Safe Keeping for Money from Home Sale

Q: Came across your website this morning. We are closing on the sale of my mother's home today. She was no longer able to afford living there since my father passed away. She will be living with my sister, and has a minimal amount to contribute monthly there,for expenses. She should not have to need this money from the sale unless there is an emergency. However, she has very little in savings. The equity in her home is what she has left. She does receive Soc. Security, and a small pension monthly from my father. Where should this equity check be placed for security? In a CD? In a Mutual Fund? Any suggestions? Thank you in advance.

A: Good question!

Safe from an investment standpoint: Depending on her age and the type of investments she is comfortable with, it may be that a Certificate of Deposit will work best. If she has invested in things like mutual funds and/or the stock market in the past, and if this money can remain invested for 5 years or more, then a portion might be used in a high-quality, no-load mutual fund.

Safety from being used for long term care: This is much more difficult to do. If she's relatively young and in good health, she might check out long term care insurance, possibly using a portion of the equity from the house to cover the annual cost. The other option is for her to gift that money away, but should she do so and apply for Medicaid within 5 years, she would be disqualified.

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