Give up the house on life annuity

Greetings! An aunt has received an offer to transfer her house in exchange for a monthly lifelong annuity and lifelong right of residence. In case of moving (e.g., to a nursing home), the house would be rented out and she would continue to receive the rental income. She is single and 75 years old. The house was valued at €300,000. A monthly annuity of €820 was offered to her. She is asking if this is a good offer. I see an obvious weakness for me in that the monthly amount is not adjusted for inflation. Additionally, one of the nephews, who was previously considered as an heir, will be upset and probably will no longer visit or help with work in the house and garden. What do you think?

Who offers that? But if you calculate it roughly, with the [Leibrente] she would have the value of the house after about 30 years. Ok, now it comes into play that she would then live there rent-free, right? Then the period decreases. But all in all, just from gut feeling, a rather strange construct.

Brief and to the point: catastrophic offer that belongs straight in the bin

Only good for the purchaser.

According to Wikipedia, a life annuity is paid until death. For a 75-year-old lady, that will certainly not be 30 more years.

The offer seems as if the poor aunt is supposed to be taken for a fool by someone.

Really really lousy offer. Then the nephew should do it. Strikes a bargain. If I were him, I wouldn’t do anything either. What for anyway

Let's do the math:

Remaining life expectancy according to the mortality table approx. 15 years = €148K
If grandma lives in the house for another 15 years, she misses out on €148K

If grandma sells now, she gets €300K and has to rent a small apartment somewhere (but also has lower additional costs).
Rent for grandma for 15 years = €81K, so grandma could spend €1,217 per month instead of €820.

If grandma dies at a different time, the calculation shifts significantly in some cases. The same applies if the rent were different.

Investment interest and operating costs/additional costs are not considered.

And now decide for yourself how good the offer is.

P.S. The lifetime annuity offer is only made if it is statistically profitable for the provider.