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#79 Using a reverse mortgage to cope with a family upheaval


David Garrison
Home Equity Retirement Specialist
NMLS # 1595194
Serving the State of Indiana
p (317) 644-2595 c (765) 516-0130
e [email protected]

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

April 12th, 2022

When it comes to sharing cash or assets with your children, the two of you have always agreed – and made clear to your children – that once you got them through their schooling, they would be expected to manage their finances on their own. Upon the second of your deaths, of course, you’d arranged for your three children to inherit (equally) whatever wealth remains. You have grandchildren, but the plan was for each set of parents to provide for their own offspring in their own way. Unlike the case with many of your friends and their children, you were able to discuss all of this openly with your kids, making your intentions clear. 

You are far from wealthy, but with your home paid off and in good physical condition, you’ve been able to manage well on retirement plan income and social security, hoping to remain in your home for the rest of both your lives. Everything appeared to be going according to plan – until, suddenly, it wasn’t.

Your oldest daughter’s husband was killed in a traffic accident at the end of last year, and, after quitting her own job, your daughter is making valiant attempt to save the small business they’d owned together. Meanwhile, there are junior high-school aged children at home, one of whom is in need of therapy. It is plain that this daughter needs financial help now.

Rather than tapping your own retirement assets, consider using your housing wealth to provide the needed help for your daughter and grandchildren. Since your plan is to “age in place”, a reverse mortgage line of credit will enable you to “draw down” tax-free loan proceeds which you can use to provide the financial assistance your daughter needs today.  There will be time later to discuss if and how you’d want to adjust your estate plan to accommodate this “early legacy” to one child.

When “later” arrives earlier than planned, a reverse mortgage can provide a “legacy” needed now!