Retain
Sentimental Assets
While a home may hold a great amount of
sentimental value for a family, the reality
is that in most cases the property is sold
after the owner’s death. At a time
when they should be simply grieving, the
heirs are often forced to sell the property
and are at the mercy of the real estate’s
market condition at that time. Once the
home is sold, the heirs may be faced with
additional inheritance taxes from capital
gains on the proceeds of the sale.
One way to avoid this eventuality is to
use a portion of the proceeds of a reverse
mortgage to purchase life insurance. Upon
death of the senior homeowner, that policy
can be used to retire the reverse mortgage
debt and return the home free and clear
back to the family members. The end result
can be a debt free transfer of this sentimental
asset, while still allowing the senior homeowner
use of the remaining funds to maximize their
quality of life.
Funding for Healthcare or Long-Term Care
Insurance
Statistics show that for a couple turning
65 years old, there is a 75% chance that
one of them will need Long-Term Care in
their lifetime. However, only 12% of the
population has made the necessary financial
arrangements for this possibility. When
a need for long-term care arises, unprepared
seniors are forced to use their savings
or impact their monthly income in order
to fund this unexpected expense. A reverse
mortgage can relieve that burden by funding
the cost of a Long-Term Care Insurance policy,
while allowing the senior to remain in the
home, remain as self-sufficient as possible,
and not deplete existing savings or income.
This option not only protects their assets,
but can also relieve any potential burden
on their families.
Provide Funding for Estate Taxes While
Maximizing Legacy Asset Transfer
A reverse mortgage is a creative and effective
way to release tax-free equity in a home
to minimize estate taxes and maximize asset
transfer. A portion of the reverse mortgage
funds can be utilized to purchase a life
insurance product, and secure the future
for their heirs. The reverse mortgage can
give homeowners, particularly those with
substantial equity built up in their homes,
the comfort of having more control over
their estate. By doing so they can assure
the legacy they leave behind retains its
value by lowering the total estate value
subject to taxes, and utilizing the proceeds
from the life insurance policy to pay estate
taxes.
What if I have a Living Trust?
It is very common for a Living Trust and
a Reverse Mortgage to operate together.
The only stipulation is that your Trust
must meet HUD’s requirements. It would
be prudent to have your trust advisor review
the documents in order to make sure they
are coordinated properly.
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