Zippy

BINGO, if it sounds too good to be true it probably is.
Thank you counselor for sage advice.

Jet sitter

I would agree with the majority on this. Unless, you are needing the money for a major medical expense, or, if you're in your 80's and have no one to give the money and don't mind going out with a zero balance, I'd stay away from reverse mortgages.

tof

Personally I plan for the last check I ever write to bounce. But THANKS, BILL, for the benefit of your obviously extensive experience. While I suspect your clients may not represent a true random sample of borrowers (I doubt people who have good results with a reverse mortgage would call upon your services) your experience sure does raise a gigantic red flag.

Payday loans are beneficial for a few in special circumstances, too. But of course they are primarily designed to line the pockets of the lender at the expense of those least able to afford them. Sounds like reverse mortgages are in the same league but with two or three extra digits between the dollar sign and the decimal point..

Heyitsgary

A little side note... After my Father passed away, my Mother started looking into a variety of options for many things. She was about 65 at the time. She spent time with an elder lawyer.

The one thing that she took away was that you can legally transfer your house to your kids, however, the process takes three years to complete. It's not a last ditch effort to save the house from a nursing home or the government. It could be part of long term planning to protect your assets however. That's all I remember from the conversations.

Lainey

There are ways to legally transfer a house to family. I don't think the transfer takes that long, but there may be a time period (may be five years now) in which Medicare can "look back" and still consider it the parents' asset. We were able to transfer my mother in law's home to her three sons, while giving her a life tenancy. If anyone is considering this, get legal advice. I may be wrong, however if the asset is no longer yours, you might have to ask permission from your kids if you want to take an equity loan out for a new roof. If one of your kids gets a divorce, his/her share of the house is now THEIR asset...it can get messy.

Legal advice is necessary.

Jet sitter

^You are correct Lainey, Medicare looks back 5 years on home transfers. If you go on Medicaid your spouse can keep the home, 1 car and only $25K in wealth and the person receiving the care only gets to keep $2k. If it comes down to that, most people buy a new car and have the home completely renovated, whatever else is left after your attempt to blow some money, ends up going to the government. I believe, when I looked into it, your 401K is safe, except for the money that is required to be distributed each year after you are 70 1/2. Whatever that sum is goes to Medicaid. The laws may have changed, it's been a few years since I checked.

Lainey

I don't believe your 401's are safe at all. If you have money, you will be responsible for your care. We have a family member in a nursing home right now. The spouse can have about 130K in assets, i.e. life insurance $, etc I don't think the house is factored in. Right now, there is still a Medicaid friendly annuity that allows the spouse to take some $ and shelter it. The government is trying to eliminate this loophole. Our family member had to make a large withdrawal from a retirement account and pay taxes on said amount to buy one of these annuities. She is well aware that these annuities are often not the best investment, but there was no choice. In the meanwhile the nursing home is getting all of his monthly pension from a utility company, all of his SS and part of hers will be needed to pay taxes. If she gets "poor enough" and he is not home, she may be allowed to keep part of his income. She has been dealing with an awful mess for almost two years. There is a possibility he may come home. If so, his income reverts back to him, however, if he ended up back in a nursing home, they entire process would start over, new application would be needed, etc. I am surprised this couple had not purchased long term care insurance, but I'm not sure it was either affordable for them, or if it was even on the radar. Sometimes I think we should just take our retirement money, have a good time while we are healthy, and drive off a cliff when we run out of money.

Edit: Glen you may have something on the 401 possibly if belongs to the at home spouse. If anyone can clarify this info, I'm sure others would be interested. And most 401's become IRAs after retirement....however, I found this: However, some assets are joint assets - your 401K would probably be considered a joint asset and would have to be spent down to whatever your state has as the maximum asset for a CS. CS have a formula - CSRA - community spouse resource allocation (or allowance) that varies by the state. Most states have the CSRA at 109K but other states have it at much, much lower. Really you need an experienced attorney because you don't want to make a costly and irreversible mistake.

Heyitsgary

The time period to completely transfer the house was three years (1/3 of the value each year). My understanding was to remove it from the government's ability to look back and take it. People I guess think they can do something the 'week or month' before. We understood it more of a planning for later than a last ditch effort to save the asset under some circumstances. I'm sure there are many issues - seek Legal (Bill or not Bill) advice.

Jet sitter

This is what is on the internet from elderlaw:

Medicaid's Asset Transfer Rules | ElderLawAnswers

boltonblue

it seems that the reverse mortgages are suddenly getting a lot of press ( see politics) none of it good.