Renewal and Refinancing

How to Take Control of Your Estate Using a Reverse Mortgage

How to Take Control of Your Estate Using a Reverse Mortgage
Written by
  • Gregory Saget-Rudd
| Mar 18, 2019
Reviewed, Oct 24, 2023

Table of contents

    You’ve worked hard for the assets you own (investments, cash, property, etc.) that your family members will inherit after you pass. It would be normal and expected for you to feel you deserve to reap the benefits of your hard work, just as it is normal for your children to want their inheritance.

    Knowing this, how can you find the right balance?

    This subject can lead to awkward and uncomfortable conversations with your family members.

    A reverse mortgage can be the perfect way to find a middle ground.

    A reverse mortgage allows homeowners to use the equity built into their main residence to receive funds (with no initial repayment required) they can use to repay debt, renovate, go on the trip of a lifetime or even to supplement their retirement income.

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    A reverse mortgage does not mean that the entirety of the equity built into the home goes away

    Often, when the subject of reverse mortgage is brought up by homeowners, their children and/or grandchildren are immediately fearful that their parents are spending the money they are expecting as an inheritance.

    But obtaining a reverse mortgage does not mean that the entirety of the equity built into the home goes away. It only means a portion of the equity can be accessed and needs to be repaid when the home is sold, or the last homeowner passes away or moves into long-term care. The maximum qualifying amount depends on the age of the applicants. Younger borrowers typically qualify for less to ensure prudent borrowing and equity preservation. 

    Now, after the homeowners’ pass, their inheritors can decide if they want to purchase the property from the estate to keep it in the family. If they do, they must pay off the reverse mortgage. Should they decide to sell the property, they will need to use the proceeds from the sale to pay off the reverse mortgage. Once that’s done, they can keep the remaining money for themselves.

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    Avoid Disagreements

    Even the best families have disagreements and arguments from time to time. That’s life. Homeowners who know their inheritors don’t get along may be worried of what will happen with their estate after they pass away.

    Will it lead to more arguments?

    Will it further divide my sons and daughters than they already are?

    Will it drive a stake between my children and grandchildren?

    These questions are perfectly valid and normal. After all, we’ve all heard about hellish situations happening after parents have passed away (no, they don’t happen only in movies or novels).

    In these cases, a reverse mortgage could be the perfect tool to avoid these unfortunate situations.

    The capital can be used to distribute a “living inheritance” to children and/or grandchildren, thus avoiding any quarrel around the homeowners’ estate.

    Homeowners can also establish trusts allocated to individual inheritors where they will invest the capital as they wish.

    Hard Decisions

    Listen, we get it. Thinking about your own death is never enjoyable. Deciding how your financial assets will be handled once you’ve passed can be one of the hardest decisions you’ll ever make.

    A reverse mortgage can take some of the weight off your shoulders and help you enjoy your retirement or senior years

    Talk to your nesto advisor today to find out how you can take control of your estate.

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