#58 Including Heirs in Reverse Mortgage Planning
INCLUDING HEIRS IN REVERSE MORTGAGE PLANNING
Comforted by the fact that all three of your adult children are financially stable, the two of you have been able to focus during this first year of retirement (you both turned 70 earlier this year), on arranging your affairs so as never to become a burden to them. Key elements in that planning have included pre-paying for funeral arrangements and cemetery plots, purchasing life insurance with long-term care provisions, and updating your estate planning documents.
Until now, you have not been in the practice of discussing your plans with your children or their spouses, other than giving your offspring powers of attorney should one of you be deceased with the other of you incapacitated. But in the course of applying for a reverse mortgage on your home, you’ve learned about the decisions your heirs will face once both of you are gone, and you’re now considering bringing the children into the conversation after all.
You are heartened by the fact that your heirs will have no responsibility for the deficit should the value of the home be less than the debt at the time of your death. On the other hand, should your children decide to sell the property and the proceeds exceed the amount owed on the mortgage debt, those excess funds will go to the heirs. Your children will have up to 360 days to decide how they wish to handle the situation, and will be required to keep the utilities turned on and the property insurance maintained until the home is sold. As you’ve realized, it will be a good idea to educate your heirs now about both of your intentions and about their responsibilities after the second of you passes.
You can take pride in having brought up three children who have “made their way in the world,” as well as in your own very thoughtful contingency and estate planning.