Thursday, February 12, 2015

Reverse mortgages can backfire if younger surviving spouses or inheriting adult children don't have enough cash

Michelle Singletary has a sobering article on reverse mortgages, on p A14 of the Washington Post on Wednesday, February 11, 2015, link here. The hooker is that, because older seniors are typically allowed to take out more cash out of their equity (scaled to age), a younger surviving spouse might be faced with substantial repayment, possibly without enough cash in the estate or her own accounts.  The problem could now occur in some states with same-sex couples who might not be as familiar with “married life” rules.  It may also occur was adult children or other relatives inherit the house or live in it.
It’s important to check on the rules with your financial institution or with an eldercare attorney.  In some cases, it is advisable to put the house in a trust instead, but you can’t do both at the same time (put in trust and take out a reverse mortgage).  It looks as though this problem had also been covered Dec, 5, 2012. 

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