HOUSING WEALTH HELPS “FOSTER” GRANDKIDS
When each of your son’s daughters was born, you opened a 529 account for them and you kept up the tradition of contributing $3,000 to each of those accounts as a birthday gift. The granddaughters are also named as beneficiaries in your trust documents.
Meanwhile, your daughter, who has never married, has recently become a foster parent to two brothers, one 6, the other 8, with the plan to possibly adopt them if they are unable to be returned to their natural parents. (It was explained to your daughter that, while the boys’ reunification with natural their parents remains a goal in every foster care situation, in this case that may not ending up a possibility.)
While the two of you had initially expressed strong reservations about your daughter’s decision, single and in her early 50s, to become a foster parent of two, you want to show that you support her choices every bit as much as you do your son’s, and would like to contribute to education accounts for these two new additions to the family. Later, should adoption become possible, you plan to rework your estate planning documents to include them.
Importantly, you understand that, although there is compensation through the foster care system (and while your daughter has not asked for any extra financial help from you), her job’s position is not as secure as your son’s and daughter-in-law’s. Needless to say, the discussion led to an evaluation of your own financial situation. Now both in your late 70s and retired, you’ve been blessed with very few health problems. You were able to, without incurring debt, make some updates to your home to make it “aging-appropriate”. Still, with costs becoming more of a challenge for everyone, you want to be sure you’re not over-taxing your own resources.
You might consider tapping into your own housing wealth by applying for a reverse mortgage. That way, rather than taking larger withdrawals out of your own investment and retirement accounts to provide financial help to your daughter while maintaining your own lifestyle. Since with a HECM line of credit, there are never required monthly mortgage payments,* you’ll have enormous flexibility in terms of the timing of any tax-free** withdrawals. Meanwhile, the unused portion of your equity will be credited with growth at the same rate as that being charge on any borrowed amounts.
As a point of information, under Indiana law, if you end up naming your foster grandsons in your will or trust documents, explicitly indentify them by full name (not in the general category of “grandchildren”), because foster children have no automatic legal right to inherit under state intestate succession rules).
Simply put, your housing wealth can help you “foster” your new grandsons and welcome them into the family!
https://mutualreverse.com/david-garrison
*Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees.
**Please consult a tax advisor. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.org
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