What Happens When a Reverse Mortgage Borrower Dies
A home equity conversion mortgage, commonly known as a reverse mortgage, allows seniors to tap into the equity in their home. Unlike a traditional mortgage, the borrower does not make ongoing monthly payments to pay off the loan. Repayment is not required until the home is sold, either when the borrower moves out, such as to a nursing home or assisted living facility, or when he/she dies. Borrowers must be at least 62 years old to qualify for a reverse mortgage. As discussed previously in this blog reverse mortgages can be helpful in the right situation but they also have potential pitfalls. One potential negative is when one spouse is over 62 and one isn’t. In that case the “over 62” spouse must be the sole owner of the home and the sole borrower. There are also other instances in which both spouses meet the age requirement but only one spouse owns the home and takes out the reverse mortgage. So, what happens if the borrower spouse dies? What rights does the non-borrower spouse have? Under the terms of the reverse mortgage, the non-borrower spouse must refinance the loan, sell the home or
How the Republican Tax Bill Might Affect Seniors
With the Republican Congress and President Trump determined to push thru their tax bill at warp speed, there has been much discussion about how it will provide a big tax cut for corporations and the wealthy and super wealthy while it could hurt the poor and middle class who either won’t see much of a decrease in their tax bill or in some cases may see their tax bill actually go up. But, how might a new tax bill specifically affect seniors? Keep in mind that although the House of Representatives has passed its version, the Senate has yet to vote on its proposed bill which may happen this week. If there are differences between the two bills (which there likely will be) then the two houses must get together to reconcile their versions which must then be voted on by both houses of Congress. If this reconciled version is approved then it will be sent to the President who must approve it before it becomes law. A lot can happen in the journey from here to there. Thru the negotiation process certain provisions that are now being discussed can be taken out while other provisions never previously mentioned
ABLE vs. SNT (Part 2)
Last week I was telling you about a call I received about the benefits of an Achieving a Better Life Experience (ABLE) account vs. a special needs trust (SNT). Joan called about her sister Mary, who is receiving an inheritance from their uncle’s estate. Mary is in a group home and receives SSI and Medicaid benefits. Joan correctly is concerned that the inheritance of $200,000 would cause Mary to lose those benefits. She wants to set up an ABLE account and place the inheritance proceeds into that account. She prefers an ABLE account because it is less expensive to set up and she believes it is easier to manage. I told Joan, however, that she was misinformed. Let me tell you why. First of all, an ABLE account can only be funded with $14,000 per year. Secondly, if the total account value exceeds $100,000, eligibility for SSI benefits will be suspended. Losing SSI will then cause a loss of Medicaid benefits. These reasons alone make an ABLE account impossible here. But there’s more. Even if Mary’s inheritance was small enough to meet the financial limits above, Mary’s disability must have occurred
ABLE vs. SNT (Part 1)
I received a call from Joan. She told me that her sister Mary is named as an heir to part of their uncle’s estate. Mary is disabled and living in a group home. Joan was concerned that the inheritance Mary would receive of approximately $200,000 would jeopardize her government benefits and continued residence in the home. Joan did a little research on the internet, always a little dangerous. She concluded that in order for Mary to preserve her benefits, she has two options. She can either have a special needs trust set up for Mary which could receive the inheritance proceeds or she could set up an ABLE account for Mary into which the proceeds could be placed. An ABLE account is relatively new. The Achieving a Better Life Experience Act of 2014 was passed by Congress and was intended to allow for the creation of something similar to 529 accounts for the benefit of disabled individuals. While the law is now almost 3 years old it took some time before financial institutions and organizations began offering the accounts. See my blog posts on 1/12/2015 and 1/19/2015 for more details. Joan
Found Money (Part 2)
Last week I was explaining what happens to abandoned or unclaimed property. New Jersey has in its possession more than $1 billion of property that people have abandoned, usually because they have forgotten about the accounts. Nationwide, there is well over $50 billion in unclaimed funds. Financial institutions and other holders of this property must report the property to the State Treasurer. The State, however, doesn’t get to keep the property forever. If the rightful owner reclaims it, then the State must turn it back over to the owner. But, where do you go to find this property? Luckily, in today’s online world it is easier than it has ever been to search and reclaim abandoned property. There are websites that can help you locate property you may have had in any state. Because each state has its own unclaimed property laws and acts as custodian for property held in that state it is important to run a check of any state where you lived or had a reason to take accumulate property. It is also a good idea to check states where a family who has left you an inheritance lived. Two
Found Money (Part 1)
In today’s world, change comes at a pretty rapid rate. That is certainly true when it comes to our assets and financial accounts. Many people move jobs and change financial institutions frequently. It is easy to understand how assets can be overlooked or forgotten. Maybe I never completed the paperwork to rollover all my retirement accounts, stock plans etc. from a former employer or I didn’t close out all the accounts I had at one bank before moving to another. If I change my address I will no longer receive account statements so it is easy to forget about these accounts. Out of sight. Out of mind. What happens to this property? The law calls it abandoned property. New Jersey, like many states has a body of law covering abandoned or unclaimed property, what is called the Uniform Unclaimed Property Act. The account holder (eg. financial institution holding the account) has a duty to report abandoned property to the Administrator. In New Jersey that is the state treasurer. Unclaimed property then must be turned over to the custody of the state. New Jersey alone is currently holding in its possession more than $1