Forbes: Reverse Mortgages Part of Opportunity in Current Estate Planning

If a senior planning an estate has mortgage or other debt, there is a key opportunity that they may be able to take advantage of due to the current economic climate. Because interest rates are so low, refinancing that debt to take advantage of those rates can likely be a good economic strategy, and a reverse mortgage may fit into that equation.

This is according to Bob Carlson, editor of monthly newsletter and website Retirement Watch, in a new column at Forbes.

While many who have stock market investments are understandably concerned by the way that the markets across the world are performing, that doesn’t mean that opportunities to take advantage of the current conditions do not exist, Carlson says.


“Instead of worrying, realize that there are opportunities in this crisis. You can make some moves now that will enhance your tax and estate planning,” he says. “The moves will reduce the damage from this sell-off and increase the pay off when things turn around.”

One of the specific ways that a senior may be able to take advantage of the current conditions, particularly through low interest rates, is with a reverse mortgage. This is especially true for those who carry a debt burden that they may be able to alleviate by refinancing.

“If you have a mortgage or other debt, look into refinancing at today’s low interest rates,” he says. “The lenders are deluged right now, but rates are likely to be low for a while. Also, consider locking in a line of credit or reverse mortgage. Begin the process as soon as you can.”

An additional opportunity that someone might be able to take advantage of in the current interest rate climate is selling assets to your heirs in an installment sale, Carlson says.

“Someone with a large estate that might be subject to the estate tax, either now or after 2025 when the current exemption levels are cut in half, can remove assets from the estate economically by selling some assets to children using an installment sale,” he says. “Check with your estate planner for details.”

Other potential opportunities to explore according to Carlson include selling investments that have paper losses, making a low or no-interest loan to an adult child for the purposes of purchasing investments, and taking advantage of the annual gift tax exclusion, which allows someone “to give up to $15,000 of property to anyone free of gift and estate taxes,” he says.

Read the full column at Forbes.

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  • Nothing in the article above ties estate planning to reverse mortgages or vice versa. In fact they seem more of an afterthought by Bob Carlson than a primary consideration — but that is much better than recommending reverse mortgages only as a last resort.

    The estate planning ideas were of little consequence to most taxpayers. Few are required to file gift tax returns and fewer still estate tax returns.

    I sincerely have no idea why it might be a good idea to sell assets right now to heirs since most assets are not appreciating over their values as of early February 2020. To the extent that assets are expected to greatly appreciate, this could be a very valid way to avoid estate tax for the very low number of Americans who will leave this world with an expected estate tax liability following death.

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