Health, Medical, Personal Finance, Relationships

Whose Assets to Tap First?

A friend came to me for advice the other day regarding a big problem brewing in his house. His in-laws are getting up in years and have very little saved to cover their health care and long term needs. Health problems are starting to show up and expenses are mounting. They’ve told their daughter and my friend that without any cash reserves, they are going to have to rely on whatever assistance they can get from family. This is not entirely true, however.

The in-laws own a large chunk of land that has been valued in the millions of dollars. They have had several offers from developers and mining companies. The land is valuable either as a subdivision in a fast growing area or for the deposits of minerals and gas that it sits on. The problem is, the in-laws are adamant that they will not sell the land. While they own the land free and clear, the adjacent piece is owned by other family members who are adamant that the pieces be kept together. (Both pieces used to form one big farm that was divided up amongst family when the original owners died.) Since the other family members do not want to sell, my friend’s in-laws don’t want to sell, either. Selling would start a family war.

Further complicating the problem is the fact that my friend and his wife have power of attorney for her parents. If her parents become incapable of making decisions for themselves, my friend and his wife will need to step in. This could put the decision about the land in their hands. If they sell, they could generate money to pay for care but then they would anger the other family members. If they don’t sell, they would have to help pay for care or leave her parents to get whatever care they can afford.

The question my friend faces is this: Should he and his wife financially contribute to the care of the in-laws or should they let them handle their own care? Do you let them self destruct with their refusal to sell the land no matter what? If my friend and his wife have to act on behalf of the in-laws, should they sell the land to generate the money for care, or should they honor the family’s wishes and keep the land? Should my friend be expected to tap his own assets to help the in-laws, even though they could generate enough money to more than cover their needs if they sell the land?

It’s a complicated question and one that many people will face in one form or another as they help to care for aging relatives. On the one hand, there is a natural tendency to want to help, if you can. My friend has a good amount of money saved and could spare some to help his in-laws. However, giving that money to them would derail some of his plans and mean that he would lose out on some of the compound interest that his money could earn over the years. If he helps the in-laws he might not have as much saved when it comes time for his own retirement, or he might have to put off the purchase of newer cars or home renovations.

“I’d be more inclined to help,” he said, “if they had nothing. If they were truly destitute I would help, no question. But they have an asset they can tap that will generate millions.”

If the land is sold, the other family members will be angry. At what point is it worth it to generate that kind of enmity among family members? Should my friend just put up the money in order to preserve the peace in the family, or should he make the financially smart choice to sell the land and risk their anger?

Unfortunately, I don’t have an easy answer for my friend. From a financial standpoint, the smart decision would be to sell the land and use the proceeds to pay for any care and final expenses that the in-laws require. The in-laws won’t qualify for Medicaid until all other assets are exhausted. If they don’t have the cash and my friend does not help, then they will be faced with limited (and bottom of the barrel) care choices. Selling the land solves that problem. My friend should not (or be expected to) tap his own assets until those of the in-laws have been completely exhausted. He should keep his own money so that it can pay for his needs and goals including retirement, college for his kids, and much-needed home improvements. Tapping his assets may put him behind financially. Unfortunately, it’s not that simple. He has to consider the other family members and his wife’s feelings. Will she be upset if they sell the land and the other family members cast them out? Will the other family members ever speak to them again?

The only option I could give him that was a safe choice was to see if the other family members would buy the land. That way they could keep the pieces together yet generate the cash that the in-laws will require. My friend says that he will ask, although it does not seem possible since the other family members don’t have much money, either. Barring that, he is faced with a situation he cannot win. He and his wife must choose to sacrifice either their money or family unity.

When it comes to taking care of ageing relatives there are rarely easy choices. This is why it is so important that you adequately plan for your old age and make certain that you have money saved, adequate insurance, and clearly defined wishes. Without that, you risk placing your family members in this sort of heart breaking situation. Unfortunately, because his in-laws failed to plan for their old age, my friend will have to make some ugly choices that will have lifelong ramifications and no winners. Don’t leave your family in this position.

13 thoughts on “Whose Assets to Tap First?

  1. Has he considered other short-term ways to tap money of the land without selling it? Do they own the mineral rights to the land? If so, I’d suggest they he sold the mineral rights to a company, and then lease the land to them while they mine/drill it. (With clear agreements as to the state the land should be left in when they were done.) This maintains the land ownership in the family (keeping the others happy), but gives you a windfall of short term money to help them live through retirement. You wil have to be very careful, though, about the tax consequences. Such a windfall would be taxed like crazy!

