Pass Equity Before You Die
The following article was written
specifically for Professionals who deal with
Seniors in our communities. Please
read this article, and if you feel you can make
a difference with your Senior clientele,
call me for further information about the
Reverse Mortgage product from the
FHA. 702-845-4632
PASS ON EQUITY BEFORE YOU DIE -
Perspective For Reverse Mortgage Customers
Written
by Harlan
J. Accola
Wednesday,
27 January 2010 09:03
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It is traditional to pass on our
worldly goods AFTER we die. In fact it seems to be almost a
rule amongst the seniors that I talk
to that they must hang on to everything until the will or
the trust disburses after they have
left the scene! Sometimes this is absolutely necessary
because their needs are uncertain and
they are not sure if they have enough money to
make sure they don’t run out for
their needs before they pass away. But, what this article
addresses is the folks that know they
have more than enough even if they live to 100 and
they will never run out of money.
They strongly believe they want to pass on their home to
their children "free and
clear".
Those folks don’t understand (and it
is up to us as lenders to educate them) that the goal is
really not to pass on the house - but
the equity IN the house. Very few children move into
their parents’ house when their
parents are gone. It is almost always sold and the proceeds
are divided. They don’t leave the
cemetery, pack up Mom and Dad’s stuff and prepare to
move in.
Most of the time, they call the
realtor and put up a “for sale” sign. If that is the most likely
scenario, why is it so important to
pass on the house free and clear? The truth is that the
children really could put the equity
to better use in their 40’s and 50’s than when they get
to retirement age themselves. If
parents live into their 80’s and 90’s, which is the common
life expectancy, then, their children
are usually above the 60’s and looking at retirement
themselves. When bills are high and
the grandkids are going to college, there is a far
bigger need for the inheritance when
they are younger. An inheritance is always
appreciated, but likely needed more
at a younger age.
Many folks over 62 will tell us that
they don’t NEED a reverse mortgage and that is certainly
true. They have lots of other assets,
retirement plans, pensions etc. Those are the folks
that I talk to about passing on the
equity in their home early. If they know they will never
need part, or all of that equity,
then they should think about passing it on to their children
or charity that is already planned in
their will. Time value of money clearly dictates that the
money is worth more today than it
will be in 2042. Ask any investment planner when is the
best time to invest money and they
will tell you when you are 20 as compared to starting
when you are 40. If the grandkids
need to go to college, helping today is a great
investment in their future.
There is also the “bird in the hand”
factor. Because of the uncertainties of our economy and
our health costs, we have no
guarantees where the equity in our home is going to go. If
there is a real estate crash like
back in the 30’s, or we have to go to a nursing home, our
equity could be diminished or
completely gone by the time we pass away. Today, we know
exactly what we can get out of a
reverse mortgage and how much we can pass on.
Regardless of what happens in the
future, that money has went to where we planned.
The most important factor is how I
would like to conclude this article. Perhaps you have
seen the movie or read the book, The
Ultimate Gift by James Stovall. If you have not, go
get one today, or several, and pass
them on to your clients and friends. I won’t spoil the
story line, but the most important
lesson is that money is not the most important thing that
we leave behind. It is our values and
our wisdom. We have all seen or heard stories about
heirs wasting money in months that
took their parents a lifetime to save. It is important for
your clients to realize that if they
give away money while they are alive, they can do it
coupled with their wisdom and advice.
Give me $50,000 with 70 years of life experience
and I will likely do better than if
the attorney calls and tells me to pick up a check at his
office that my parents left for me.
Seniors really don’t realize how much knowledge and
wisdom can be passed on to their
children if they give it with their money while they are still
alive. It is up to us to show them
what a great opportunity this is.
Harlan J. Accola
Certified Senior Advisor, Reverse
Mortgage Planner, Registered Financial Consultant
ENVOY Mortgage of Wisconsin,
Marshfield, WI
Contact Info:
Telephone: 702-845-4632
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