like money
wasn't even a thing for herbecause she wasn't going to need
it.
and that you, you have to starthaving the tough conversations
during the easy times of life.
through my 20 year experienceinside senior living, I realized
(03:47):
families who came prepared, hadthis binder and like each tab
had something in it about theirloved one and they had these
conversations with people andthey kind of knew what the plan
was.
And we all know that we can'tcontrol things, but there is
something about having a planthat just gives a roadmap to
when life kind of starts fallingapart.
(04:10):
It gives us an illusion ofcontrol, which therefore would
give us somewhat of a peace ofmind.
One of the biggest problems, ifthat's the most impressive one,
a son or a daughter coming inwith a binder that has all of
their health history, their listof their medications, their
insurance cards, every doctor'svisit that they could ever come
(04:30):
up with.
I mean, that was impressive.
You would always have 10.
Family members come in and justnot know what to do, you know,
yeah, for every one impressive,you would have probably 10 to 15
of, I have no idea what to do.
And it's more in the mortgage
Mark (04:46):
industry.
You're, you're pretty muchdescribing my clients for
everyday loans that we do aswell, not just for seniors, but
Erin (04:53):
it seems like a
Mark (04:53):
common thread for sure.
Erin (04:55):
Yes.
Yes.
That's, that's the thing.
So the more prepared you are inthe good times, in preparation
for the bad times.
The more control you have,because you can never understand
what it's like when your lovedone, your aging loved one, is
fine one day, and then somethinghappens and the next day they're
(05:17):
not, and you have no access tofinancials, you have no access
to bank accounts, you have zeroidea of how much money is in the
bank, you don't know whatoptions are available to you,
And so walking that line ofasking questions in a respectful
way.
Knowing that it's going that,that you will be the one
(05:40):
responsible if they are not, ifthey cannot be responsible for
themselves is a, is a bigresponsibility.
And it's something that weshould plan for.
Mark (05:48):
Yeah, for sure.
And my family, I always like toshare a personal experience.
My family is going through sortof a similar transition.
Fortunately, everyone's in, inpretty good health, but we just
got very organized as a familyand went through all the
financial information.
I think, even though.
My family had a financialadvisor.
They were more focused oninvestments and growing.
(06:10):
And then as my parents startedthinking about retirement, it's
a shift, right?
You go from gaining assets tonow using them and trying to
figure out how long they mightlast.
And so, so I've, I've been kneedeep in that just over the last
30 days.
And it's really enlightening to,and it feels good as a family to
have that.
(06:30):
Organization and you know, we'reprobably catching up on time.
We probably should have spentyears ago, but I think it's
given my parents a peace of mindto know that.
Okay.
They've got, you know, somemeans to last them for a while
and they can live theirlifestyle and whatnot.
But I do.
I agree with you.
I wish people would start that.
Early as possible.
Maybe we need to get a binder.
(06:51):
We don't have a binder yet.
We have a spreadsheet, but nobinder We'll work on that.
So because I want to come to yousomeday and have you be
impressed And i'll know i'vearrived as a as a sandwich
generation Yes child of agingparents but what sort of common
threads do you usually see withseniors as far as like their
(07:12):
finances and where theirchallenges are
Erin (07:17):
Well, if you're a, if you're a family member and
generations are going to, goingto change, but if you're, if
your loved one is not a babyboomer, but you know, of the
older, I don't know whatgeneration is before the baby
boomers, but the kind that don'twant to share information, that
is certainly a common thread,but you have to dig deep and
(07:38):
lean in and ask because so.
One of the negative commonthreads you see is a family
member or a loved one coming inand saying, I don't know what
they have, you know, and I don'thave any access.
And then come to find out verylittle liquid assets and very
much in, in, in real estateassets.
(08:00):
Like they've lived in this housefor 30 years, 25 years, they
paid X amount for it.
And now it's worth, you Youknow, 10 times that, what do
they do?
They feel like they, they don'twant to touch what liquid, what
little bit of liquid assets theyhave.
25, 000, 30, 000, 50, 000, 100,000.
They want to wait for the houseto sell.
(08:22):
Well, that can pose a really bigproblem if your loved one isn't
safe.
People don't want to spend whatlittle money they have because
they think they might need it.
But you can't see the forestthrough the trees because they
need it now, and that's why thatmoney is there.
Right, and
Mark (08:39):
selling a home, the common threads that we see is, as you
describe, what we call houserich, cash poor, even though
having 100, 000 is not poor byany means, but relative to the
value of the home.
And because property values havegone up so much across the whole
country, over the last, youknow, decade or two, most of
(08:59):
people's net worth is tied up intheir home.
But like you said, the problemis timing.
If you need that money now topay for care, you're not gonna
be able to sell your home rightaway.
And the other common thread thatwe see is that.
Senior's homes are not alwaysshow ready, so to speak.
They're not, you know, maybethey have the same carpets from
when they bought the house 30years ago that need to be
(09:21):
replaced, or a paint job or, youknow, some of their belongings
need to be removed from thehome, and that that's not so
easy to do quickly when you're asenior.
And if you're dealing withmedical challenges that need
immediate attention, the lastthing you're thinking about is
curing off the bookcase, so tospeak.
Erin (09:38):
Yeah.
And especially if the, if yourloved one's in.
In the house, like you can't doall of that.
You know, I was blessed to beable to buy a house from an
older gentleman who was movinginto senior living and it was as
is and It was a blessing for us,but for them, they lost quite a
(10:03):
bit of, of revenue, you know, ofthe sale price because everybody
it's time or money, right?
Time or money, time or money.
and for them, it was time and,you know, we could fix these
things.
We have to be able to processthings quickly.
without a big cost to us.
So that's a prime example of afamily needing to make something
(10:27):
happen quick and two peoplereally benefiting from the need,
But there are things, you and Ihave talked about, there are
things available, and this isanother common thread.
If you're not prepared, youdon't know what's available to
you.
(10:47):
And honestly, you don't havetime to do the digging to figure
out what's available to you.
I mean, if you had 100, 000 inliquid assets, and we know that
the average rate of seniorliving is 54, 000 a year.
Okay, well, you've got a yearand a half, you can do some
digging, right?
But, In a time of trauma, in atime of transition, in an
(11:10):
emotional dis you know, disdisarray in life, when you move
a loved one into senior livingdue to something that happened
very quickly, you're not evencapable of listening, retaining,
implementing things because Itis truly a shock when you have
to do these things quickly.
Mark (11:30):
Yeah, and you have to prioritize in your own brain.
I mean, that's how I work.
I, my brain doesn't allow me toprocess lots of important things
all at once.
Right.
You know, so most critical ismaking sure that the family
member is safe and comfortable.
And, and sometimes you don'thave that time, but I think what
often happens is that peoplethink, okay, I'll sell my home,
which is a perfectly viableoption to help pay for care.
(11:53):
But as you mentioned, it takestime.
But also I think what peopledon't pay attention to is the,
the taxes that they might pay.
Let's say a senior has maybe ayear left in their life, heaven
forbid, but let's just saythat's the case.
If you sell the home before theypass, you're going to pay
capital gains based on what theypaid for it versus what they
(12:15):
sell it for.
If you're able to buy time,maybe it's with your own assets,
maybe it's with a loan, whichwe'll, we'll talk about some of
those options.
And you can buy the time and youwait for the senior to pass.
What happens is the tax basis,so the number that the IRS
compares to what you sell itfor, goes up to the, the date of
death.
So if it's worth, let's say itwas worth 50, 000 when they
(12:39):
bought it 30 years ago, and nowit's worth a million dollars,
the, if you wait until theperson has passed already, then
the value of the home forcapital gains tax is the same
as, When you sell it after theypass.
So let's say a million dollars.
So there's no capital gains taxat all.
Versus if you sell it beforethey pass, even a day before
they pass, you could be paying,you know, 100, 200, 000 dollars
(13:03):
in taxes unnecessarily.
So sometimes just understandingthe the tax planning of it and
the potential financing optionswhere you might be able to
finance some of the care costs,are important.
And also, Sometimes you don'twant to rush it because I'm sure
maybe you've experienced wheresomebody maybe moved into.
assisted living and then endedup going back home for, for
(13:25):
long, you know, for home care.
But if you sell your home, youdon't have that option, you
know, you've now gotten rid ofyour home.
You, you don't have that choice.
and hopefully that doesn'thappen often, but I'm sure it
does happen from time to timewhere somebody needs full time
care at home.
and that could be even moreexpensive.
Erin (13:44):
Yeah.
