With no children of your own, you have cultivated an especially close relationship with your nieces and nephews over the years, occasionally offering financial help as each of the kids completed degrees and launched careers. Now, with two of your nephews in the process of launching a travel business using a unique concept, you’re considering the wisdom of lending them money as opposed to handing them money. For one thing, you think the extra pressure might serve as an extra incentive to the boys to do what it takes to succeed; for another, you want to be compensated for risking your own finances in retirement.
As a 68 year old widower, you’ve been able to manage well on your retirement plan and various investments. Your home has been fully paid for and kept in good repair, and you have both health and long term care insurance plans in place. Still, raising the six-figure sum of money you’re now contemplating investing in (or lending to) the nephews’ venture would mean cashing in some assets (Your thought is that later on, if things continue to go well, you might “forgive” the loan.).Your tax advisor has cautioned that there are strict rules concerning intra-family loans, but he is going to help you follow the correct procedures.
One thing you might consider in place of “cashing in assets” is using the equity you’ve accumulated in your home as the source for funding the gift (or the loan) to your nephews. With no principal or interest payments needed on a reverse mortgage,* there will be no effect on your current investments that are the source of your own income needs. Withdrawals of your equity will be tax free,** and the unused portion of the credit line will earn interest at the same rate as that being charged on your loan (thus fulfilling your wish to “be compensated for risking your own finances in retirement”).
Your own housing wealth might be “the ticket: to helping your nephews’ new travel business – go far!
https://mutualreverse.com/david-garrison
Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).
*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 Equal Housing Lender