Estate planning can address retirement cash flow issues

As an attorney knows, the mass of paperwork involved in estate planning can seem overwhelming to individuals. There are legal benefits and limitations associated with various wills and trusts, and finding the right instrument to accomplish one’s specific wishes may require the expertise of an attorney who focuses on estate planning.

Rather than taking time with an attorney to execute a will or trust, some elders may have turned to the reverse mortgage arrangement. The option of receiving money and deferring repayment obligations may seem attractive. Indeed, this borrowing arrangement has taken off across the country.

However, a recent article exposes the potential pitfalls with a new type of borrowing arrangement for elders. Called a reverse mortgage, the arrangement allows a homeowner who is at least 62 years old to borrow against a home’s equity. The arrangement differs from some other, more conventional mortgages in that the elderly borrower does not have to repay the money until he or she passes away or moves.

Yet some reverse mortgage companies may not be playing fair when it comes time for a decedent’s heirs to inherit a home subject to a reverse mortgage. Federal rules state that heirs should be provided 30 days after the loan becomes due, as well as six months to arrange financing. However, some companies may be accelerating foreclosure, as a possible tactic for demanding full payment of the loan.

An attorney knows that elders must balance estate-planning concerns against current cash flow demands. Yet the quick fix provided by a reverse mortgage may only create more problems in the long run. An attorney can explain these options in greater detail.