I mean, it happens if, you know,Do the different state
regulation, you know, each stateis different.
And so, you know, progressivedisease happens and we cross a
line from a regulatorystandpoint, but I have also seen
happy cases where someone had astroke.
They were younger, they gotbetter, they lived with with us
(14:06):
for a year, 6 months, they gotbetter and they were able to go
back home.
You know, you have thosescenarios too and.
I don't know the details onthose people, like, what their
liquid assets were.
Did they have long term careinsurance?
but they did have a home, orthey were able to go to an
apartment afterwards.
(14:26):
So it's really, reallyimportant.
Like, there is no black andwhite.
Just like, you know, it's likehaving children, you, you, you
can have a child and you, youdon't know what you're going to
get, you know, you just assumethat it's going to be, you know,
rainbows and butterflies in thegarden full of blooms, but
that's not that way foreverybody.
(14:48):
And it's the same way towardsthe end of life.
We, we don't know what thejourney is going to be and what,
what we need.
And so it's, it's better to beprepared.
And this loan, I mean, that's anamazing concept.
Of selling it while the person'salive.
Versus selling it after theypass away.
(15:09):
Like that's a huge savings.
Mark (15:11):
It's a massive savings.
Far more
Erin (15:14):
that way nationally, not state to state.
Mark (15:17):
Yeah.
That's IRS.
Yeah.
Yeah.
It's called a step up in basis.
That's the formal.
classification of it.
certainly I'm not an accountantin full disclosure, so don't
take tax advice from, from thispodcast, but you can ask your
accountant about it.
And, and it's, it's one of thenice benefits for seniors is
(15:38):
that they have the option tonot, the families don't have to
necessarily pay that tax.
If they plan accordingly.
But oftentimes people thinkinitially, Oh, I need money to
pay for care.
I'm going to sell the home.
And that can be the worstdecision, especially if you're
in a high, you know, high pricedarea, like I'm in, you know, my,
my primary markets are LosAngeles and New York city where
(16:00):
properties are very expensive.
So you, we, we have clients whobought their Brownstone in
Brooklyn for, for 300, 000 andthey're now worth 5 million.
Like if they sell before theypass, they're going to lose a
million dollars.
so planning and, and potentiallyfinancing, even if you just
leave the property empty for afew years, you're still way
(16:22):
better off by doing that.
and I think also, peopleoftentimes, default to reverse
mortgages because it's, Youknow, it, and there is a place
for them, for sure.
They definitely serve a purpose.
but there are some implicationson that, especially if you end
up having them for a long time.
So have you seen people take outreverse mortgages to try to pay
(16:44):
for the care?
Erin (16:47):
I haven't seen that too much, or I wasn't told.
I have just certainly seenrenting them out.
Yeah.
And selling them as the primary.
And I will tell you, I, I havesaid to somebody like, these are
some options for you and reversemortgages being one of them,
(17:09):
because there are a lot offamily members that do not want
to sell the house.
Mark (17:13):
Right.
Right.
If the family wants to keep it,you know, they want to keep it
in the family so to speakbecause it's sentimental or
maybe one of the adult childrenwants to live there eventually
or they want their kids to livethere or something like that.
One of the challenges withreverse mortgages is that once
the person passes or no longerlives there for a certain period
of time, you, you're required topay off the loan.
(17:36):
So it puts a little bit of aburden on the family that if
they can't.
Refinance that loan easily.
They don't qualify or whateverit may be.
they may have no choice but tosell the home and not be a
default of the, of thatmortgage.
But, yeah, that capital gainstax is a really big deal that I
think people don't miss.
And, I mean, I've, I've hadclients over the years who are
(17:58):
buying properties that weren'ton the seller's side.
So it wasn't really my place toadvise on this where the senior
was.
very ill and selling their homein their very final days.
And, you know, obviously theyprobably the family probably
took a huge hit.
And what they were trying to dowas rush the closing so that the
person would still be able tosign so that it didn't go into
(18:20):
probate, which makes sense to adegree.
But they probably paid asignificant premium because They
didn't wait.
so it's just, it's, you know,that's why these types of
discussions I think are soimportant because people just
don't know these things.
I mean, it's, it's not, nobodystudies the IRS, you know, books
(18:42):
on the weekend just for fun.
Right.
So, right.
If you don't have properadvisors that are, you know,
experts on taxation and, andother things, you may not even
know any of this exists, butthat's partly why we do what we
do, right?
To bring awareness to thesetopics and help people
understand how to, you know, howto navigate them.
(19:02):
But yeah, this, the selling, youget hit with that capital gains
tax.
you know, you can't move backhome and your family can't,
can't keep the home necessarily.
That's a, that's a big problem.
But also, when you liquidateyour assets, what assets are
there, ideally to grow overtime.
And when you're a senior.
(19:23):
The idea is hopefully they'regrowing at a rate that's
comparable to what it's costingyou for care so that you're not
actually depleting thoseaccounts too much every month to
where they'll eventually goaway.
So when you take money out ofyour investments, you're also
stopping that compounding growthover time that can actually help
pay for care.
So, so that's why sometimesfinancing can be a really great
(19:46):
solution.
That's kind of where we come in.
Is, is to provide, you know, ourcompany does do reverse
mortgages.
And there are, like I said,there are, there are reasons why
sometimes they are the rightfit.
The beautiful thing about themis you don't have a monthly
payment.
but there are some major, majordownsides to them, in my
opinion.
the worst of which is kind ofthe opposite of investing money
(20:08):
where, when when you investmoney.
The money grows on a compoundingbasis.
So the longer you have it, thefaster, the paces that it grows
with a reverse mortgage, it'sactually the opposite because
you're paying interest oninterest, on interest, on
interest, and that accelerates.
And you're basically giving awayequity to the lender.
(20:28):
on an accelerated basis.
And then you have the issues oflike, if you're not living there
anymore, technically, you'resupposed to get rid of the loan.
and, you know, passing theproperty to family can be a
little bit difficult.
And they're also pretty limitedon what percentage of the equity
you can actually access.
So again, there are, there arecircumstances where a reverse
(20:50):
mortgage is the right fit, but,people oftentimes don't know
that there are alternatives.
So, and that's kind of what Iwanted to talk with you a little
bit about.
And you had mentioned thatyou've had some families who
have rented properties.
Yeah.
Was that just to buy time untilthey kind of figured things out
and just to cover the expensesor was it potentially to pay for
(21:12):
care?
Erin (21:14):
I think it was kind of both.
I think it was to generaterevenue for the family.
In my area, you're never goingto charge.
Well, never is a strong word,but it is rare that you would
charge rent, the same amount ofrent as it is For rent inside of
(21:35):
a senior living community.
Like it's typically not going tobe the same amount.
So it would be to help floatsome of the costs to generate
some revenue or to give theperson moving into senior living
hope, like we're not sellingyour home.
And that's another veryemotional.
Cause when we talk aboutplanning, We're focusing a lot
(21:58):
on financial planning today, butwhen you have these hard
conversations early, you get tolisten to podcasts like these
and hear about the capital gainsbenefits and the negative
benefits and the positivebenefits of other options.
But also there's an emotionalcomponent and a psychological
component to, to moving into asenior living community.
(22:19):
And if the home is superimportant to the person moving
in, and you can look at your,your loved one, whether it's a
family member or a friend, andyou can say, we are going to
keep this as long as we can.
And then you make good faithefforts to figure out what
options are out there for you.
(22:41):
You give somebody hope whodoesn't have any particular at
that moment.
Right.
And I think that that was a hugecomponent of why.
A certain percentage of peoplewould say, we're not going to
sell your house, mom.
I promise we're not going tosell your house.
we're going to leave it there.
And then that's not always agood thing.
And then the next phase is,okay, well, now we're going to
(23:03):
make you some money, mom, andwe're going to put somebody in
there.
Right.
And that turns into a headachefor some people and, and,
they're not prepared foreverything that comes with that.
And then, okay, mom, what can wedo now?
You know, that that's typicallythe phases that I've seen, but
(23:25):
if family members didn't live init, or, you know, have a
grandchild that lives in it, ora niece or a nephew, you know,
Mark (23:32):
Yeah, and and what we've seen is that oftentimes it
supplements other funds thatthey're using to pay for care
because you're right that therent you're going to get for a
single family residencetypically even in in most
markets, I would just say arenot going to be enough to cover.
You know extensive care needsfor the long term, but what it
(23:53):
can do again is buy you and yourfamily time So if it means
that's buying you time until youare safe enough to move back in
or Where you're buying time toavoid the capital gains tax that
you might have if you sell ittoo soon You can generate income
in the meantime.
