REVERSE
MORTGAGES AS AN ESTATE PLANNING TOOL
The Reverse Mortgage should be
considered as an integral part of the estate plan. As a non-recourse
loan that releases home equity and converts it into tax-free cash, there
are no restrictions on the use of the proceeds, the borrower continues
to own the home and no monthly payment is required for as long as the
borrower resides in the home.
Funding
for Healthcare or
Long-Term Care Insurance
Most Americans recognize the need for
a long-term care insurance program to both protect their assets and
relieve any potential burden on their family. Many Seniors, when faced
with this situation are forced to use their savings or impact their
monthly income for long-term care coverage. A reverse mortgage allows
seniors to stay in their homes, be self-sufficient, and not deplete
existing savings or income.
Maximize
Legacy Asset Transfer
While a home may hold a great amount
of emotional value for a family, the reality is that in most cases, the
property is sold after the owner’s death. The heirs are often forced
to sell the property in a volatile real estate market with no
guarantees. After the sale, which may drag on due to market conditions,
heirs may be faced with inheritance and/or capital gain taxes on the
proceeds. The net proceeds are often less than the perceived value of
the home. If a reverse mortgage is used to purchase life insurance, this
scenario typically translates into greater wealth transfer to the heirs.
Provide
Funding for Estate Taxes
When the tax-free equity release is
used to fund life insurance products, a reverse mortgage is a creative
and effective way to secure the future for heirs. It gives homeowners,
particularly those with substantial wealth built up in their homes, the
comfort of having more control over their estate and assuring the legacy
they leave retains its value by:
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