It is not easy to decide what to do with your assets as you get older. Here is a problem..feel free to write in your suggestions..

Let us say a person is 80 years of age and is dependant on his ‘interest’ income which is dwindling. He has a house worth Rs. 2 crores and fixed deposits of about Rs. 20L. For his day to day living he gets a small pension of Rs. 28000 per month, interest of Rs. 13000 per month and his son pays him a rent of Rs. 20,000 per month.

This gives him a total income of Rs. 61,000 a month. His expenses (in an old age home) is about Rs. 55000 per month.

So far, so good.

However, he is now in a dilemma. His wife has some new complications and he needs to get a full time maid/ nurse – at least for a part of the day and it is costing him Rs. 15000 a month, and expected to go up. He needs MORE CASH.

I told him he has 2 choices:

  • eat into your fixed deposits – consuming the principal or
  • Sell off the house and eat into that prinicipal.

He has 3 children – 2 sons and a daughter. All the children are settled – but none of them have a huge cash surplus. In fact the son who is staying in his house cannot afford a higher rent. The rent prevailing in that place is Rs. 45,000 a month, but his son is paying him ONLY Rs. 20k. It is in a good location and he can easily, easily get about 2 crores for that house.

So a simple solution was to monetize the asset, put it in a bank, and live far more comfortably. His son is offering his parents one room..and offering to pay for the food and other expenses. Thus the senior citizen would save the money paid to the home, and will be able to live with his pension, and interest income.

The Father does not want to shift from the senior citizen home – which is about 180 km away from his hometown Mumbai.

I stuck to my solution – said ‘sell the house, invest in REC bonds, pay some tax and live happily.

I said “by partially subsidizing ONE CHILD you are actually cheating your other children.

I said make him pay Rs. 80L to each of his siblings as a settlement. He again said “it is too much – he cannot afford even that”.

I said then ask him to buy HALF the house – paying his father Rs. 1 crore.

I said the other option is to ask him to pay you Rs. 10L on account, so that you can keep it in the bank and increasing your interest income.

I do think the best solution is to sell off that house and use the cash.

What do you think?

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  1. The 2 sons share the additional expenses of their parents if they want to inherit the house..or else selling the house is the only option..

  2. Why not ask the son to move out and get 45,000 rental income.. Rental income will also increase each year.. His total income will be close to 95k per month.

  3. Well Financially the best option would be to sell house…..but considering the emotional aspect….would prefer the option of having the Son pay extra amount in FD to increase the intrest amount.

  4. I think the people who will inherit the house should pay additional expense. So supporting Karthik comments.

  5. selling the house is the only option – either to his son or outside and dividing the proceeds, whatever he is comfortable to his children as inheritance AFTER keeping for himself and his wife what he is comfortable with. by this way he is ensuring no future fight between the siblings too for sure about the property after his death.

  6. Sell the house, make four parts of the returns, keep one for self, give three to children, move to old age center, live happily for the rest of lif.

  7. I think for time being dip into FD. Try to arrive at consensus on selling/retaining house over next 3 months. If there is no consensus sell than house, pay CG tax and live happily

  8. Instead of selling, why not reverse mortgage it some bank? That way, the son can continue to live in the house as long as the father is alive and hence, no sentimental issues…. As an added bonus, the cash flow also increases…

  9. Manu Vikram Singh

    Why Cannot both sons take care of their parents, by contributing maid’s expenses 50:50 or 60:40..After all it is their parents, it is their duty to not only protect their parents but also something they have built & love.

    FD’s can be touched when there is any emergency.

  10. The article made me sad, I don’t know what in it made me sad.

    A pension of 28k is small ? Its income of some of my married relatives with kids.

    61k-55k is not sufficient for a couple age 80 ? Man its the take home of many employed in software industry now.

    A 80 year old has a house but he lives in old age and instead his son lives there and pays a rent of 20k.
    Sorry, I am very very old school. I can’t even think of giving or taking money from my parent as an agreement for anything. If they need something I just pay, and if I need something they don’t lid an eyebrow. Its all in the family. I believe that whatever happens to my parents I will be there to take care of them, financially medically whatever. If I am in trouble they will be with me, even to take care of me if I am bedridden.

    Sorry, I am bewildered, I am maybe lost touch with what the current world is like, what is reality.

    I don’t consider spending on my kids as expense, that’s my responsibility as I had brought them to world. I assume my parents too did the same. How can I ever ever think of repaying them, I cant. Least I can do is live together with them. No maid, can take care of them emotionally the way I can. At sunset its only the children’s face that one wants to see, the progeny for which one lived most of his adult life.

  11. Set rent to 45K ( for the son living there ).
    Ask all 3 children to contribute to the shortfall ( equally divide the shortfall ) – if any one dis-agree , sell the asset .

  12. Very well narrated, Atiker. I completely agree with each line from your comment. Hope India has not become such bad place to live in yet.

  13. @Atiker, you are definitely old school. This is 2nd/3rd generation of a well todo nuclear family, so a different mindset has evolved. There is less and less inter-generational emotional attachment. My nephew absolutely does not look upon me with the attachment I looked up to my Mamaji’s. Whatever parent-child love-attachment is there, its only till the children attain maturity, after which they fly off and the oldies are kind of left to themselves. They either have to live alone or in an old-age home. High-flying lifestyles of nuclear families/DINK couples simply don’t match with having an aged parent living at home.

    By the time 4th or 5th generation rolls on, even this will be rare. I suspect middle class reproduction rates will drop significantly, as even having a kid will become a privilege and lead to unmanageable expenses.

  14. Sell the house – invest the 2 cr. in an short-term bond fund to earn an additional 1.2 lakhs in interest monthly. Contribute some money to the son who lost his home to help him get a new flat at market rate.

  15. Sell 2 cr house and buy a smaller one at around 1-1.2 cr.
    Let the son use the smaller house at 20K rent and father gets the remaining corpus for interest earning.

  16. I Suggest to go with Reverse Mortgage Loan. So that he can live happily in the same home till end.

    And after him, it’s son’s choice to buy or let off.

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