Reverse Mortgages–Part 3

Reverse Mortgage Pro's

• Fast access to your equity.
• The mortgage is typically not paid until you die.
• Proceeds can be used for in-home care if you do not qualify for, or cannot get adequate in-home care, keeping you out of a nursing home for as long as possible.
• If you have great need for the cash flow from a reverse mortgage, and preserving your estate for your heirs is not the primary objective of your financial plan, this can be an effective way of supplementing your cash flow.

Reverse Mortgage Con's

High Closing costs.

· Closing costs for Reverse Mortgages can be as much as double what is charged for a conventional mortgage.

Potential impact on eligibility for government benefits.

· Reverse mortgage payments are not typically counted as income, if the proceeds are spent in the month they are received. If the proceeds from the reverse mortgage however are not spent and accumulate in a bank account, they could push you over the allowable limits for Medicaid of SSI. Certain states may also consider the proceeds to be income, even though it is your own equity, as you receive a monthly check.

Spending your children's inheritance.

· If you are trying to preserve your estate for your heirs, the mortgage will be paid off through your estate. Your inheritors can receive the difference, however, between what you owe on the reverse mortgage and what the home actually sells for if there is an excess.

Moving Out.

· Under certain circumstances, if you end up moving to a nursing home, it could be construed as having “permanently moved out”, as there may be a presumption that an elderly person leaving their home for a nursing home would not be returning. If this were the case, it could force the sale of the home.

to be continued…

Alzheimer’s and Dementia Part 3

 

4.      Financial Status

Use this week to ask tough questions about your parents financial status. Be sure that their finances are appropriately managed after their diagnosis of Alzheimer’s or Dementia. Find the location of safety deposit boxes, bank accounts, investment or brokerage accounts, outstanding debts or other assets unknown to the family. If you don't have these hard discussions, funds that could be used to cover the costs of long term care could be lost and forgotten when memory loss ultimately occurs.

5. Contacts and information

Ask now, while memories are still sharp. Begin to work with your elder parents to compile a list of important contacts and other information that will be useful to the family if memory loss occurs. Get information on doctors, professional advisors (ie. accountant, attorney, financial advisor) and important passwords for online accounts.

“These conversations are NEVER easy. Having these talks though can ease every member of the family's transition into living with Alzheimer’s or Dementia.” says Steve Cohen. “Plan Ahead, if at all possible, don't leave these things till it is too late and you have to react instead of plan. Your parents will appreciate your care and concern that their wishes be followed and honored ”.

 

For further information contact our elder law attorneys at Cohen & Oalican, LLP.

Alzheimer's and Dementia

 

While most of the country is involved in Valentines activity this week, those who care for elders with special needs are more than aware that this is also Alzheimer’s and Dementia awareness week (February 14th –21st).  This week is the perfect time to show your love for those you care for by having the “tough love” hard conversations with elderly aging parents about their wishes and plans should the disease ever strike.

“Does Dad want to be in an assisted care facility, or a nursing home?”

“Does Grandma look at life with Alzheimer’s or Dementia to be quality of life?”

“Do you have, and where do you keep legal documentation ensuring someone can act financially on mom or dad’s behalf  if they are no longer able to act on their own behalf?”

These are many questions that experts in all fields urge adult children to ask of their parents during this year’s Alzheimer’s and Dementia Awareness Week (February 14th- 21st).  These answers help family’s build a plan, and know how to execute their parents’ wishes in the tragic event that mental illness strikes.  Don’t leave the decisions to when it becomes a battle between siblings, or until there isn’t enough time to financially prepare.  Have these heartfelt conversations now.

“We see so many families that waited on important conversations, that come to us in crisis mode, instead of planning mode regarding Alzheimer’s or Dementia  - Crisis mode is expensive, and results too often in knee jerk, and expensive decisions.” says Boston elder lawyer, Stephen Cohen. “Legally, if an adult child doesn’t know  their parents’ wishes, or can’t put their hands on instruments like a durable power of attorney, they can be left with a legal, financial and tax quagmire, while simultaneously dealing with the physical and emotional needs of this debilitating disease”, adds elder law partner Eric Oalican.

 

to be continued…

"Living Longer on Less in Massachusetts:"

These tough economic times have made it increasingly difficult for many Massachusetts seniors to make ends meet. The Institute on Assets and Social Policy recently released a report entitled: "Living Longer on Less in Massachusetts: The New Economic (in)Security of Seniors." This report highlights some of the financial difficulties faced by seniors today and discusses proposed changes to the law.
The study identified five factors critical in determining the economic stability of seniors. These factors are: Housing costs, healthcare expenses, household budget, home equity, and household assets. According to the study, 68 percent of all senior households in the state are financially at risk. Single and widowed seniors face the greatest financial hardships. The study recommended that seniors meet minimum financial criteria to be considered financially stable. To view the criteria and the proposed changes to state law, click on the following link to read the article in it's entirety:
Article
If you have any questions pertaining to Medicaid, guardianship, or other elderlaw issues, please feel free to contact us at scohen@cohenoalican.com or eoalican@cohenoalican.com or by phone at (617) 263-1035 Boston or (508) 821-5599 Raynham