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 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 families 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.

However, there’s another smart solution to the problem if selling the land is out of the question. They could sell the gas rights on their property and then use the money from the royalties on the oil they extract from under their property to cover their healthcare costs.

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 the old couple to get whatever care they can afford.

Whose Assets Should You Tap First?

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 aging 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 heartbreaking 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.

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