And one of the, I do a lot ofreal estate investing.
(24:14):
So I love talking about thistopic, but one of the beauties
of real estate investing is thatfirst of all, taking debt out
from the property is a nontaxable event.
So you don't, if you cash out,whatever.
300, 000 to pay for care.
That's not considered incomefrom the IRS.
So you can pull that money outand use it as you wish.
and also the, the rental incomethat you get, even if you have
(24:37):
positive rental income, in manycases, not all again, talk to
your accountant, but can bewritten off.
with depreciation write offs,meaning it's just a tax write
off.
It's not an actual expense.
You're not paying money tosomebody to depreciate your
property, but you get a writeoff against the income.
So sometimes that income isactually not taxed because it
(24:57):
gets written off by otherthings.
So if you can avoid the capitalgains tax, Obviously, you have
to put up with the, the nuancesof being a landlord and what
that entails, and you want to bereally careful with that
because, you know, like in LosAngeles, for example, the rent
control laws are astronomicallydifficult to get people out if
you want to come back in, or ifyou want to sell the house, it's
(25:19):
not so easy necessarily to dothat, so there's definitely some
considerations, but if you havea good property manager, that's
a great way to delegate some ofthat Work that you don't want to
do, like you don't want thesenior getting a call in the
middle of the night saying, youknow, the HVAC unit went down,
you need help with that kind ofstuff, but if somebody's able to
pull equity out of the home topay for the care, that money, if
(25:43):
you do it as a lump sum, whichis another alternative to, one
of the reverse mortgage optionsis you can actually put that
money with, you know, hopefullya financial advisor who knows
what they're doing.
That money will grow.
You then get the rental incometo offset the expense.
You might get additional incomebeyond what it's costing you for
(26:03):
the mortgage and your taxes andinsurance, which can then be
used for care.
So you can use the gains fromthe money you're cashing out if
you invest it properly.
And you can use the rentalincome and now you're really
offsetting a much higher Portionof that of that care and you're
avoiding potentially the capitalgains tax from selling it.
So, if a family can stomach theidea of renting the property.
(26:27):
It can really make a bigdifference, but even if they
don't rent it out and they justwant to leave it vacant for the
time being, or they just needtime to like settle into their
new reality, even just avoidingthe capital gains tax alone
could be a huge savings if thesenior has been in that home for
a very long time.
Erin (26:46):
Yeah, so you would still have to pay the interest on 300,
000 out.
Mark (26:51):
Correct, but some of that that would be like when we plan
with a family for those types ofthings, we're looking at okay,
realistically, how much time dowe need to buy some of that 300,
000 would go toward paying themortgage over that period of
time.
So let's say the family wants toplan for five years.
So we figure out how much arethe payments going to be for
(27:13):
that five year period.
We make sure that's included inthe amount that we suggest that
they consider taking out, alongwith looking at the potential
gains of those investments.
That's more of a financialadvisor discussion because we're
big on engaging with all thedifferent parties, the state
attorneys, financial advisors,tax advisors.
(27:34):
They all play a very importantrole in these decisions.
But when you collaborate withall the right people, you can
make really good decisions.
So we work with the seniors andtheir families to try to figure
out how much financing isappropriate based on their care
needs and what they plan to dowith the property after, you
know, either the senior movesback in, or maybe they pass,
(27:55):
hopefully not, but, and that'spart of the overall planning
that we do with people to helpthem figure that out.
And I think people oftentimesthink they default to the
reverse mortgage in part becausethere's not really much.
Qualification requirements.
But that's where, that's whereour education is really focused
on right now is to let peopleknow that there are alternatives
(28:17):
where you can cash these fundsout and actually invest that
money and use it to make thepayments on the mortgage that
you're taking out to pay forcare.
And, so you can kind of use debtin a more strategic way.
and you're not losing equity ona compounding basis where.
You know where you might withwith a reverse mortgage So
(28:38):
there's some creative solutionsthat I think most people don't
even know are possible i'll giveyou one quick example.
There's a if if a family doesdecide to rent the property
there's something called a dscrloan debt service coverage ratio
loan, which looks at the rentalincome that they're getting
Relative to the expenses of theproperty.
(28:58):
And in some cases, even if theirrental income is meaningfully
less than, than the expenses,they can still get approval just
based on being at like a.
50 to 75 ratio on that wherethey're still losing money But
the bank's okay still lendingthem those funds.
So it's all, it's not based onthe senior's income and their,
(29:18):
you know, standard underwritingcriteria like a debt to income
ratio or, you know, looking attheir social security income or
pension income or, you know, VAbenefits or whatever it may be.
It's just based on the cashflowof the building.
So as long as a senior or theirfamily member has the capacity
to sign, which is a whole, it'sa different issue.
that comes up sometimes, thenthey can get loans much easier
(29:41):
than people think.
And oftentimes people default tothe reverse mortgage because
they think they won't qualifyfor any other type of loan.
And that, that was just oneexample is if they rent the
property, that's one type ofloan, but there are others that
don't require them to rent it aswell, where they can pull out
financing and usually at lowerrates and lower closing costs
than a, than a reverse mortgage.
(30:01):
So that's part of what we, youknow, want to get out there.
Erin (30:06):
You know, this is why social media and podcasts are so
amazing.
I mean, like, really people talkabout how, and I, everybody
should go to college or go to atrade school.
That's not what I'm saying here.
But this is, this is the stuffthat they don't teach you that
now all of a sudden social mediaand podcasting gives you these
(30:29):
golden nuggets on that.
Maybe you don't understandeverything because I didn't
understand everything he justsaid, but I know that I can go
to these people and I can say,Hey, I heard about this.
I want to knock.
I want to know more about thisand then figure out what will
this work in my situation.
And this is part of the planningthe pre planning process.
(30:52):
My husband does disaster reliefwork and he was down after the
hurricane.
We're in the southeast.
He was in Florida and thesehomes in Saint Pete Beach are.
Are just generational homes.
I mean, sure, there's the newhomes, right, but there's these
generational homes that havebeen in the family for, you
(31:13):
know, since the 1800s.
I mean, some of these homes werevery, very historic and you
think about it.
I mean, these are conversationsthey had to do with somebody to
keep this home in the family.
For with 10 kids and all theother things because I was
talking to these these people atthe beach when they were I'm,
(31:33):
like did it get destroyedbecause these houses didn't but
these older homes Couldn'twithstand the wind and the water
that was coming in, you know
Mark (31:43):
Yeah,
Erin (31:43):
and I mean could you imagine?
That was probably built on Thatthat house probably was 10, 000
to build.
And right now is it a per primeexample that would be millions
upon millions of dollars justfor the land, right?
Mark (32:01):
Yes.
But even more valuable with thehouse on it for sure.
Erin (32:05):
Yes.
Mark (32:06):
Yeah, I mean, and maybe I should connect with your husband
too, because we, we recently gota call similar, very similar
situation related to seniors inparticular from a, I won't
mention the name, but aprominent, operator of CCRC
communities, that has, There'shomes in parts of Georgia that
(32:28):
are in a disaster zone that werehit by Hurricane Helene,
probably where you're, you know,near where your husband was
helping people.
And there, they had planned tomove into the CCRC community
which, as you probably know,have large entry fees, and they
were planning on either sellingtheir home or pulling equity
from their home but when thehome's damaged, you can't easily
(32:51):
do either or you just lose somuch value if you're selling it
just for land value rather thanrebuilding it, then you have to
sell it to somebody who'swilling to come in and build a
house from scratch,theoretically, or repair major
damage.
So we're, we're in, indiscussions with them about
potentially helping people withconstruction financing and
things like that.
So we have other aspects of whatwe do that can help people.
(33:12):
people through disasters and,you know, the wildfires in
California have been disastrousfor seniors and communities as
well.
And, you know, there's so manythings going on these days with
natural disasters.
Not that that was the point ofour conversation today, but,
there are different ways that wecan help people through these
challenges because even seniorsgo through these disasters.
(33:32):
And now all their plans thatthey had to move in this
community that they may havebeen on a waiting list for
months, and all of a sudden theyhave the opportunity but their
house is damaged and they can'ttake action on it or they think
they can't but that's why we'rein touch with them is to try to
facilitate helping them figurethat out.
Yeah.
So and that's, that's honestlylike The joy of what we do is is
(33:54):
helping people through thesesituations.
And now that I've gone throughit, I'm not a disaster
fortunately, but just planningwith with our family and trying
to stay ahead of things.
just puts everyone at ease I canspeak from personal experience,
please do that get a binder.
