Reverse Mortgage Basics

REVERSE MORTGAGE BASICS

A "Reverse Mortgage" allows an older homeowner (62 years of age or older) to use the equity in their home to obtain cash resources when other resources have dwindled or are insufficient, but the home equity has grown.

All of the borrowers must be on title, however, most lenders will accept a living trust (family trust) as the title owner. This arrangement will leave the living trust estate plan undisturbed, an important factor in financing of real estate owned by a living trust (family trust).

A Reverse Mortgage works very much like a line of credit, and because it is a loan, the payments to the borrower(s) are not considered taxable income.

Social Security and Medicare eligibility are not affected by a Reverse Mortgage; and in general, neither are SSI or Medi-Cal, so long as the bank balance is not more than $2,000 for a single person.

The loan is non-recourse, which means that the borrower is not liable for a negative loan balance should the equity of the home go down.

There are no monthly payments on the loan usually, and the repayment of the loan is deferred as long as the borrower(s) live(s) in the home. Also, the loan can be repaid anytime without a prepayment penalty.

If the borrower becomes incapacitated and is out of the home for more than a year, payments cease, and the lender can require payoff.

This is only basic information about Reverse Mortgages. Before entering into a Reverse Mortgage arrangement, it is always advisable to talk to your C.P.A. about taxes and other financial consequences, and also with your Estate Planning Attorney to ensure that your legal objectives remain unaffected by the transaction.

Please visit my website for information on Family Trusts and Estate Planning for more useful information about this and other subjects:

http://www.tompkins-law.com/

DWIGHT EDWARD TOMPKINS
Attorney at Law

This blog is intended for information and educational purposes only and is not a substitute for legal advice from a qualified estate planning attorney in your jurisdiction.

ROTH IRA CONVERSIONS IN 2010

ROTH I.R.A. CONVERSIONS IN 2010

Roth IRAs historically have been off limits to high income taxpayers. Converting a "Traditional IRA to a "Roth IRA" has been prohibited at income levels above $100,000 through the end of 2009.

Beginning January 1, 2010, all taxpayers, regardless of income, will now have the option of converting their "Traditional IRA" to a "Roth IRA". Thus, financial advisors are expecting a rush in early 2010 by high-income clients converting to Roth IRAs.

The advantage of the Roth IRA is that there are no mandatory annual distributions after age 70 1/2, so savings can be left to grow tax free to heirs. As an estate planning attorney concerned with assisting clients in preserving wealth for their family, the Roth IRA works well with the overall estate plan of many clients.

The new Roth IRA opportunity in 2010 may be especially helpful to people who have rolled over 401(k)s and other plans into IRAs when they changed jobs or retired.

The decision to convert depends on several factors, and working with a capable financial advisor is very important.

Equally important for all qualified retirement plans is to make sure that you have named beneficiaries, both primary and secondary.

When meeting with clients to create a Family Trust, one of the important things I look at is the designation of beneficiaries on retirement accounts, life insurance, and annuities.

Often clients have failed to name beneficiaries on these accounts, or the beneficiary designations are not up to date.

Because retirement, life insurance, and annuities pass to the beneficiaries outside of Probate, having up to date and complete designations of beneficiaries is extremely important.

If you have any questions on this topic or any other topic in Estate Planning, please visit my website at

http://www.tompkins-law.com

DWIGHT EDWARD TOMPKINS

Attorney at Law

This blog is intended for informational and educational purposes only and is not a substitute for legal advice from a qualified estate planning attorney in your jurisdiction.

"Family Trusts" You Tube Channel Has Important Videos

THE FAMILY TRUSTS YOU TUBE CHANNEL HAS 7 GREAT ESTATE PLANNING VIDEOS

Seven videos are now available on You Tube covering the following important topics:

1. ESTATE PLANNING BASICS


2. FAMILY TRUSTS AVOID PROBATE


3. ESTATE PLANNING: PROBATE AND FAMILY TRUSTS


4. ESTATE PLANNING: COMMUNITY VS. SEPARATE PROPERTY


5. WHEN TO REVIEW AND AMEND YOUR TRUST


6. ESTATE PLANNING: THE PROBLEMS WITH JOINT TENANCY


7. ESTATE PLANNING: DOING NOTHING, THE BIG MISTAKE

All of the videos are presented by me, some taken from my last seminar in September. Please check them out.

http://www.youtube.com/user/FamilyTrusts

DWIGHT EDWARD TOMPKINS, Attorney at Law

This blog is intended for information purposes only and is not a substitute for legal advice from a qualified estate planning attorney in your jurisdiction.