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What impact might a reverse mortgage have on estate planning?

You’ve likely seen ads, myriad online pitches and extended infomercials (some of them featuring tier-one celebrity figures) touting the alleged virtues of reverse mortgages.

The information surrounding such financial vehicles is vast and detailed, and consequently more than a bit complex to many Americans.

Especially to select seniors. Many individuals within that demographic are dealing with age-specific issues relevant to memory, physical disability and other limitations. Their focus and understanding regarding a product that often seems to lack transparency and clarity can be clouded amidst all the fine print. That can turn out to be a real problem, given the potential financial ramifications involved.

As one recent in-depth media report stresses, reverse mortgages are hyped as a relatively simple and problem-free solution for seniors with debt woes. An eligible borrower can take out a mortgage and thereafter remain in his or her home without making regular payments, instead borrowing against the accumulated equity in their property. When a resident decides to leave the home or dies, heirs have the option to either sell the home or pay off the loan balance and keep the property.

At least that’s the way that reverse mortgages are supposed to work. In reality, notes the above-cited media piece, heirs are often shocked by an avalanche of negativities inherent in such products. They are unable to proceed as they’d like, instead being “stymied by a seemingly endless cycle of conflicting messages that stretch out for years.”

A reverse mortgage is unquestionably a financial vehicle that, while being potentially beneficial for a borrower, can also yield stark downsides for heirs at a future date.

Questions or concerns regarding such a product in the context of financial planning might reasonably be directed to a proven estate planning attorney.

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