    Whatever you do, though, I would advise the Dad against leaving the land to his children in some kind of joint ownership. We have family land that was left by my grandfather to his NINE children. It really has been more of a divider in our family than a uniter. Most times, I wish he would have just sold it and distributed the money to his kids, or put it in some kind of trust to provide education for his descendants.

  2. Our family has a similar problem but with furniture. We divided up my grandmother’s furniture and some members of the family think that we don’t have right to sell any pieces we no longer want. I’m not even talking beloved antiques! People get weird about possessions that were once “co-owned” even if it was by deceased ancestors.

  3. Why not simply build an extension and have the in-laws move in? He can hire a nurse to come once a day to check on them.


  4. WhiteEyeBrows has a good idea about the mineral rights, but maybe the gas rights would be less destructive. Talking to the wife and parents about this would be a start. Then see a very, very good oil & gas lawyer who specializes in that type of thing to protect the land and parties involved. They could probably avoid selling the land and yet get money out of it to pay the in-law growing health care costs.

  5. Forget the materialistic things in life, when it comes to your health, sell the land.

    Myself, I would tell the in-laws that I cannot help since they have assets in the millions. If I did help, then I was faced by a medical disaster and it ruined my life after they were gone and I could not provide for my family….well you get the picture.

    I’m pretty sure the family will not outcast you if you need to sell the land in order to LIVE. If they do, then they are not the family you need.

  6. Your idea about the other members buying them out was what I thought and the mineral rights idea could be good as well. Except all the fracing for natural gas scares the #$%^ out of me.

    I think the real question is: Why must family unity be kept at any cost? Who wants to be around insane people who would rather see the old people be poor or who think your friend should deplete his hard earned resources when the in-laws have untapped ones?

    I think your friend needs to prepare his wife to have some healthy boundaries with her insane family and sell if the POA comes into action and if the other options don’t work.

  7. I totally agree with [email protected] If the land was on the other foot, I doubt they would give it a second thought. You said earlier that they don’t have money, so they are not good planners/savers. If they are the ones to benefit from keeping the land as is, then it should be incumbent upon them to foot the upcoming medical costs, no?

    I have family like this, they are bad planners and because I am a good planner, they feel ENTITLED to *me* helping them out. I did some and it was not enough, they want more. Had to cut off the gravy and all of a sudden I am mud, never-mind the help I have already provided, all that is forgotten!

    If the family does ostracize them, for using the land so the elderly members medical needs are taken care of, then they are manipulators, plain and simple and best to know that now because they are not going to be there for you in any case.

  8. I’d say sell the land if necessary. If the mineral rights worked out that would be great, but otherwise the land goes.

    I’d find out the value, & offer it to the family to purchase at that value first, with the understanding that if they don’t buy it the land will be sold to someone else. The ball is then in THEIR court.

    If this causes a family battle, so be it. I would not tap my savings to pay for medical care when the in-laws have other assets. That could go on indefinitely. (I would look at this differently if they did not have assets to use.)

  9. I have to agree, since they have an untapped asset that could potentially bring millions (*millions* whoa!) if sold that changes the whole picture. It is mind boggling to me that family members would rather see their relatives struggle than do what they need to do to have security in their elder years. Where is the love? I appreciate the idea of legacy, but this situation sounds like a legacy of financial hardship and uncertainty.

    Plus, who inherits? If it’s the daughter and son-in-law that are being asked to help subsidize this retirement, then what will these other relatives do when they feel they have to sell anyway to recoup losses?

    I hope for your friend’s sake that his inlaws come to their senses and the family friction is relatively short and bloodless.

  10. I suggest a family meeeting with the adjacent owners regarding this no-sell situation. If they don’t want the property sold either then see if they are willing to set up a “care” fund whereby the seriously contribute to the parents’ care and expenses while they are alive. You might be surprised where their interest and alliegance falls.

  11. If the property is theirs and they are in financial needs, then I think that they need to sell the property in order to take care of themselves. The rest of the family can come up with a contingency plan to deal with what ever land remains.

  12. Sounds like a nutso family that who cares if they stop speaking to you. If this is the only asset these elders have to live on, the land needs sold (or leased or whatever will bring in cash). There is no reason for the younger couple to subsidize the elderly parents when they are worth millions. If the relatives next door don’t like it, they can either take the people in or buy the land themselves. Throughout the centuries family land has had to be sold to cover expenses. This is not a new problem, but one that always amazes me. I can’t understand people expecting others to care for them when they have the resources to do for themselves.

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