Re: New to the forum - Posted by John Corey
Posted by John Corey on May 02, 2006 at 01:48:48:
Reverse mortgages have a place. As my knowledge on the subject is thin I will not comment further on the product.
On the broader subject of estate planning…
At some level your parents need to do some estate planning. How to cover their bills, what will happen if one or both need long term care, what should happen after 1 dies and then the other. The topic is more complicated than just getting some cash out our of the home.
As you somewhat indicated you could look to buy the place from them and then rent it back or let them stay for free. There are tax issues depending on how this is handled (gift or equity transfer to you is one issue; fair market rents if you want to claim the property as a rental is a second).
Two things really need to happen. First is an honest discussion as to what your parents would like to have happen if they get a vote. Some decisions will be forced upon them based on circumstances. Other decisions are only possible if you plan far enough in advance.
Second is a conversation with a competent estate planner (a lawyer who handles such matters). They will know the state and federal laws that apply. Depending on the state your parents live in you can collect referrals.