Archive for the ‘Long Term Care’ Category

Using Your Home Equity for Long Term Care

Posted By Marty Higgins | April 23rd, 2011

For many seniors the equity in their home is their largest single asset, yet it is unavailable to use unless they use a home equity loan. But a conventional loan really doesn’t free up the equity because the money has to be paid back with interest.

A reverse mortgage is a risk-free way of tapping into home equity without creating monthly payments and without requiring the money to be paid back during a person’s lifetime. Instead of making payments the cash flow is reversed and the senior receives payments from the bank. Thus the title “reverse mortgage”.

Many seniors are finding they can use a reverse mortgage to pay off an existing conventional mortgage, to create money to pay off debt, make home repairs, or for remodeling.

For those seniors who are in need of long term care and want to stay in their home, a reverse mortgage can create the money needed to pay for in-home personal and medical care. They can also pay for needed medical equipment and handicap adaptation to their home.

There are no income, asset or credit requirements. It is the easiest loan to qualify for.

A reverse mortgage is similar to a conventional mortgage. As an example:

  • The bank does not own the home but owns a lien on the property just as with any other mortgage
  • You continue to hold title to the property as with any other mortgage
  • The bank has no recourse to demand payment from any family member if there is not enough equity to cover paying off the loan
  • There is no penalty to pay off the mortgage early
  • The proceeds from a reverse mortgage are tax-free and can be used for any legal purpose you wish

False Beliefs Regarding Reverse Mortgages

  • “The lender could take my house.” The homeowner retains full ownership. The Reverse Mortgage is just like any other mortgage; you own the title and the bank holds a lien. You can pay it off anytime you like.
  • “I can be thrown out of my own home.” Homeowners can stay in the home as long as they live, with no payment requirement.
  • “I could end up owing more than my house is worth.” The homeowner can never owe more than the value of the home at the time the loan is due.
  • “My heirs will be against it.” Experience demonstrates heirs are in favor of Reverse Mortgages.

Virtually anyone can qualify. You must be at least 62, own and live in, as a primary residence, a home [1-4 family residence, condominium, co-op, permanent mobile home, or manufactured home] in order to qualify for a reverse mortgage.

The amount of reverse mortgage benefit for which you may qualify, will depend on

  • your age at the time you apply for the loan
  • the reverse mortgage program you choose
  • the value of your home
  • current interest rates
  • and for some products, where you live

As a general rule, the older you are and the greater your equity, the larger the reverse mortgage benefit will be (up to certain limits, in some cases). The reverse mortgage must pay off any outstanding liens against your property before you can withdraw additional funds.

The loan is not due and payable until the borrower or borrowers no longer occupy the home as a principal residence (i.e. the borrower sells, moves out permanently or passes away). At that time, the balance of borrowed funds is due and payable, all additional equity in the property belongs to the owners or their beneficiaries.

The most popular reverse mortgages are the so-called HECM loans. HECM loans require that the applicant meet with a government approved counseling agency to be sure the applicant understands the reverse mortgage process.

The Federal Trade Commission states:

“Before applying for a HECM, you must meet with a counselor from an independent government-approved housing counseling agency. Some lenders offering proprietary reverse mortgages also require counseling. The counselor is required to explain the loan’s costs and financial implications, and possible alternatives to a HECM, like government and nonprofit programs or a single-purpose or proprietary reverse mortgage. The counselor also should be able to help you compare the costs of different types of reverse mortgages and tell you how different payment options, fees, and other costs affect the total cost of the loan over time. Most counseling agencies charge around $125 for their services. The fee can be paid from the loan proceeds, but you cannot be turned away if you can’t afford the fee.”

A Reverse Mortgage Specialist in your area can answer your questions, calculate the amount of loan you can receive and advise the type of loan for your needs.

The National Care Planning Council (http://longtermcarelink.net/a7reversemortgage.htm) has a list of Reverse Mortgage Specialists in your area.

Martin V. Higgins, CFP, CLU, AEP is a financial practitioner who specializes in helping people prepare financially retirement.

Family Wealth Management is a professional firm providing customized financial planning and wealth management solutions to our clientele of pre-retirees, retirees, widows and small business owners.