It's better than my spreadsheet.
I'm sure more organized.
And if you're applying foralone, you're better off.
Love you.
(34:15):
If you come in that organized,but I agree with you.
I think some of these topicsjust come up in conversation.
That's the beauty of socialmedia and podcasts and just
getting good information outthere to our respective
networks.
So, so I, I really appreciateyour time.
Tell us how can people find you?
Cause I know you, you have thepodcasts and I know you also
coach leadership within thesenior.
(34:37):
Living communities.
So how can people find you ifthey if they want to get in
touch?
Erin (34:41):
i'm most active on linkedin And honestly i'm trying
to find the bandwidth to reallytalk about my The first love
which is helping families andresident future residents look
for right senior livingcommunities know how to find the
right ones What do you want outof a senior living community?
I hope to start building,content out like that to be
consistent on Instagram andFacebook, but Aaron Thompson, or
(35:06):
aspire for more with Aaron.
On Facebook, but Aaron Thompsonon LinkedIn, you can search
Aaron Thompson on Instagram andI will come up.
I do want to say just in passingjust so you're the listeners
know how much growing oldercosts what a blessing it is, but
just some ideas for you to have,Genworth, which was a long term
(35:29):
care insurance company in 2021.
these are the, the nationalmedian costs.
Okay, for a private 1 bedroomapartment and assisted living
4500 dollars per month, whichdivides out to 148, 148 dollars
per day, which is 54, 000dollars annually.
Okay, that is national average.
(35:51):
That's not, you know, the costin Boston versus the cost in
Alabama, South Dakota, you know,that is national median.
for a nursing home, a long-termcare community where you are
private pay, it is$9,000, around$9,000 per month, which equals
out to$297 per day,$108,000 peryear.
(36:17):
And then home health.
So if you wanted to have a homehealth care aid aide inside a
companion inside your communityor inside your home and not move
to a community, this is a 40hour work week, which is only
eight hours.
Okay, it's only like a 7 to 3 ora 10 to, 4, that's 6, so like a
10 to 6.
(36:38):
You're looking at$154 per day,which is$19 an hour, and$56, 000
a year, which we know is goingto be more expensive in
California than it's going to bemore expensive in Florida or
Alabama or Georgia.
And even in South Dakota versusMassachusetts, There's, there's
(36:58):
a big discrepancy.
So where you live matters andjust know that it's, if it's
private pay, national median, soyou're talking about in like
small potential group homesversus large CCRCs, there's a
huge difference there in cost,but you can assume, I would even
say 5, 000 per month.
(37:20):
for a 1 bedroom apartment, youhave studios, you have shared
rooms.
There's many different options,but assuming 50 to 75, 000
dollars annually, I will have tohave in order to pay private
pay.
And obviously there are otheroptions.
I mean, just in my owngrandmother's story, my aunt
(37:41):
helped, supplement pay.
And if you have that amazingopportunity, you have, you have
that as well.
So when you have the hardconversations during easy times,
lean into the discomfort.
They're not going to want totalk about it.
But if you see early signs ofdementia, the web is an awful
(38:01):
place.
For your loved one becausethey're gonna sell you cruises
and why not buy a cruise becauseit's a really great deal I have
seen men specifically Giveeverything away on the internet
to women who think they'recoming Shipping 20, 000 in a
teddy bear that got caught incustoms like I can begin to tell
(38:24):
you things that happen so Justhaving the internet password is
really important to where youcan keep an eye on your bank ac
on your loved one's bank accountwithout them knowing.
Get that password, do not useand abuse it, just review it and
figure out if you have problems.
(38:44):
Because We're entering a timethat there are more and more
people who are going to want totake advantage of your loved
one, and the more prepared youare, the better you can protect
them.
Mark (38:57):
Yeah.
There's my soapbox.
No, I couldn't agree more.
I heard a story just yesterdayabout a gentleman who was
starting to, to have issueswith, dementia and he bought a,
he bought a car and then heforgot where he parked it.
And so he went and boughtanother one.
And then it happened three orfour times where now all of a
(39:19):
sudden, but they couldn't findthe cars so it's it's important
and as it relates to financingIt gets significantly more
difficult to get a loan for asenior to help pay for care when
they aren't able to Mentally,you know, like they don't have
the capacity to sign on theirown behalf So when the notary
comes to sign the documents ifthey think that the person
(39:42):
doesn't have the capacity Theywill not allow them to sign You
And they won't ensure the title.
So that's why the pre planningthat you've talked about, when
times are good, is so much moreimportant to plan those things
ahead of time, because you mightnot, those options may go out
the window completely, literallyspeaking, and, and figuratively,
(40:03):
if you don't plan ahead and dothese things before These issues
come so the planning is I cannotI cannot say strongly enough how
important that is Whether youtake a loan or not just anything
the further ahead you can stayfrom these things from a
planning perspective the betterYou'll never go wrong.
Erin (40:21):
I will say I had a resident.
I know we got to end But this isreally funny story to compliment
yours.
He used to own car dealerships.
He was really really big time inanother state And when his
daughters, took his keys awayhe's like, he just called people
up and be like, Hey, give me acar here.
You know what I mean?
Like, didn't even have to doanything just because of who he
was.
A car was delivered, you know?
(40:43):
So you are all going to haveroadblocks and hurdles that you
would have never imagined justdepending on who your loved one
is.
So prepare yourself.
It's a wild ride sometimes.
For sure.
Mark (40:55):
And, and also met the professionals that you're
working with becauseUnfortunately, seniors are
susceptible to scams and peopletaking advantage of maybe not
having their best interest inmind.
And that's why.
I, I invited you on today,Aaron, because I know you're,
you're so committed to, tomaking sure that people are
cared for and, and dealt with ina, you know, in a positive way.
(41:16):
And that's definitely how weapproach things as well.
So we're definitely like mindedin that way, but the
professionals you work withmatter, and the quality of
professionals and the people whofeel like they need to protect,
you know, seniors and put a, Ialways say, I want to put a
protective bubble around them.
That's my, that's my calling isto, you know, to do what I do
(41:39):
to, to help them with thefinancing, but also to protect
them from other people in myindustry who maybe don't have
their best interests in mind.
So, you know, it's so important.
So, well, Aaron, thank you somuch for joining us.
I really appreciate all yourinsight.
I'm sure we will be engagingplenty, hopefully not only
around disaster areas and thingslike that.
(42:00):
Hopefully people can make thesedecisions.
It's hard enough to make thesedecisions, hopefully not during
a, during or right after anatural disaster as well.
But thank you so much.
And I would definitely encourageanybody who's on the call today,
and checking out this episodeto, to check out Aaron's
podcast.
They are really good.
That's how I connected with herat first.
As I saw one of hers that talkedabout paying for care and it
(42:22):
didn't mention all thesemortgage things.
So I know an expert like you, ifthese things weren't aware on
your radar, that they likely arenot on most people's radar.
So that's why I wanted to makesure we had a chance to connect
and get this message out there.
So.
Thank you so much, Erin.
I really appreciate it.
Erin (42:39):
My pleasure.
Thank you.
Mark (42:41):
Okay.
Take care.
Hi, everyone, I hope you aredoing well, thank you for
spending this time with metoday.
I wanted to give you a heads upand say that this episode is a
little bit different because Iwas a guest on Mark Maimons on
the mark podcast where wediscuss.
Financial matters and ways forour residents and prospects to
(00:22):
afford senior living.
So I got to discuss a lot ofbest practices.
I saw families.
Bring into tours and differentconversations.
Got to talk about my own story alittle bit.
He got to talk about his and Ithought this is just a great
conversation that every seniorliving leader needs to hear.
And so that's why I'm bringingit to you on this podcast.
(00:46):
you know, it's hard to havethose money conversations.
And here is just a little bit ofa, a window into how I handled
money conversations and somefunny stories regarding our
residents and money and uniqueways that are out there that our
residents and prospects can usethe, the house that they're in
(01:12):
as a way to pay for seniorliving and not sell it.
And that's kind of new.
So, I hope you enjoy thisepisode.
I hope it brings you value andat least a good step in having
the hard conversations withfamilies about money.
And as always, aspire for morefor you.
We're starting in right at acertain point of the
(01:33):
conversation.
We skipped all the niceties.
Your time is valuable.
Hope you enjoy it.
Mark (01:39):
Yeah, absolutely.
And I, and I checked out yourcontent and I really enjoyed it.
