Massachusetts Estate Planning & Asset Protection Blog

The Reverse Mortgage: Useful Tool for Massachusetts Planning?

Posted by Wellesley Estate Planning Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Mon, Aug 08, 2011

The Basics

Reverse mortgages can be a useful option for homeowners who are in need of cash.  However, most financial experts warn against these and suggest liquidating your portfolio and reducing your living expenses before going this route.  To many they are usually considered a last resort.  This option was introduced in 1989 and allows Americans age 62 and older to access a portion of their home equity without having to move.

Benefits of a Reverse Mortgage

The bank pays the borrower throughout his or her lifetime according to the amount of accumulated home equity. The loan balance does not have to be repaid until the borrower dies, sells the home or permanently moves out.  Because of the nature of the loan, you can never owe more than the value of your home, and if the balance is less than the value of your home at the time of repayment, you or your heirs keep the difference.

To be eligible, the property in question must be your primary residence, and you must either own it outright or have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan.  Generally, the older you are and the more valuable your home, the more money you can get.

You may want to check out AARP's calculator which helps retirees figure out how much money they might be eligible to receive.  There are no restrictions for how the money from a reverse mortgage must be used, and the proceeds can be received in a lump sum or some type of monthly payment.

What's the catch?

Reverse mortgages are complex and can affect eligibility for Medicaid and Supplemental Security Income benefits.  The closing costs and interest rates involved are often higher than with a usual mortgage.

Needless to say, if you are spending the equity in your home, you are reducing that value of that asset when it ultimately passes on to your heirs.

For more information on planning for retirement, watch Dennis Sullivan, Esq., CPA, LLM talk about estate and retirement planning on the national talk show, "Ask The Experts."  To learn firsthand how to plan for and protect your assets and life-savings, register online or call 800-964-4295 (24/7) to attend for one of our Trust, Estate & Asset Protection workshops.

Tags: Retirement, Estate Planning, cash, CCRCs, reverse mortgage

Continuing Care Retirement Communities (CCRC)

Posted by Dennis Sullivan & Associates on Mon, Aug 01, 2011

Over the last few years, a variety of housing options for elders has evolved.  One such option called Continuing Care Retirement Communities (CCRC)s is a unique type of senior housing which also provides personal services and health care at one location so people can "age in place" without having to leave the community.

CCRCs also offer different housing options on the same campus from townhouses for independent living to studio apartments for people in assisted living programs to nursing home accommodations for those who require more comprehensive care. CCRCs also provide, usually for a set monthly fee ranging from $700 to $3,000 per month, some combination of the following services:

  • Nursing/ health-care services
  • Maid service
  • Dining
  • Emergency assistance
  • Personal care assistance
  • Scheduled transportation
  • Laundry
  • 24-hour security
  • Social/recreational activities
  • Custodial & grounds maintenance.

In addition to these, they also offer amenities like salon services, craft classes, etc. designed to maximize the resident’s independence. These service packages vary based on the level of independence per resident as well as on the monthly fee for the package.

Most CCRCs also require a significant entrance fee, which is less than 100% refundable, ranging from less than $100,000 to more than $300,000.  These fees are usually refunded when the resident leaves the community.

If you'd like more information about CCRCs and other senior housing options, please visit our website and download our free guide entitled, "Massachusetts Elder Guide on Nursing Homes and Assisted Living."  In addition, you could contact the Executive Office of Elder Affairs at (617) 727-7750, (800) AGE-INFO (or 800-243-4636).  To learn firsthand about aging issues and how to plan for your retirement and protect all your assets and life-savings, register online to attend one of our Trust, Estate & Asset Protection Workshops or call 800-964-4295.

Tags: long term care, Retirement, assisted living, CCRCs

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