A reverse mortgage is an option for homeowners ages 62 and older who have substantial equity in their homes. You can either choose a loan with a lump-sum payment, monthly payments or a line of credit. The loan does not need to be repaid until you either pass away or move out of your home. Once you are no longer in the house, you (or your estate) must repay the entire loan.
A reverse mortgage can help you pay bills and keep living in your home for years to come. But what happens once you sell the house, move into a retirement home or pass away?
A reverse mortgage can impact your will, trust and estate plan.
Cannot Leave Home to Beneficiaries
The total loan amount is due when you no longer live in the house. If you pass away or move out of the house, your heirs either have to sell the home to pay the loan or they must come up with the money another way to pay the loan if they want to keep the house.
A Reverse Mortgage For a Home In a Trust is Allowed
You can still take out a reverse mortgage if you already have your home in a trust. Also, if your home is already in a reverse mortgage, you can still put it into a trust. Both options are available, but they can be tricky, and we recommend working with an experienced estate planning attorney to establish this properly.
Way to Help Others
There are ways to use your reverse mortgage to help others. Some people purchase a life insurance plan with the money received from the reverse mortgage.
• The heirs can then use the insurance money to pay off the loan and keep the house.
• Another way people have used the loan money is to give it to the beneficiaries now. Then, when you are not living in the house, they will sell the house and pay off the reverse mortgage loan.
It’s a good idea to speak with an estate planning attorney before you commit to a reverse mortgage so that you know your options and the best decision for your situation.
If you are considering a reverse mortgage, call an experienced estate planning attorney at Estate and Probate Legal Group to understand how it will affect your estate plan. Contact us today at Estate and Probate Legal Group. Call 630-864-5835 to speak to an experienced estate planning attorney.
AREAS WE SERVE: Cook, DuPage, Kane, Lake and Will counties