And, I'm glad we connectedbecause I think we, we share a
similar values in wanting toserve coming from a place of
service.
And, I think that's so importantspecifically within the senior
community.
So thank you for all you do andfor the, for the knowledge that
you share.
And I'm looking forward tosharing that with the, with our
(02:02):
audience as well.
So, so I think one of the thingsthat We often come across,
obviously we do financing for aliving, so people usually ask us
about financing is one of theissues is that the cost of care
has just risen so much over theyears and what we often find is
that people aren't planning.
(02:23):
Necessarily for that.
They don't really have a planfor how, how are we going to
cover the cost of care becauseit's always feels like it's
something so far in the future.
And I will deal with it then.
And, you know, maybe we'll justpull out some money from our
accounts or something like that.
But I think people reallyunderestimate how much care can
cost.
so I'm curious to get yourthoughts on that.
Erin (02:45):
Well, care costs a lot of money.
and honestly, that phase of lifecan happen to us at any given
moment.
And so, a perfect, a perfectexample is when my grandmother,
who lived to be 96, who thought,Because she had health issues
when she was younger she livedher life thinking this was gonna
(03:06):
be her last year, and she didnot plan financially,
conversationally, emotionally,psychologically about what this
looks like.
She never in her mind thoughtthat she would live till 96
years old.
And so we can take from her thatyou don't give your money away.
(03:26):
because you're going to need itbecause she just felt like money
wasn't even a thing for herbecause she wasn't going to need
it.
and that you, you have to starthaving the tough conversations
during the easy times of life.
through my 20 year experienceinside senior living, I realized
(03:47):
families who came prepared, hadthis binder and like each tab
had something in it about theirloved one and they had these
conversations with people andthey kind of knew what the plan
was.
And we all know that we can'tcontrol things, but there is
something about having a planthat just gives a roadmap to
when life kind of starts fallingapart.
(04:10):
It gives us an illusion ofcontrol, which therefore would
give us somewhat of a peace ofmind.
One of the biggest problems, ifthat's the most impressive one,
a son or a daughter coming inwith a binder that has all of
their health history, their listof their medications, their
insurance cards, every doctor'svisit that they could ever come
(04:30):
up with.
I mean, that was impressive.
You would always have 10.
Family members come in and justnot know what to do, you know,
yeah, for every one impressive,you would have probably 10 to 15
of, I have no idea what to do.
And it's more in the mortgage
Mark (04:46):
industry.
You're, you're pretty muchdescribing my clients for
everyday loans that we do aswell, not just for seniors, but
Erin (04:53):
it seems like a
Mark (04:53):
common thread for sure.
Erin (04:55):
Yes.
Yes.
That's, that's the thing.
So the more prepared you are inthe good times, in preparation
for the bad times.
The more control you have,because you can never understand
what it's like when your lovedone, your aging loved one, is
fine one day, and then somethinghappens and the next day they're
(05:17):
not, and you have no access tofinancials, you have no access
to bank accounts, you have zeroidea of how much money is in the
bank, you don't know whatoptions are available to you,
And so walking that line ofasking questions in a respectful
way.
Knowing that it's going that,that you will be the one
(05:40):
responsible if they are not, ifthey cannot be responsible for
themselves is a, is a bigresponsibility.
And it's something that weshould plan for.
Mark (05:48):
Yeah, for sure.
And my family, I always like toshare a personal experience.
My family is going through sortof a similar transition.
Fortunately, everyone's in, inpretty good health, but we just
got very organized as a familyand went through all the
financial information.
I think, even though.
My family had a financialadvisor.
They were more focused oninvestments and growing.
(06:10):
And then as my parents startedthinking about retirement, it's
a shift, right?
You go from gaining assets tonow using them and trying to
figure out how long they mightlast.
And so, so I've, I've been kneedeep in that just over the last
30 days.
And it's really enlightening to,and it feels good as a family to
have that.
(06:30):
Organization and you know, we'reprobably catching up on time.
We probably should have spentyears ago, but I think it's
given my parents a peace of mindto know that.
Okay.
They've got, you know, somemeans to last them for a while
and they can live theirlifestyle and whatnot.
But I do.
I agree with you.
I wish people would start that.
Early as possible.
Maybe we need to get a binder.
(06:51):
We don't have a binder yet.
We have a spreadsheet, but nobinder We'll work on that.
So because I want to come to yousomeday and have you be
impressed And i'll know i'vearrived as a as a sandwich
generation Yes child of agingparents but what sort of common
threads do you usually see withseniors as far as like their
(07:12):
finances and where theirchallenges are
Erin (07:17):
Well, if you're a, if you're a family member and
generations are going to, goingto change, but if you're, if
your loved one is not a babyboomer, but you know, of the
older, I don't know whatgeneration is before the baby
boomers, but the kind that don'twant to share information, that
is certainly a common thread,but you have to dig deep and
(07:38):
lean in and ask because so.
One of the negative commonthreads you see is a family
member or a loved one coming inand saying, I don't know what
they have, you know, and I don'thave any access.
And then come to find out verylittle liquid assets and very
much in, in, in real estateassets.
(08:00):
Like they've lived in this housefor 30 years, 25 years, they
paid X amount for it.
And now it's worth, you Youknow, 10 times that, what do
they do?
They feel like they, they don'twant to touch what liquid, what
little bit of liquid assets theyhave.
25, 000, 30, 000, 50, 000, 100,000.
They want to wait for the houseto sell.
(08:22):
Well, that can pose a really bigproblem if your loved one isn't
safe.
People don't want to spend whatlittle money they have because
they think they might need it.
But you can't see the forestthrough the trees because they
need it now, and that's why thatmoney is there.
Right, and
Mark (08:39):
selling a home, the common threads that we see is, as you
describe, what we call houserich, cash poor, even though
having 100, 000 is not poor byany means, but relative to the
value of the home.
And because property values havegone up so much across the whole
country, over the last, youknow, decade or two, most of
(08:59):
people's net worth is tied up intheir home.
But like you said, the problemis timing.
If you need that money now topay for care, you're not gonna
be able to sell your home rightaway.
And the other common thread thatwe see is that.
Senior's homes are not alwaysshow ready, so to speak.
They're not, you know, maybethey have the same carpets from
when they bought the house 30years ago that need to be
(09:21):
replaced, or a paint job or, youknow, some of their belongings
need to be removed from thehome, and that that's not so
easy to do quickly when you're asenior.
And if you're dealing withmedical challenges that need
immediate attention, the lastthing you're thinking about is
curing off the bookcase, so tospeak.
Erin (09:38):
Yeah.
And especially if the, if yourloved one's in.
In the house, like you can't doall of that.
You know, I was blessed to beable to buy a house from an
older gentleman who was movinginto senior living and it was as
is and It was a blessing for us,but for them, they lost quite a
(10:03):
bit of, of revenue, you know, ofthe sale price because everybody
it's time or money, right?
Time or money, time or money.
and for them, it was time and,you know, we could fix these
things.
We have to be able to processthings quickly.
without a big cost to us.
So that's a prime example of afamily needing to make something
(10:27):
happen quick and two peoplereally benefiting from the need,
But there are things, you and Ihave talked about, there are
things available, and this isanother common thread.
If you're not prepared, youdon't know what's available to
you.
(10:47):
And honestly, you don't havetime to do the digging to figure
out what's available to you.
I mean, if you had 100, 000 inliquid assets, and we know that
the average rate of seniorliving is 54, 000 a year.
Okay, well, you've got a yearand a half, you can do some
digging, right?
But, In a time of trauma, in atime of transition, in an
(11:10):
emotional dis you know, disdisarray in life, when you move
a loved one into senior livingdue to something that happened
very quickly, you're not evencapable of listening, retaining,
implementing things because Itis truly a shock when you have
to do these things quickly.
Mark (11:30):
Yeah, and you have to prioritize in your own brain.
I mean, that's how I work.
I, my brain doesn't allow me toprocess lots of important things
all at once.
Right.
You know, so most critical ismaking sure that the family
member is safe and comfortable.
And, and sometimes you don'thave that time, but I think what
often happens is that peoplethink, okay, I'll sell my home,
which is a perfectly viableoption to help pay for care.
(11:53):
But as you mentioned, it takestime.
But also I think what peopledon't pay attention to is the,
the taxes that they might pay.
Let's say a senior has maybe ayear left in their life, heaven
forbid, but let's just saythat's the case.
If you sell the home before theypass, you're going to pay
capital gains based on what theypaid for it versus what they
(12:15):
sell it for.
