Borrowing against mother's home to pay for her care

Dear Len & Rosie,

My mother requires constant care. I have hired a round-the-clock geriatric care agency to look after her. It’s very expensive. I want to take a loan out against the house so mom can stay home, and not have to go to a nursing home. To do this I need to get the deed to the house which is entirely paid for. I can not get the deed out of the safe deposit box because its in Mom's name only; they said I need a court order plus the trust and power of attorney documents which I do have to get into the box. Can you get this court order by yourself if my mother’s physician certifies that she has dementia and is incapable of making decisions, or do I have to hire an elder law attorney? 
Mark

Dear Mark,

You do not need to concern yourself with the original deed to your mother’s home, so long as the deed was recorded by the County Recorder. Title companies handling escrow for home sales and loans rely solely on recorded deeds. The only reason you would need to get the original deed out of your mother’s safe deposit box is if it has not yet been recorded.

You ought to be able to get into the safe deposit box, if necessary, using your mother’s durable general power of attorney if the box is titled in her name alone. However, many banks do not honor perfectly valid durable general powers of attorney other than their own bank forms. As a general rule, if you want your children or other trusted family members or loved ones to have access to your bank accounts, you should take them to your bank and add them to your account signature cards. It’s easier than fighting a bank manager worried more about making “excessive” demands on the legal department than the needs of his or her clients.

If the safe deposit box is in your mother’s name as trustee of her trust, you will have to follow the procedures of the trust to remove your mother as trustee as a result of her incapacity. Most trusts require one or two physicians to certify that your mother is no longer able of making her own decisions or protecting herself from undue influence.

That’s not all there is to it. To borrow against your mother’s home, you may need her original durable general power of attorney, which will have to be recorded as part of the loan escrow. Also, if her home is held within a trust, she will have to be removed as trustee before you, as successor trustee, may borrow against the home or transfer the home out of the trust so that you can borrow against the home using your mother’s power of attorney.

Be flexible. Your mother may or may not qualify for a reverse mortgage, and if she can’t get one, she may not qualify for a traditional loan or home equity line of credit on her own credit record. It may be necessary to put a small percentage of the property into the names of her children to qualify her for the loan. Work with your family to find out from the lender what it needs for your mother to qualify for the loan. Then, if your path is not clear, review the situation with an elder law attorney.

Len & Rosie

Brother using mother's funds to court his new wife

Dear Len & Rosie,

Seven years ago my mother made a trust to take care of her needs if she became unable to do so herself. She named my brother and me as trustees.

Four years ago my brother divorced his wife and immediately remarried. He moved his new family into mom’s home and put her in a nursing home. Since then he has not bothered to pay mom’s taxes and insurance. He even cashed in our mother’s $6,000 burial fund to court his new wife and pay for his divorce. My mother’s care is covered by Med-Cal. My brother keeps a small portion of mom’s retirement income each month. Everything else goes to the nursing home. My mother has nothing.

I am fearful of confronting my brother. He is an abusive alcoholic and is impossible to reason with. Every time I try to approach him he has some crazy interpretation of why he is doing the “right thing” for mom. Please advise me of what I can expect at the time of my mother’s death, and what I can do now to protect my interests.

Katie

Dear Katie,

Your situation is disturbing. Unfortunately, it is not unique. Some children openly salivate when they are handed the keys to the larder. Your brother probably thinks he can do anything he wants to with your mother’s assets. On top of swiping your mother’s burial fund, he probably pays no rent while living in your mother’s home. He should be paying at least all of the property’s expenses, especially because your mother must pay all of her monthly income except $35 to the nursing home as her Medi-Cal share of cost.

You need to do something about this, not just to protect your share of the trust, but also to protect your mother and any other beneficiaries of the trust. As a trustee, you can be held personally responsible to the beneficiaries if you allow your co-trustee to enrich himself with trust assets. If you and your brother are the only beneficiaries, then only your interest in the trust is at stake, but we wouldn’t be surprised if your brother procured atrust amendment leaving everything to him. For all you know, the property could already be in his name.

If your mother is mentally competent and the terms of the trust allow it, she could amend the trust to remove your brother as a trustee or just simply fire him. She may also be able to revoke the trust and make a new estate plan. If your mother has lost her mental capacity, or if she is unwilling to do anything to stop your brother, you can petition the court to remove your brother as a trustee. If you can prove what you say in your letter to the judge’s satisfaction, the court should remove him as a trustee.

The more you wait, the more your brother will be entrenched in your mother’s home. While it may not be easy, it’s better to do something about this now before there’s nothing left.

Len & Rosie