Article summary
A 2021 AARP study revealed that 77% of adults aged 50 and older plan to stay in their homes long-term, a concept often referred to as ‘aging in place.’ If your parents belong to the majority of seniors who want to stay in their home as they age, or if they plan to downsize and purchase a smaller house or condo, it’s important to understand how to protect the equity in their home.
Provide routine maintenance
Depending on your parents’ ages and abilities, you may need to offer support to ensure that routine maintenance is being conducted. This support could come in many forms, including:
- providing reminders of necessary home maintenance tasks
- hiring a handyman to complete the tasks
- doing the maintenance tasks yourself
Based on your availability, proximity, and funds, create a plan that’s right for you and your parents. Ensuring that your parents’ home is well maintained goes a long way in protecting its equity.
Create a trust
Thanks to the exorbitant price of elder care, the cost of in-home or nursing home care can quickly consume a person’s assets. Medicaid is often used to supplement what insurance doesn’t cover, but is only available to cover what someone can’t pay on their own. If your parents own a $400,000 house outright, they’d be expected to pay that $400,000 in equity toward medical care before Medicaid kicked in.
By putting their house in a trust (rather than a Will), your parents’ home is protected from this drain of funds and able to be passed on to their children. Just remember that Medicaid has a 5-year look-back policy to determine a person’s assets, so this is something that should be taken care of sooner rather than later.
Speed up payments
If your parents are still making payments on their home, paying more toward the principal each month is a valuable method for protecting and boosting the equity in their home. Even an extra hundred dollars a month decreases the amount of interest they’ll be paying over the life of the loan. It’s a way to directly increase the cash value of their home. (And honestly, while this is great advice for your parents, it’s a valuable idea for any homeowner.)
Consult a trusted Elder Care attorney
Every state has different laws and regulations. In addition, there are specific considerations that need to be made if your parents might require long-term care as they age. An Elder Care attorney will provide guidance involving estate planning, tax planning, and the rights of senior citizens.
Purchase Home Price Protection
REZITRADE’s Home Price Protection safeguards the value of a home. There’s no way to predict how the market will change or your parents’ neighborhood will shift. Home Price Protection makes a payout if local real estate prices drop below a minimum, and there are no claims or proof of loss. Payouts are automatic. Simple and easy, providing valuable peace of mind.
Key Takeaways
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Make sure routine maintenance is regularly performed on the home.
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Consider a trust to protect their home from health care costs.
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Help your parents accelerate principal repayments so their equity builds faster.
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Do consult an Elder Care Legal professional.
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Consider protecting your parent’s home value from market price declines by purchasing Home Price Protection from REZITRADE.