If you're able to buy time,maybe it's with your own assets,
maybe it's with a loan, whichwe'll, we'll talk about some of
those options.
And you can buy the time and youwait for the senior to pass.
What happens is the tax basis,so the number that the IRS
compares to what you sell itfor, goes up to the, the date of
death.
So if it's worth, let's say itwas worth 50, 000 when they
(12:39):
bought it 30 years ago, and nowit's worth a million dollars,
the, if you wait until theperson has passed already, then
the value of the home forcapital gains tax is the same
as, When you sell it after theypass.
So let's say a million dollars.
So there's no capital gains taxat all.
Versus if you sell it beforethey pass, even a day before
they pass, you could be paying,you know, 100, 200, 000 dollars
(13:03):
in taxes unnecessarily.
So sometimes just understandingthe the tax planning of it and
the potential financing optionswhere you might be able to
finance some of the care costs,are important.
And also, Sometimes you don'twant to rush it because I'm sure
maybe you've experienced wheresomebody maybe moved into.
assisted living and then endedup going back home for, for
(13:25):
long, you know, for home care.
But if you sell your home, youdon't have that option, you
know, you've now gotten rid ofyour home.
You, you don't have that choice.
and hopefully that doesn'thappen often, but I'm sure it
does happen from time to timewhere somebody needs full time
care at home.
and that could be even moreexpensive.
Erin (13:44):
Yeah.
I mean, it happens if, you know,Do the different state
regulation, you know, each stateis different.
And so, you know, progressivedisease happens and we cross a
line from a regulatorystandpoint, but I have also seen
happy cases where someone had astroke.
They were younger, they gotbetter, they lived with with us
(14:06):
for a year, 6 months, they gotbetter and they were able to go
back home.
You know, you have thosescenarios too and.
I don't know the details onthose people, like, what their
liquid assets were.
Did they have long term careinsurance?
but they did have a home, orthey were able to go to an
apartment afterwards.
(14:26):
So it's really, reallyimportant.
Like, there is no black andwhite.
Just like, you know, it's likehaving children, you, you, you
can have a child and you, youdon't know what you're going to
get, you know, you just assumethat it's going to be, you know,
rainbows and butterflies in thegarden full of blooms, but
that's not that way foreverybody.
(14:48):
And it's the same way towardsthe end of life.
We, we don't know what thejourney is going to be and what,
what we need.
And so it's, it's better to beprepared.
And this loan, I mean, that's anamazing concept.
Of selling it while the person'salive.
Versus selling it after theypass away.
(15:09):
Like that's a huge savings.
Mark (15:11):
It's a massive savings.
Far more
Erin (15:14):
that way nationally, not state to state.
Mark (15:17):
Yeah.
That's IRS.
Yeah.
Yeah.
It's called a step up in basis.
That's the formal.
classification of it.
certainly I'm not an accountantin full disclosure, so don't
take tax advice from, from thispodcast, but you can ask your
accountant about it.
And, and it's, it's one of thenice benefits for seniors is
(15:38):
that they have the option tonot, the families don't have to
necessarily pay that tax.
If they plan accordingly.
But oftentimes people thinkinitially, Oh, I need money to
pay for care.
I'm going to sell the home.
And that can be the worstdecision, especially if you're
in a high, you know, high pricedarea, like I'm in, you know, my,
my primary markets are LosAngeles and New York city where
(16:00):
properties are very expensive.
So you, we, we have clients whobought their Brownstone in
Brooklyn for, for 300, 000 andthey're now worth 5 million.
Like if they sell before theypass, they're going to lose a
million dollars.
so planning and, and potentiallyfinancing, even if you just
leave the property empty for afew years, you're still way
(16:22):
better off by doing that.
and I think also, peopleoftentimes, default to reverse
mortgages because it's, Youknow, it, and there is a place
for them, for sure.
They definitely serve a purpose.
but there are some implicationson that, especially if you end
up having them for a long time.
So have you seen people take outreverse mortgages to try to pay
(16:44):
for the care?
Erin (16:47):
I haven't seen that too much, or I wasn't told.
I have just certainly seenrenting them out.
Yeah.
And selling them as the primary.
And I will tell you, I, I havesaid to somebody like, these are
some options for you and reversemortgages being one of them,
(17:09):
because there are a lot offamily members that do not want
to sell the house.
Mark (17:13):
Right.
Right.
If the family wants to keep it,you know, they want to keep it
in the family so to speakbecause it's sentimental or
maybe one of the adult childrenwants to live there eventually
or they want their kids to livethere or something like that.
One of the challenges withreverse mortgages is that once
the person passes or no longerlives there for a certain period
of time, you, you're required topay off the loan.
(17:36):
So it puts a little bit of aburden on the family that if
they can't.
Refinance that loan easily.
They don't qualify or whateverit may be.
they may have no choice but tosell the home and not be a
default of the, of thatmortgage.
But, yeah, that capital gainstax is a really big deal that I
think people don't miss.
And, I mean, I've, I've hadclients over the years who are
(17:58):
buying properties that weren'ton the seller's side.
So it wasn't really my place toadvise on this where the senior
was.
very ill and selling their homein their very final days.
And, you know, obviously theyprobably the family probably
took a huge hit.
And what they were trying to dowas rush the closing so that the
person would still be able tosign so that it didn't go into
(18:20):
probate, which makes sense to adegree.
But they probably paid asignificant premium because They
didn't wait.
so it's just, it's, you know,that's why these types of
discussions I think are soimportant because people just
don't know these things.
I mean, it's, it's not, nobodystudies the IRS, you know, books
(18:42):
on the weekend just for fun.
Right.
So, right.
If you don't have properadvisors that are, you know,
experts on taxation and, andother things, you may not even
know any of this exists, butthat's partly why we do what we
do, right?
To bring awareness to thesetopics and help people
understand how to, you know, howto navigate them.
(19:02):
But yeah, this, the selling, youget hit with that capital gains
tax.
you know, you can't move backhome and your family can't,
can't keep the home necessarily.
That's a, that's a big problem.
But also, when you liquidateyour assets, what assets are
there, ideally to grow overtime.
And when you're a senior.
(19:23):
The idea is hopefully they'regrowing at a rate that's
comparable to what it's costingyou for care so that you're not
actually depleting thoseaccounts too much every month to
where they'll eventually goaway.
So when you take money out ofyour investments, you're also
stopping that compounding growthover time that can actually help
pay for care.
So, so that's why sometimesfinancing can be a really great
(19:46):
solution.
That's kind of where we come in.
Is, is to provide, you know, ourcompany does do reverse
mortgages.
And there are, like I said,there are, there are reasons why
sometimes they are the rightfit.
The beautiful thing about themis you don't have a monthly
payment.
but there are some major, majordownsides to them, in my
opinion.
the worst of which is kind ofthe opposite of investing money
(20:08):
where, when when you investmoney.
The money grows on a compoundingbasis.
So the longer you have it, thefaster, the paces that it grows
with a reverse mortgage, it'sactually the opposite because
you're paying interest oninterest, on interest, on
interest, and that accelerates.
And you're basically giving awayequity to the lender.
(20:28):
on an accelerated basis.
And then you have the issues oflike, if you're not living there
anymore, technically, you'resupposed to get rid of the loan.
and, you know, passing theproperty to family can be a
little bit difficult.
And they're also pretty limitedon what percentage of the equity
you can actually access.
So again, there are, there arecircumstances where a reverse
(20:50):
mortgage is the right fit, but,people oftentimes don't know
that there are alternatives.
So, and that's kind of what Iwanted to talk with you a little
bit about.
And you had mentioned thatyou've had some families who
have rented properties.
Yeah.
Was that just to buy time untilthey kind of figured things out
and just to cover the expensesor was it potentially to pay for
(21:12):
care?
Erin (21:14):
I think it was kind of both.
I think it was to generaterevenue for the family.
In my area, you're never goingto charge.
Well, never is a strong word,but it is rare that you would
charge rent, the same amount ofrent as it is For rent inside of
(21:35):
a senior living community.
Like it's typically not going tobe the same amount.
So it would be to help floatsome of the costs to generate
some revenue or to give theperson moving into senior living
hope, like we're not sellingyour home.
And that's another veryemotional.
Cause when we talk aboutplanning, We're focusing a lot
(21:58):
on financial planning today, butwhen you have these hard
conversations early, you get tolisten to podcasts like these
and hear about the capital gainsbenefits and the negative
benefits and the positivebenefits of other options.
But also there's an emotionalcomponent and a psychological
component to, to moving into asenior living community.
