Should my relative who has stage 4 cancer take out a second HELOC?
My relative “Ann” has stage 4 cancer, and a year ago was given 1-3 years to live…. and she recently found the tumors have come back, in spite of chemo… she could die soon.
Her adult daughter and two year old granddaughter live at home with her. A few years ago, Ann took out a HELOC, and retired. She made minimum repairs to the house (which badly needed many more repairs) but instead, put $50,000 in a ponzi scheme, and spent the rest on shopping.
Now, Ann’s in trouble financially. She has credit card debt (probably $15,000.) and has no will, no living trust. She was never good with money, and even though she has enough to cover her second HELOC (which is between $65,000-$100,000) she claims she is stretched tight, even though her daughter, who makes $50,000+ splits the expenses with her.
Her daughter is also bad with money, lives paycheck to paycheck, and is in no position, financially to take over the mortgage.
Ann’s house is probably valued at $600,000. It was $800,000 before the market dropped. She had paid the house off completely until she took out her first HELOC.
Ann brings home enough to cover the $1200 mortgage, insurance, taxes, etc. Her daughter helps with many of the expenses. But now, she wants to take out another HELOC, to give herself more money a month.
Here’s another problem: Ann has no living trust, and no will. If she dies tomorrow, the house will not go to her daughter and son, but rather to probate, to resolve her house taxes, and debts.
Her son has begged her for years to get her affairs in order and get a living trust so her house will not go into probate. She claims she has no money to get a living trust done; but when she did have the money to complete it, she stalled and stalled and would not get it done. (Her son and daughter do not have the money, either.)
Now, her son has suggested that she use money from a second HELOC to make more home improvements (which is doubtful, considering her health) and to get a living trust and will completed.
I think it is a bad idea, considering her history with mismanagement of money, and her refusal to get a trust completed.
Will the bank even give her a second HELOC, considering she is retired and has no way to pay it back?
MVD34 and Judy–thank you for your responses. I am DEFINITELY staying out of it–I just really wanted validation to know if it was a bad idea (or was I crazy?) because my relative seems to think it’s a good idea. Ann did interview 3 potential attorneys to get her trust done; but she stopped short of doing it because of money but I doubt she’d do it if she did get a HELOC.
To answer your questions: Other houses in the neighborhood are being sold. It is a nice neighborhood with multi-million $ homes; hers is on the low end.
I know that her personal debt does not equal more than what the house is worth… but since the house does need some major repairs, they might not be left with much, if they are able to hold onto it at all.