My mother-in-law has progressive dementia. When she began to fail at home, my wife and her brother proposed moving her into a one-room cottage on our property. This did not work out, so she moved into a room in my brother- and sister-in-law’s house.
We proposed charging her the $1,200 rent we normally charge for that property, so my brother-in-law insisted that he charge her the same amount to live in a room in their house. Over the last five years, he has increased this figure to $1,800 per month.
But the real burden is that she needs 24/7 care.
My wife and I watch her during the day three or four times a week, and we’ve put in tens of thousands of hours and never been compensated, whereas my brother- and sister-in-law have taken in about $70,000 over the same time period.
I have spoken to my wife on a number of occasions because of how unfair the situation feels to me. My questions are: Do you think it is ethical to charge an elderly relative “rent” at all? If so, does our arrangement seem fair?
What would you do in this situation?
Your family is faced with a complex financial and ethical conundrum.
Any arrangement that is consensual, and helps make your mother-in-law’s final years comfortable and free of financial insecurity is worth exploring. Your brother-in-law is being transparent with the family, but that does not mean this situation is ideal. He and his wife are not only de facto landlords, they are caregivers.
Not everyone would charge a parent rent, but this situation appears more complicated than mere room and board. Your family should look into the laws in your state with the help of an elder-care attorney to ensure that any arrangement does not preclude your mother-in-law from receiving financial aid.
“It is legitimate and not unusual for parents to pay their adult children for costs associated with housing and care,” says Anne Tumlinson, the founder of Daughterhood, a Washington, D.C.-based organization that provides resources to people caring for aging parents. She advocates working with an elder-care attorney.
‘Not everyone would charge a parent rent, but this situation appears more complicated than mere room and board.’
“Putting a legal agreement in place is smart, not only to force the family into a conversation about what’s fair and making it explicit, [but] it’s important in the event the parent ever needs to apply for Medicaid coverage for higher levels of care,” she adds. If not, rent and care “may be counted as the parent’s funds.”
But there is another issue to consider: who, if anyone, should have the power of attorney over your mother-in-law’s estate, especially given her declining cognitive capacity. Ideally, this should happen before the elderly relative’s health has declined to the point where they have little or no understanding of their financial affairs.
If your mother-in-law’s dementia has progressed to the point where she can no longer comprehend what’s going on, a court-appointed conservatorship or guardianship will allow a third party to make financial decisions and healthcare. Formalizing your mother-in-law’s care will make everyone more accountable.
Kern Singh, founder of Singh Law Firm in Fremont, Calif., agrees you will likely have to appoint a conservator given that your mother has progressive dementia: “We are in a gray area. If her doctors have stated in writing that she is unsound of mind — does not have legal capacity — then she cannot enter into a lease agreement.”
‘A court-appointed conservatorship or guardianship will allow a third party to make financial decisions and healthcare.’
“Let’s say a lease agreement is legally entered into, the rent charged should be at fair market value,” he adds. “A quick rental market analysis should be conducted to see what similar rents are being charged for a room in a shared house. What your brother-in-law may be charging may not be market rent. This would be a problem.”
He says you have three tasks ahead: 1. Determine your mother has the capacity to sign a power of attorney. 2. Seek assistance with figuring out a fair market rent for the room in the shared house, and draft the lease agreement. 3. Discuss care options for your mother through the county to relieve the children from 24/7 care.
Ultimately, you all have the same goal, and you are trying to do what’s right. But it’s time to hold a family meeting to discuss to ensure that no one is benefiting financially, in good faith or otherwise, from a situation that should be handled by the entire family, and with the appropriate legal oversight.
By emailing your questions, you agree to having them published anonymously on MarketWatch. By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Check out the Moneyist private Facebook
group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.
More from Quentin Fottrell