(22:19):
And if the home is superimportant to the person moving
in, and you can look at your,your loved one, whether it's a
family member or a friend, andyou can say, we are going to
keep this as long as we can.
And then you make good faithefforts to figure out what
options are out there for you.
(22:41):
You give somebody hope whodoesn't have any particular at
that moment.
Right.
And I think that that was a hugecomponent of why.
A certain percentage of peoplewould say, we're not going to
sell your house, mom.
I promise we're not going tosell your house.
we're going to leave it there.
And then that's not always agood thing.
And then the next phase is,okay, well, now we're going to
(23:03):
make you some money, mom, andwe're going to put somebody in
there.
Right.
And that turns into a headachefor some people and, and,
they're not prepared foreverything that comes with that.
And then, okay, mom, what can wedo now?
You know, that that's typicallythe phases that I've seen, but
(23:25):
if family members didn't live init, or, you know, have a
grandchild that lives in it, ora niece or a nephew, you know,
Mark (23:32):
Yeah, and and what we've seen is that oftentimes it
supplements other funds thatthey're using to pay for care
because you're right that therent you're going to get for a
single family residencetypically even in in most
markets, I would just say arenot going to be enough to cover.
You know extensive care needsfor the long term, but what it
(23:53):
can do again is buy you and yourfamily time So if it means
that's buying you time until youare safe enough to move back in
or Where you're buying time toavoid the capital gains tax that
you might have if you sell ittoo soon You can generate income
in the meantime.
And one of the, I do a lot ofreal estate investing.
(24:14):
So I love talking about thistopic, but one of the beauties
of real estate investing is thatfirst of all, taking debt out
from the property is a nontaxable event.
So you don't, if you cash out,whatever.
300, 000 to pay for care.
That's not considered incomefrom the IRS.
So you can pull that money outand use it as you wish.
and also the, the rental incomethat you get, even if you have
(24:37):
positive rental income, in manycases, not all again, talk to
your accountant, but can bewritten off.
with depreciation write offs,meaning it's just a tax write
off.
It's not an actual expense.
You're not paying money tosomebody to depreciate your
property, but you get a writeoff against the income.
So sometimes that income isactually not taxed because it
(24:57):
gets written off by otherthings.
So if you can avoid the capitalgains tax, Obviously, you have
to put up with the, the nuancesof being a landlord and what
that entails, and you want to bereally careful with that
because, you know, like in LosAngeles, for example, the rent
control laws are astronomicallydifficult to get people out if
you want to come back in, or ifyou want to sell the house, it's
(25:19):
not so easy necessarily to dothat, so there's definitely some
considerations, but if you havea good property manager, that's
a great way to delegate some ofthat Work that you don't want to
do, like you don't want thesenior getting a call in the
middle of the night saying, youknow, the HVAC unit went down,
you need help with that kind ofstuff, but if somebody's able to
pull equity out of the home topay for the care, that money, if
(25:43):
you do it as a lump sum, whichis another alternative to, one
of the reverse mortgage optionsis you can actually put that
money with, you know, hopefullya financial advisor who knows
what they're doing.
That money will grow.
You then get the rental incometo offset the expense.
You might get additional incomebeyond what it's costing you for
(26:03):
the mortgage and your taxes andinsurance, which can then be
used for care.
So you can use the gains fromthe money you're cashing out if
you invest it properly.
And you can use the rentalincome and now you're really
offsetting a much higher Portionof that of that care and you're
avoiding potentially the capitalgains tax from selling it.
So, if a family can stomach theidea of renting the property.
(26:27):
It can really make a bigdifference, but even if they
don't rent it out and they justwant to leave it vacant for the
time being, or they just needtime to like settle into their
new reality, even just avoidingthe capital gains tax alone
could be a huge savings if thesenior has been in that home for
a very long time.
Erin (26:46):
Yeah, so you would still have to pay the interest on 300,
000 out.
Mark (26:51):
Correct, but some of that that would be like when we plan
with a family for those types ofthings, we're looking at okay,
realistically, how much time dowe need to buy some of that 300,
000 would go toward paying themortgage over that period of
time.
So let's say the family wants toplan for five years.
So we figure out how much arethe payments going to be for
(27:13):
that five year period.
We make sure that's included inthe amount that we suggest that
they consider taking out, alongwith looking at the potential
gains of those investments.
That's more of a financialadvisor discussion because we're
big on engaging with all thedifferent parties, the state
attorneys, financial advisors,tax advisors.
(27:34):
They all play a very importantrole in these decisions.
But when you collaborate withall the right people, you can
make really good decisions.
So we work with the seniors andtheir families to try to figure
out how much financing isappropriate based on their care
needs and what they plan to dowith the property after, you
know, either the senior movesback in, or maybe they pass,
(27:55):
hopefully not, but, and that'spart of the overall planning
that we do with people to helpthem figure that out.
And I think people oftentimesthink they default to the
reverse mortgage in part becausethere's not really much.
Qualification requirements.
But that's where, that's whereour education is really focused
on right now is to let peopleknow that there are alternatives
(28:17):
where you can cash these fundsout and actually invest that
money and use it to make thepayments on the mortgage that
you're taking out to pay forcare.
And, so you can kind of use debtin a more strategic way.
and you're not losing equity ona compounding basis where.
You know where you might withwith a reverse mortgage So
(28:38):
there's some creative solutionsthat I think most people don't
even know are possible i'll giveyou one quick example.
There's a if if a family doesdecide to rent the property
there's something called a dscrloan debt service coverage ratio
loan, which looks at the rentalincome that they're getting
Relative to the expenses of theproperty.
(28:58):
And in some cases, even if theirrental income is meaningfully
less than, than the expenses,they can still get approval just
based on being at like a.
50 to 75 ratio on that wherethey're still losing money But
the bank's okay still lendingthem those funds.
So it's all, it's not based onthe senior's income and their,
(29:18):
you know, standard underwritingcriteria like a debt to income
ratio or, you know, looking attheir social security income or
pension income or, you know, VAbenefits or whatever it may be.
It's just based on the cashflowof the building.
So as long as a senior or theirfamily member has the capacity
to sign, which is a whole, it'sa different issue.
that comes up sometimes, thenthey can get loans much easier
(29:41):
than people think.
And oftentimes people default tothe reverse mortgage because
they think they won't qualifyfor any other type of loan.
And that, that was just oneexample is if they rent the
property, that's one type ofloan, but there are others that
don't require them to rent it aswell, where they can pull out
financing and usually at lowerrates and lower closing costs
than a, than a reverse mortgage.
(30:01):
So that's part of what we, youknow, want to get out there.
Erin (30:06):
You know, this is why social media and podcasts are so
amazing.
I mean, like, really people talkabout how, and I, everybody
should go to college or go to atrade school.
That's not what I'm saying here.
But this is, this is the stuffthat they don't teach you that
now all of a sudden social mediaand podcasting gives you these
(30:29):
golden nuggets on that.
Maybe you don't understandeverything because I didn't
understand everything he justsaid, but I know that I can go
to these people and I can say,Hey, I heard about this.
I want to knock.
I want to know more about thisand then figure out what will
this work in my situation.
And this is part of the planningthe pre planning process.
(30:52):
My husband does disaster reliefwork and he was down after the
hurricane.
We're in the southeast.
He was in Florida and thesehomes in Saint Pete Beach are.
Are just generational homes.
I mean, sure, there's the newhomes, right, but there's these
generational homes that havebeen in the family for, you
(31:13):
know, since the 1800s.
I mean, some of these homes werevery, very historic and you
think about it.
I mean, these are conversationsthey had to do with somebody to
keep this home in the family.
For with 10 kids and all theother things because I was
talking to these these people atthe beach when they were I'm,
(31:33):
like did it get destroyedbecause these houses didn't but
these older homes Couldn'twithstand the wind and the water
that was coming in, you know
Mark (31:43):
Yeah,
Erin (31:43):
and I mean could you imagine?
That was probably built on Thatthat house probably was 10, 000
to build.
And right now is it a per primeexample that would be millions
upon millions of dollars justfor the land, right?
Mark (32:01):
Yes.
But even more valuable with thehouse on it for sure.
Erin (32:05):
Yes.
Mark (32:06):
Yeah, I mean, and maybe I should connect with your husband
too, because we, we recently gota call similar, very similar
situation related to seniors inparticular from a, I won't
mention the name, but aprominent, operator of CCRC
communities, that has, There'shomes in parts of Georgia that
(32:28):
are in a disaster zone that werehit by Hurricane Helene,
probably where you're, you know,near where your husband was
helping people.
