Understanding the Issues of Elder Law

The legal needs of many older Americans go beyond basic legal services. They are also all intertwined. In addition to understanding the legal issues and complications that older Americans face, elder law attorneys must also understand the surrounding personal concerns of their clients, such as health, financial and family issues, and how those affect their clients’ legal issues.

Recently Heard’s article entitled “What You Need to Know About Elder Law” explains that other specific areas of expertise include the following:

  • End of life planning could extend to planning your health care support system as you age, signing a power of attorney, establishing a living will and other issues surrounding end of life care.
  • Financial issues frequently entails questions about retirement and financial planning, housing financing, income and estate tax planning and gift tax issues.
  • Long term care can include planning for asset protection, insurance for in-home care or assistance with activities of daily living, Medicare planning, insurance, veterans’ benefits and other issues.
  • Residents’ rights issues may include claims or complaints you bring while a patient in a nursing home or long term care facility.
  • Workplace discrimination issues stem, from the fact that older Americans sometimes face age and disability discrimination in the workplace.
  • Guardianship issues might include guardianship avoidance, planning wills and trusts, planning for the future of a special needs child, probate court and other issues surrounding minor or adult children.
  • Landlord-tenant law may mean handling disputes with landlords, contesting an eviction, dealing with foreclosure issues, rent increases and more.
  • Abuse, neglect, and fraud. These elder law attorneys specialize in cases where an older client is being victimized.

An elder law attorney can be a great partner for you as you plan out the legal and financial aspects of the next stage of your life-or the life of a loved one. Speak to one today.

Reference: Recently Heard (June 23, 2022) “What You Need to Know About Elder Law”

Is Your Home Your Largest Asset or Biggest Liability?

If you’re a homeowner who’s ready to retire, you’ve most likely worked to pay off the home, while dreaming of the day when you could relax and live a mortgage-free, life while enjoying the fruits of your labor. However, Real Simple’s recent article entitled “For Retirees, a Home Could Be Your Largest Asset—or Your Biggest Liability” provides important food for thought.

Signs Your Home Is Your Largest Asset. A home can be one of your biggest assets because of the equity that’s been built up. You’ll be able to pass it on to your heirs, and they get a step-up in cost basis to the current market value. This will significantly reduce capital gains taxes, if the home is later sold by your children. With that equity, you can take money out of the house in a home equity line of credit. If your 62 or older with a substantial amount of equity in your home, it can be used as collateral for a reverse mortgage.

Signs Your Home Is Your Biggest Liability. A home can be a liability when it’s worth considerably less than what you paid for it, especially if you have a mortgage. The last thing you want when you’re retiring is to be saddled with a debt that has no equity. Your home could be also considered a liability, if it falls under the category of an expense that you have to manage, such as a mortgage, homeowner’s insurance, municipal taxes, repair or renovation costs, or homeowner’s association fees.

Stay or Sell? Take a holistic approach to what you want in your retirement years and determine what importance you place on your living space. The answer to this is at the core of deciding if you need to downsize. If you decide to sell your home and downsize to something less expensive, be sure to save part of the proceeds from the home’s sale. You can use that money to fund traveling, hobbies, the cost of living, or any other project in retirement.

You should also try to be more objective in evaluating your home as an asset or a liability. Retirement-aged homeowners generally choose one of these options: (i) plan to pay off your mortgage before your target retirement date; (ii) get a reverse mortgage that pays out over a specified time period; (iii) rent out the home for cashflow or offset a monthly cash flow deficit, if you have a mortgage; or (iv) sell the home in the future.

If you decide to stay in your home, there are several ways to monetize home equity in retirement, such as needs-based government programs like property tax abatements or home improvement forgivable grant programs. As alternatives to a reverse mortgage, you could tap into loan products such as a home equity line of credit or a conventional mortgage loan.

Reference: Real Simple (Nov. 1, 2021) “For Retirees, a Home Could Be Your Largest Asset—or Your Biggest Liability”

Does Your Inherited House have a Mortgage?

When a loved one dies, there are always questions about wills, inheritances and how to manage all of their legal and financial affairs. It’s worse if there’s no will and no estate planning has been done. This recent Bankrate article, “Does the home you inherited include a mortgage?,” says that things can get even more complicated, when there’s a mortgage on the inherited house.

Heirs often inherit the family home. However, if it comes with a mortgage, you’ll want to work with an estate planning attorney. If there are family members who could become troublesome, if houses are located in different states or if there’s a lot of money in the estate, it’s better to have the help of an experienced professional.

Death does not mean the mortgage goes away. Heirs need to decide how to manage the loan payments, even if their plan is to sell the house. If there are missing payments, there may be penalties added onto the late payment. Worse, you may not know about the mortgage until after a few payments have gone unpaid.

Heirs do have several options:

If the plan is for the heirs to move into the home, they may be able to assume the mortgage and continue paying it. There is also the option to do a cash-out refinance and pay that way.

If you plan to sell the home, which might make it easier if no one in the family wants to live in the home, paying off the mortgage by using the proceeds from the sale is usually the way to go. If there is enough money in the estate account to pay the mortgage while the home is on the market, that money will come out of everyone’s share. Here again, the help of an estate planning attorney will be valuable.

Heirs have certain leverage, when dealing with a mortgage bank in an estate situation. There are certain protections available that will give you some leeway as the estate is settling. More good news—the chance of owing federal estate taxes right now is pretty small. An estate must be worth at least $11.58 million, before the federal estate tax is due.

There are still 17 states and Washington D.C. that will want payment of a state estate tax, an inheritance tax or both. There also might be capital gains tax liability from the sale of the home.

If you decide to take over the loan, the lender should be willing to work with you. The law allows heirs to assume a loan, especially when the transfer of property is to a relative, because the borrower has died. Surviving spouses have special protections to ensure that they can keep an inherited home, as long as they can afford it. In many states, this is done by holding title by “tenancy by the entireties” or “community property with right of survivorship.”

When there is a reverse mortgage on the property, options include paying off or refinancing the balance and keeping the home, selling the home for at least 95% of the appraised value, or agreeing to a deed in lieu of foreclosure. There is a window of time for the balance to be repaid, which may be extended, if the heir is actively engaged with the lender to pay the debt. However, if a year goes by and the reverse mortgage is not paid off, the lender must begin the foreclosure process.

Nothing changes if the heir is a surviving spouse, but if the borrower who dies had an unmarried partner, they have limited options, unless they are on the loan.

What if the mortgage is “underwater,” meaning that the value of the inherited home is less than the outstanding mortgage debt? If the mortgage is a non-recourse loan, meaning the borrower does not have to pay more than the value of the home, then the lender has few options outside of foreclosure. This is also true with a reverse mortgage. Heirs are fully protected, if the home isn’t worth enough to pay off the entire balance.

If there is no will, things get extremely complicated. Contact an estate planning attorney as soon as possible.

Reference: Bankrate (Oct. 22, 2020) “Does the home you inherited include a mortgage?”