After sharing with your son, daughter, and daughter-in- law your plan to remodel your home with an eye to “staying put” (as opposed to moving into a retirement facility as your daughter-in-law’s parents have recently done), your daughter (single and living nearby) surprised you by expressing an interest in someday inheriting the home.
In the process of setting up our powers of attorney and other documents, you had not considered that either of the children would actually want the home, which is four months away from being mortgage-free. You have more than enough money set aside for the costs of reconfiguring the sleeping quarters, installing certain safety rails, and even changing the access pathways, but now want to be sure that a) the aesthetics will be suitable for a younger resident and that b) you change our estate plan so as to equalize the value we pass on to each of the two children.
Given this changed view of the future now keeping the home “in the family”, you might consider a combination of two financial strategies: 1) a HECM, or reverse mortgage set up as a line of credit on your home 2) a survivorship whole life insurance policy, which would pay a death benefit to your son after the second of you has passed away.
While there is no way to know precisely what the market value of your home will be years into the future, the idea would be to “equalize” the inheritances you leave to your two children, with your son receiving the insurance proceeds, your daughter the home.
Meanwhile, the reverse mortgage would ensure that both of you have the right to remain in the home for life. As you continue to “age in place”, you will be able to “draw” on your own housing wealth to help finance any unforeseen additional remodeling costs, as well as to help pay the insurance premiums. (Your estate planning attorney can discuss with you setting up a life insurance trust to implement the plan.)
Over the years to come, you might choose to “repay” part or all of the borrowed amounts, with any unborrowed portion of your equity credited with growth at the same rate as the interest accruing on the mortgage balance.
Think of this combination as an “aging-in-place, then bequeath” housing wealth management plan!
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. 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.orgEqual Housing Lender