And there, they had planned tomove into the CCRC community
which, as you probably know,have large entry fees, and they
were planning on either sellingtheir home or pulling equity
from their home but when thehome's damaged, you can't easily
(32:51):
do either or you just lose somuch value if you're selling it
just for land value rather thanrebuilding it, then you have to
sell it to somebody who'swilling to come in and build a
house from scratch,theoretically, or repair major
damage.
So we're, we're in, indiscussions with them about
potentially helping people withconstruction financing and
things like that.
So we have other aspects of whatwe do that can help people.
(33:12):
people through disasters and,you know, the wildfires in
California have been disastrousfor seniors and communities as
well.
And, you know, there's so manythings going on these days with
natural disasters.
Not that that was the point ofour conversation today, but,
there are different ways that wecan help people through these
challenges because even seniorsgo through these disasters.
(33:32):
And now all their plans thatthey had to move in this
community that they may havebeen on a waiting list for
months, and all of a sudden theyhave the opportunity but their
house is damaged and they can'ttake action on it or they think
they can't but that's why we'rein touch with them is to try to
facilitate helping them figurethat out.
Yeah.
So and that's, that's honestlylike The joy of what we do is is
(33:54):
helping people through thesesituations.
And now that I've gone throughit, I'm not a disaster
fortunately, but just planningwith with our family and trying
to stay ahead of things.
just puts everyone at ease I canspeak from personal experience,
please do that get a binder.
It's better than my spreadsheet.
I'm sure more organized.
And if you're applying foralone, you're better off.
Love you.
(34:15):
If you come in that organized,but I agree with you.
I think some of these topicsjust come up in conversation.
That's the beauty of socialmedia and podcasts and just
getting good information outthere to our respective
networks.
So, so I, I really appreciateyour time.
Tell us how can people find you?
Cause I know you, you have thepodcasts and I know you also
coach leadership within thesenior.
(34:37):
Living communities.
So how can people find you ifthey if they want to get in
touch?
Erin (34:41):
i'm most active on linkedin And honestly i'm trying
to find the bandwidth to reallytalk about my The first love
which is helping families andresident future residents look
for right senior livingcommunities know how to find the
right ones What do you want outof a senior living community?
I hope to start building,content out like that to be
consistent on Instagram andFacebook, but Aaron Thompson, or
(35:06):
aspire for more with Aaron.
On Facebook, but Aaron Thompsonon LinkedIn, you can search
Aaron Thompson on Instagram andI will come up.
I do want to say just in passingjust so you're the listeners
know how much growing oldercosts what a blessing it is, but
just some ideas for you to have,Genworth, which was a long term
(35:29):
care insurance company in 2021.
these are the, the nationalmedian costs.
Okay, for a private 1 bedroomapartment and assisted living
4500 dollars per month, whichdivides out to 148, 148 dollars
per day, which is 54, 000dollars annually.
Okay, that is national average.
(35:51):
That's not, you know, the costin Boston versus the cost in
Alabama, South Dakota, you know,that is national median.
for a nursing home, a long-termcare community where you are
private pay, it is$9,000, around$9,000 per month, which equals
out to$297 per day,$108,000 peryear.
(36:17):
And then home health.
So if you wanted to have a homehealth care aid aide inside a
companion inside your communityor inside your home and not move
to a community, this is a 40hour work week, which is only
eight hours.
Okay, it's only like a 7 to 3 ora 10 to, 4, that's 6, so like a
10 to 6.
(36:38):
You're looking at$154 per day,which is$19 an hour, and$56, 000
a year, which we know is goingto be more expensive in
California than it's going to bemore expensive in Florida or
Alabama or Georgia.
And even in South Dakota versusMassachusetts, There's, there's
(36:58):
a big discrepancy.
So where you live matters andjust know that it's, if it's
private pay, national median, soyou're talking about in like
small potential group homesversus large CCRCs, there's a
huge difference there in cost,but you can assume, I would even
say 5, 000 per month.
(37:20):
for a 1 bedroom apartment, youhave studios, you have shared
rooms.
There's many different options,but assuming 50 to 75, 000
dollars annually, I will have tohave in order to pay private
pay.
And obviously there are otheroptions.
I mean, just in my owngrandmother's story, my aunt
(37:41):
helped, supplement pay.
And if you have that amazingopportunity, you have, you have
that as well.
So when you have the hardconversations during easy times,
lean into the discomfort.
They're not going to want totalk about it.
But if you see early signs ofdementia, the web is an awful
(38:01):
place.
For your loved one becausethey're gonna sell you cruises
and why not buy a cruise becauseit's a really great deal I have
seen men specifically Giveeverything away on the internet
to women who think they'recoming Shipping 20, 000 in a
teddy bear that got caught incustoms like I can begin to tell
(38:24):
you things that happen so Justhaving the internet password is
really important to where youcan keep an eye on your bank ac
on your loved one's bank accountwithout them knowing.
Get that password, do not useand abuse it, just review it and
figure out if you have problems.
(38:44):
Because We're entering a timethat there are more and more
people who are going to want totake advantage of your loved
one, and the more prepared youare, the better you can protect
them.
Mark (38:57):
Yeah.
There's my soapbox.
No, I couldn't agree more.
I heard a story just yesterdayabout a gentleman who was
starting to, to have issueswith, dementia and he bought a,
he bought a car and then heforgot where he parked it.
And so he went and boughtanother one.
And then it happened three orfour times where now all of a
(39:19):
sudden, but they couldn't findthe cars so it's it's important
and as it relates to financingIt gets significantly more
difficult to get a loan for asenior to help pay for care when
they aren't able to Mentally,you know, like they don't have
the capacity to sign on theirown behalf So when the notary
comes to sign the documents ifthey think that the person
(39:42):
doesn't have the capacity Theywill not allow them to sign You
And they won't ensure the title.
So that's why the pre planningthat you've talked about, when
times are good, is so much moreimportant to plan those things
ahead of time, because you mightnot, those options may go out
the window completely, literallyspeaking, and, and figuratively,
(40:03):
if you don't plan ahead and dothese things before These issues
come so the planning is I cannotI cannot say strongly enough how
important that is Whether youtake a loan or not just anything
the further ahead you can stayfrom these things from a
planning perspective the betterYou'll never go wrong.
Erin (40:21):
I will say I had a resident.
I know we got to end But this isreally funny story to compliment
yours.
He used to own car dealerships.
He was really really big time inanother state And when his
daughters, took his keys awayhe's like, he just called people
up and be like, Hey, give me acar here.
You know what I mean?
Like, didn't even have to doanything just because of who he
was.
A car was delivered, you know?
(40:43):
So you are all going to haveroadblocks and hurdles that you
would have never imagined justdepending on who your loved one
is.
So prepare yourself.
It's a wild ride sometimes.
For sure.
Mark (40:55):
And, and also met the professionals that you're
working with becauseUnfortunately, seniors are
susceptible to scams and peopletaking advantage of maybe not
having their best interest inmind.
And that's why.
I, I invited you on today,Aaron, because I know you're,
you're so committed to, tomaking sure that people are
cared for and, and dealt with ina, you know, in a positive way.
(41:16):
And that's definitely how weapproach things as well.
So we're definitely like mindedin that way, but the
professionals you work withmatter, and the quality of
professionals and the people whofeel like they need to protect,
you know, seniors and put a, Ialways say, I want to put a
protective bubble around them.
That's my, that's my calling isto, you know, to do what I do
(41:39):
to, to help them with thefinancing, but also to protect
them from other people in myindustry who maybe don't have
their best interests in mind.
So, you know, it's so important.
So, well, Aaron, thank you somuch for joining us.
I really appreciate all yourinsight.
I'm sure we will be engagingplenty, hopefully not only
around disaster areas and thingslike that.
(42:00):
Hopefully people can make thesedecisions.
It's hard enough to make thesedecisions, hopefully not during
a, during or right after anatural disaster as well.
But thank you so much.
And I would definitely encourageanybody who's on the call today,
and checking out this episodeto, to check out Aaron's
podcast.
They are really good.
That's how I connected with herat first.
As I saw one of hers that talkedabout paying for care and it
(42:22):
didn't mention all thesemortgage things.
So I know an expert like you, ifthese things weren't aware on
your radar, that they likely arenot on most people's radar.
So that's why I wanted to makesure we had a chance to connect
and get this message out there.
So.
Thank you so much, Erin.
I really appreciate it.
Erin (42:39):
My pleasure.
Thank you.
Mark (42:41):
Okay.
Take care.
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