While you have both been U.S. citizens for many years, some of your fondest childhood memories revolve around Brothers and Sisters Day in Canada. Fraternal twins, your brother and you have remained very close over the years. At age 68 and single with no children, you are still actively self-employed on a part-time basis; your brother and sister-in-law both retired from the school system three years ago.
Tragically, just last week, at your annual observance of Siblings Day (as it is called here in the States) you learned that the latest diagnosis of your brother’s long-standing medical issues is forcing some immediate decisions. While he does have Medicare and supplemental insurance, the bulk of the costs of the one treatment plan that appears to hold the most promise are probably not going to be covered.
Rather than offering to help the couple pay each medical bill as it arrives, you would like to make a one-time six-figure cash gift, opening an account in your brother-in-law’s and sister-in-law’s name from which they can draw funds as needed. The only issue is that the bulk of your own financial assets is in tax-deferred accounts (one IRA rollover account and the Solo 401k) to which you contribute out of earnings.
Consider using your housing wealth (as opposed to your tax-deferred investment accounts) as the source of funding for your generous gift to your sibling’s family to help them pay for non-insurance-covered medical treatments. Set up as a line of credit, a Home Equity Conversion Mortgage will allow you to either make the one-time gift you envisioned, or to periodically gift sums of money (as the costs of the treatment protocol become clearer), all without increasing your own income tax liability.
Far from the sibling rivalry that so often appears in families, in helping remove any financial barriers that might have prevented your twin from accessing the most advanced medical treatments for his condition, a reverse mortgage might well turn out to be the perfect vehicle for you to practice sibling chivalry!
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