Reverse Mortgages and Your Estate Plan With Legacy Assurance Plan Bradenton, Florida

What is reverse mortgage and estate plan? Legacy Assurance Plan could help you it better understand. A reverse mortgage may be the right option for some seniors but needs careful consideration before being accepted.

If you watch much TV (beyond premium channels and public broadcasting,) you’ve probably seen commercials marketing reverse mortgages to seniors. Reverse mortgages can offer real benefits to some seniors, depending on their circumstances. However, these reverse mortgages can also come with distinct risks, too. Before you make the decision to take out a reverse mortgage, you should educate yourself on all of the impacts that a reverse mortgage will have, including on your estate plan.


A reverse mortgage can be very helpful to some seniors. Generally, advisers might suggest a reverse mortgage as a viable option for seniors who have relatively little cash but a lot of equity in their home. The money received for a reverse mortgage can be invaluable to some people. The proceeds of a reverse mortgage may help pay for in-home care, which may allow you or a loved one to avoid, or at least put off, going into a nursing home.

There are downsides, though, as it relates to your estate plan. A reverse mortgage can impact your Medicaid eligibility. Depending on the state where you live, it is possible that your state’s Medicaid agency could view the payments you receive from your reverse mortgage as income and this added “income” could put you above the threshold for continued Medicaid eligibility. Even if your state doesn’t view the payments as income, your state could view a lump-sum or the accumulation of monthly payments received as part of a reverse mortgage as assets that might take you over the allowable maximum for continued eligibility.


Additionally, there is the scenario in which you die before you pay back the total amount you took out in your reverse mortgage. When that happens, the loan is paid back from the proceeds of the sale of your house. But what if you don’t want to sell your house or you don’t want to leave your loved ones a diminished asset? One way to deal with this is by using life insurance. Buying life insurance for the purpose of having the proceeds cover your outstanding reverse mortgage balance potentially can accomplish two goals. One, this strategy can potentially lower your death tax obligations, as your it lowers the amount of equity you have in your home, so the total amount of your taxable estate (for purposes of death taxes) is reduced by that same amount. Also, this strategy ensures that your loves ones will receive a set amount of inheritance that won’t be impacted by the fluctuations of the real estate market.

Grandmother, mother and daughter with family in background at park

If you’re considering a reverse mortgage, your estate planning professional can help you go over your circumstances and goals and decide if it makes sense for you.

Summary By legacy Assurance Plan: Reverse mortgages can provide clear benefits to some seniors, but also come with their own set of potential drawbacks. A reverse mortgage can help you cover some health care costs and may help you delay going into a nursing home. However, reverse mortgages could, depending on the eligibility rules observed in your state, negatively impact your Medicaid eligibility. They can also reduce the size of your estate that you leave for your loved ones, unless you plan for the payment of this debt after your death (using a vehicle such as life insurance.) Whether a reverse mortgage is right for you and your estate plan depends on the particular facts of your situation.


Legacy Assurance Plan Of America – Minimizing Your Chances of Estate Plan Challenges

A 20th Century American theologian, Reinhold Niebuhr, composed something many now know as the “Serenity Prayer,” in which the speaker seeks “the serenity to accept the things I cannot change, The courage to change the things I can, And the wisdom to know the difference.” Estate planning can be a lot like that. One of the keys to success in estate planning is to plan to avoid the problems that are preventable, to understand that not all problems are avoidable, and the wisdom to know the difference.

Legacy assurance plan For Estate planning

While you cannot always prevent people from mounting legal challenges to your estate plan, you can take steps to minimize the odds of that event happening. This is particularly true if your plan includes some less than “cookie-cutter” provisions, such as unequal distributions between children or grandchildren. One of the keys to reducing this risk of a challenge is communication. If you are leaving uneven distributions, sit down with your family and explain why you crafted the plan as you did. Alternately, you may consider documenting on paper the reasons for your decisions, so that the trustee of your trust or executor of your will has evidence in the event of a legal contest.

Legacy Assurance Plan of America

Your estate plan is your legacy, so it should reflect your desires and objectives. However, if your loved ones better understand why you made the choices you did, it may help them be more accepting and less likely to go to court.

Another way to minimize the risk of challenge resulting from unequal distributions is to make gifts during your lifetime. If you have a loved one whom you believe deserves or needs a larger share of your wealth, you can make that happen outside your will or trust. Giving gifts to that loved one during your lifetime can offer multiple benefits, as it may allow you to create unequal total distributions while maintaining equal distributions within your will or trust, and it may also offer your some tax benefits, as well.

Additionally, you can use a negative financial motivator to attempt to reduce the chances of a challenge. You may include a “no contest” clause in your plan. This clause is language that says that a beneficiary who undertakes a legal contest to your plan forfeits the right to receive his/her distribution he/she otherwise would have received under your plan. Be aware, though, these clause are not legally enforceable in all states.

Legacy Assurance plan For Estate Challenges

Finally, an essential key to minimizing the risk of a court battle is to work with experienced legal professionals. Your experienced estate planning team can give you the advice you need to make sure that your plan is as “contest-proof” as it can be.

Summary: The estate plan you create is your legacy Assurance plan ¬†and should reflect the estate planning goals you want to accomplish. Sometimes, a loved one may not agree with your goals and may seek to contest your plan in court after you die. While you cannot erect a plan that is completely “contest-proof”, you can take steps to minimize this risk. Your estate planning legal professional can help you understand your options for reducing this potential hazard.