When it comes to reverse mortgages, the more communication, the better — in most cases.
In others, family dynamics and the family’s financial culture are important, too, a financial expert tells consumer financial services company Bankrate.
“In some families, the kids would be really upset if Mom and Dad gave up the house without talking to them. In other families, they would not,” says Joseph Goetz, associate professor for the department of financial planning, housing and consumer economics at the University of Georgia and a board member of the Financial Therapy Association.
A reverse mortgage doesn’t necessarily involve giving up the house — at least, not as long as the borrower lives there. But Goetz’s point is well taken: Many adult children have an emotional attachment to their childhood home or expect to receive their parents’ home free of any encumbrance upon the parents’ death.
A reverse mortgage discovered after the borrower’s death can come as a surprise, shock or disappointment, suggests Buz Livingston, a financial planner for Livingston Financial Planning in Santa Rosa Beach, Fla.
“The children need to be involved just to make sure everybody is on the same page and there is not a big surprise,” Livingston tells Bankrate. “Just keep it simple. Say, ‘This is what we are going to do and if this (house) is something you want to hold on to, speak up.'”
In addition, whoever will be responsible for the estate should be aware of the reverse mortgage and the options to repay it, says Cara Pierce, a housing and reverse mortgage counselor at ClearPoint Credit Counseling Solutions in Fresno, Calif. Many times, that executor or administrator will be one of the adult children.
“It doesn’t mean you have to get them involved or take their advice,” Pierce says. “But if I am setting up my son to be trustee, it would be nice if I told him that if I stay (in my house) until I die, he needs to make sure to pay off the loan on my behalf.”
Read the full Bankrate story here.
Written by Emily Study