Online resource center to help you explore these key issues, and others, regarding your estate.

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Mr. Miller has many years of experience in designing and implementing a comprehensive variety of Trusts, Wills, and other estate planning documents, as well as settling estates in the most expedient and appropriate method. Further, he counsels and assists clients on becoming eligible for VA benefits and Medi-Cal.

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VA Pension/Aid & Attendance/Medi-Cal

Mr. Miller has been active in the area of VA Pension and Medi-Cal for well over a decade. He uses various specialized types of Trusts as well as non-trust strategies to gain eligibility for his clients and save the family money.

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Probate & Estate Administration

Mr. Miller has been settling estates (both simple and complex) for well over 40 years. The starting point is always to create a strategy to settle the estate in the most efficient manner possible with a minimum of taxes. Often times the strategy created allows the family to bypass Probate Court proceedings.

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Are Reverse Mortgages Effective for Senior Homeowners?

By merv,

  Filed under: Blog, Senior Resources

Several months ago we posted an article regarding What Can A Home Equity Loan Do for You?  We wanted to delve into the Reverse Mortgage a bit more.

What is a Reverse Mortgage?
A reverse mortgage is a popular but complex home loan for senior homeowners. If you qualify for a reverse mortgage, you will not have to make monthly payments on the loan. Instead, the lender pays you, similar to an annuity. Typically, the reverse mortgage is repaid from your home’s equity when you sell the home, move out permanently, or die. You, or those who will inherit from you, can keep any sales proceeds from your home in excess of what you owe the lender. However, with the current housing market depressed and likely to be this way for a while to come, there are few instances where this is the case.

To qualify for a reverse mortgage, you must be a homeowner who is at least 62 years old. The mortgage on your home must either be paid off entirely or have a low remaining balance. Generally, the amount you can borrow depends on the value of your home, the amount of equity you have in the home, and your age at the time of loan application.

How Do I Know If a Reverse Mortgage Is Right For Me?
A reverse mortgage may only be appropriate for a narrow percentage of senior homeowners (but when it’s the right tool, it’s really the right tool).  Similar to an annuity, it can undermine seniors’ financial futures by making them ineligible for Medicaid (Medi-Cal in California) benefits they might otherwise qualify for without the reverse mortgage. See my blog entry on August 16 discussing whether an annuity is the answer. So if you have an intention of making sure the family home gets passed down for generations, or is kept as an income producing property, then a reverse mortgage is probably not right for you.

It may be a useful financial tool if the following conditions apply: you have a consistent need for additional living funds with minimal savings; you live on a fixed income, your only asset is your home equity and you do not plan to leave your home to your children or others who will inherit from you.

Don’t take a reverse mortgage if you want to leave your home, free and clear, to your children or heirs. There may be other, less costly means to reach your financial goal. A reverse mortgage can be an expensive way to borrow money. Speak with an elder law attorney to get an idea of the possible financial impact a reverse mortgage can have on your ability to qualify for certain Medi-Cal, Supplemental Social Security Income (SSI) and VA benefits.

Some of the advantages of a reverse mortgage include helping you maintain your financial independence and an adequate standard of living. The money you receive from a reverse mortgage is tax-free. Additional disadvantages include it having greater costs to obtain the loan than many other types of loans and the fact that reverse mortgage options can be confusing and numerous. The home is the biggest asset for the majority of families, thus it is critical to understand the consequences of various financial tools involving your home. You should get counseling from an elder law and estate planning attorney prior to making any big financial decisions with your home. For more information regarding reverse mortgages visit CANHR’s article discussing reverse mortgages.

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About Living Trusts

About Living Trusts is hosted by the Law Offices of Merwyn J. Miller, as your online resource center to help you explore these key issues, and others, regarding your estate.

Merwyn J. Miller, J.D.

  • Board Certified Specialist in Estate Planning, Trust & Probate Law
  • Co-Author of legal text book and of “Don’t Go Broke in a Nursing Home
  • Teacher of law courses at public and private colleges
  • Continuing Education Instructor for attorneys
  • Columnist for largest regional newspaper in San Diego County and professional journals for 15 years, Contributing author to the book “In Your Service: The Veteran’s Friend”
  • Masters Degree in Financial Services - Estate Planning

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