ElderLaw News — The Estate Planning & Elder Law Firm, P.C. — MD, VA, DC
ElderLaw News

ElderLaw News is a weekly e-newsletter that brings you reports of legal developments and other trends of vital interest to seniors and their advocates. This newsletter is brought to you by The Estate Planning & Elder Law Firm, P.C., William S. Fralin, Esq., President., William S. Fralin, Esq., President.

Using Home Equity in Retirement

In a society with fewer defined benefit plans, low bond yields, longer life expectancy, and increasing costs of care, maintaining an income stream during retirement can prove challenging.

Historically, financial planners would establish a safe annual maximum withdrawal rate and look to home equity only as a "last resort." "Reverse mortgages" are now, more than ever, being looked at as a "financial planning" tool rather than a product of last resort.

Some financial planners recommend the establishment of a reverse mortgage account early in retirement, which should be exhausted prior to attacking traditional investment accounts so as to allow portfolio growth. Alternatively, financial planners are looking to an algorithm which theoretically allows portfolio recovery in years following negative performance and provides portfolio growth before fully exhausting the reverse mortgage.

It is possible to incorporate home equity into financial plans to protect retirement income and into long-term care plans to assist with the payment of "long term care" costs, most often costs associated with in home care, which are estimated to be $3,432 a month*. Additionally a reverse mortgage can be very helpful on the death of a spouse to replace lost income or to eliminate mortgage payments during retirement when incomes frequently decline. For couples relying on Medicaid to pay for the nursing home expense of the institutionalized spouse, a reverse mortgage may provide an additional source of liquidity for the community spouse without jeopardizing Medicaid eligibility.

*According to the Genworth 2013 Cost of Care Survey for Virginia

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The Estate Planning & Elder Law Firm, P.C.

The Estate Planning & Elder Law Firm, P.C. is an elder law firm. We represent older persons, disabled persons, their families, and their advocates. The practice of elder law includes estate planning, estate and trust administration, powers of attorney, advance medical directives, titling of assets and designations of beneficiaries, guardianships, conservatorships, and public entitlements such as Medicaid, Medicare, Social Security, and SSI, disability planning, income tax planning and preparation, care management, and fiduciary services. For more information about The Estate Planning & Elder Law Firm, P.C., please visit our website at http://www.chroniccareadvocacy.com.

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This newsletter is not intended as a substitute for legal counsel. While every precaution has been taken to make this newsletter accurate, we assume no responsibility for errors, omissions, or damages resulting from the use of the information in this newsletter. The Estate Planning & Elder Law Firm, P.C. thanks the law firm of Hook Law Center for their input to this newsletter.

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