My sister moved in with our widowed mother, 78, and says she deserves the family home. Is she right?

By Quentin Fottrell

'The house is worth $925,000 and mom owns it outright. She also has $480,000 in investments'

"My brother thinks my sister should get something. He says he couldn't do what she's doing and that mom should recognize it. I'm torn." (Photo subject is a model.)

Dear Quentin,

I read your response to a recent letter (Our family is broken beyond repair: My brother took over my parents' finances. What can I do?) and I want your readers to know that this is not a unique situation. I have experienced something similar, although with good intentions.

My mother is 78 and has lived in the same four-bedroom house in a good suburb outside of Philadelphia for 32 years. The house is worth $925,000, and mom owns it outright. She also has $480,000 in retirement and investment accounts, plus a small pension and Social Security. Her income covers her day-to-day expenses, but if she ever needs assisted living or a lot of in-home care, she'd have to draw on her savings.

My father died four years ago and left her comfortable, though not rich. Although my mother received a majority share of his estate, a portion was split equally among the three of us: my sister, 52; my brother, 49; and me, 46. My sister is a nurse who works three days a week. She's been divorced for six years and has two grown kids. She has always lived closest to our mom. My brother is four hours away, and I'm in another state, a three-hour flight.

Two years ago, mom fell. My sister started taking her to appointments, doing the grocery shopping and handling repairs, and then moved in. She says she's now mom's full-time caregiver: She cooks, manages her medications, drives her to appointments and handles her finances and insurance paperwork. She's also turned down overtime at work and passed on a move into management. I take her at her word, and I'm grateful to her, and I've told her so.

Last month, she told my brother and me that mom plans to leave her house. I assumed she meant in the will. She meant now. She wants mom to sign the house over to her while she's alive, because my sister has given up two years of her career and we haven't. Under mom's current plan, the three of us would split everything equally, amounting to about $468,000 each. If the house goes to my sister, my brother and I would split the $480,000 in investments, which would be $240,000 each.

My sister says that misses the point. She says she isn't asking for an inheritance, she's asking to be paid back for the care she's giving. She has offered two options. One is that mom deeds her the house now and the other investments are split three ways. The other is that mom keeps the house in her own name but changes her will so my sister gets it, and my brother and I split the investments. She calls the second option generous, since she'd keep caring for mom.

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Family split

My brother thinks she should get something. He says he couldn't do what she's doing and that mom should recognize it. I'm torn. I don't think my sister is stealing, and I don't think she's being outrageous. What bothers me is that everyone is arguing about what she deserves and nobody is asking what mom needs. Mom is sharp and wants to stay in her home as long as she can, but at 78 nobody knows what the next five or 15 years will look like.

My sister says she'd never put mom in a nursing home and will keep caring for her herself. She says the pension, Social Security and investments will cover anything that comes up. I don't know if that's realistic. She also says that if she owns the house, she can refinance or sell it if care gets too expensive. That doesn't reassure me, because it would mean mom's asset had become hers.

My brother and I offered to chip in for mom's care. I suggested hiring an independent geriatric-care manager and setting up a formal caregiving budget so my sister could be paid for part of what she does. She said no. She doesn't want an hourly wage for looking after our mother, and she says the house is the fairest way to recognize what she's given up. I also suggested a formal caregiver agreement, with mom paying her. My sister called that insulting.

Mom told me privately that she doesn't want to "choose between her children." She also said she doesn't want to be "a burden" on my sister. That second part worries me. I don't want mom giving up the house because she feels guilty. I also don't want my sister to feel that caring for mom has wrecked her finances. And I don't like the idea that my brother and I get equal inheritances while she spends 10 years doing unpaid care.

Moneywise, I don't need the inheritance. My husband and I have $1.8 million saved and we're both still working, and my brother is comfortable too. My sister isn't. She makes about $78,000 a year, has roughly $160,000 saved for retirement and owes $210,000 on her own small house, which she's been renting out since she moved in with mom. I understand why the house would change her life. That's partly why I think this needs care.

My husband says it's obvious: She does the work, so mom should pay her. My brother's wife thinks my sister is taking advantage of mom. I think both those reactions are too simple.

I don't want a fight over money. I want the three of us to still speak. What would you do?

The Sister

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.

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Rule No. 1: Do NOT give up your assets. Do NOT sign over your house. Do NOT allow a third party unfettered access to your bank accounts or brokerage accounts.

Dear Sister,

Your sister is taking care of your mom out of love, but she is understandably aware of the monetary advantages.

There's a lot of push and pull in this situation, and the best part of it is that you are all talking, negotiating and at least putting your cards on the table. That's a good start. What's missing from this series of events, as it was from previous letters on this subject, is that your mother's wishes have not been mentioned once during all of this. She appears to be a silent witness to all of the debate going on around her. It's her money, after all.

Transferring the house into your sister's name is a no-no.

Transferring the house into your sister's name is a no-no. If your mother does this, your sister would take your mother's adjusted tax basis rather than receiving the stepped-up basis. If your mother's adjusted basis was $500,000 and your sister sold the home for $1 million, her taxable capital gain would be based on the difference. Assuming your sister lives there for two of the five years before selling, she may qualify for the $250,000 federal home-sale exclusion.

Here are my Three Moneyist Rules for Aging Parents:

Rule No. 1: Do NOT give up your assets. Do NOT sign over your house. Do NOT allow a third party unfettered access to your bank accounts or brokerage accounts. Maintain your financial independence and your agency.

Rule No. 2: Learn how to say no and mean it. As an aging parent, you don't have to capitulate to the demands of your adult children.

Rule No. 3: Choose your power of attorney designation wisely.

In this case, I actually believe it would be helpful to have an elder-law attorney consider whether your sister should have sole control of your mother's finances, or whether a safeguard - a co-agent or successor agent - would be appropriate. That would help make sure you all know where your mother's finances are going and can be alerted to any unusual transactions. I don't expect your sister to be happy about giving up complete control, however.

Speaking of which, I'm quietly concerned that your sister has perhaps done too much by taking over your mother's life, including driving her everywhere. Your mother may have lost some independence if she no longer drives, and I am curious to know how that decision was made. Did the family physician weigh in? Did the department of motor vehicles take her license? Or did your sister make a unilateral decision?

Related: 'I have $400,000 in equity': I'm 80. Should I sell my house because of dangerous stairs - or spend thousands renovating?

Splitting the inheritance

Your sister has given up a lot to take care of your mother, but she's also expecting to get a lot in return. There's little mention of the rent your sister is collecting on her own house. Is she getting $2,000 or $3,000 a month? That's an immediate benefit for her. Those benefits should be weighed alongside the value of the unpaid care she is providing and the career opportunities she says she has sacrificed.

I'm not convinced that your sister should receive a $925,000 house outright. Through all the jigs and the reels - as we say in Ireland - and given your relative financial stability (and, I assume, that of your brother), you could agree to give your sister a bigger slice of your mother's estate, pending the approval of your mother. She has the final say. Make that clear to your sister. This is a conversation better had with all four of you in the same room.

There's little mention of the rent your sister is collecting.

Another option would be for your sister to receive a larger share of your mom's house. Let's say it's worth a cool $1 million by the time your mother passes away. You and your brother could split half between you ($250,000 each) and your sister could get the other $500,000. You and your brother would effectively forgo $83,000 each (or $83,333, to be exact) from your inheritance. You could then split whatever investments remain in your mother's accounts three ways.

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10-12-26 0515ET