We invite you to visit our website @ http://www.familywealthadvisory.com to learn how Family Wealth Management may be the right choice for you, your family or business.

Martin Higgins is a registered representative and investment adviser representative of Mutual of Omaha Investor Services, a securities broker/dealer and registered investment adviser. Home Office: Mutual of Omaha Plaza, Omaha, NE 68175-1020 Member FINRA/SIPC. There is no contractual relationship between Family Wealth Management and Mutual of Omaha Investor Services, Inc. Martin Higgins can only do business in states in which he is registered. The information presented in this newsletter is intended for educational purposes only, and is not intended to replace the advice of an attorney or qualified tax professional.

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Applying for the Veteran’s Aid and Attendance Pension My Personal Experience

Posted By Marty Higgins | July 20th, 2010

By Melissa Howell

12:20 a.m. The clock was blurry as I rubbed the sleep from my eyes to answer the phone.

“Hello”, I said.

A weak and frightened voice on the other end pleaded, “Melissa? Is Bryan there? I can’t get out of my chair. Could you or Bryan come over?”

I sighed as I handed the phone to my husband and heard him say, “I’ll be right over, Dad.”

When Bryan left, I pondered on my father-in-law, John, and his situation. John had just come out of the hospital after a serious illness and although the doctor had assured us he would be fine, we quickly learned that he was not able to care for himself. He lived alone in a small apartment and had in-home health care assistance through his Medicare plan. They came once a day to help him with a shower and to aid him with incontinence. Bryan and I came over three times a day to help him with changing his clothes and to make his meals. In addition, we helped him with his bills and took him to his frequent doctor appointments. Tonight was the first time he had called to ask for help in the middle of the night. We needed to do something different. We were both exhausted between working our jobs and caring for our four young children and constantly running out to take care of John’s needs. It was becoming more than we could handle. We realized we really needed to get him into assisted living.

John lived comfortably on an income consisting of social security and a retirement pension, but as we visited different assisted living homes in our immediate area, we quickly realized that this income was not enough. Assisted living was really expensive!

John had served in the Navy during the Korean conflict and we had heard through a friend that veterans could receive assistance through the Department of Veteran’s affairs for health care. The catch was doing it correctly. Our friend referred us to a Veteran’s Consultant from the National Care Planning Council to provide information for the challenging task of filling out the paperwork to receive this benefit. A Veteran’s Consultant can provide general information on how a claim is filed. Our consultant told us about all of the necessary supporting documents we would need to make sure it was approved.

The paper work was pretty daunting, but we worked through each form thoroughly to be sure that we were providing all the information Veterans Affairs (VA) would need in order to expedite John’s payments.

First, I obtained a medical report from John’s doctor — the most crucial step in the process. This form would prove that John needed aid and attendance. In our case, the doctor described his medical condition and then noted specifically his need for help with incontinence and showers, his lack of motivation to make meals for himself and his inability to leave the house alone. It was, however; important to us that the doctor wrote that John was mentally capable of making his own decisions, because we did not want to go through a delaying process of having VA assign somebody who would need to pay his bills for him (VA calls this person a fiduciary).

Another key thing was that John had to show evidence to VA that his care costs were close to or exceeded his income. Fortunately, John had a small amount of savings and he was able to pay in full for the first month’s payment to his assisted living home. This was important, because the statement showing this payment was important evidence needed to present to VA. Since his assisted living cost exceeded his income by $1,000 per month, we arranged with the director, to pay what John could afford until the benefit from VA came in and then the director agreed to pay the remaining debt balance on the account at that time.

An important form was John’s original DD-214, which was the official record showing that he had been honorably discharged from the military. I quickly found a certificate of honorable discharge (DD-256) but this was not the correct form. We searched through all of his files and boxes and couldn’t find the DD-214. So I got on the Internet and found a website for the National repository where the official forms can be obtained. It appeared that it could take up to 6 weeks to receive an official copy. Fortunately, we found the original document folded in his wallet and we did not have to delay our process.

One of the forms my Consultant made me aware of was a VA power of attorney form (VA form 21-22a) that gave me the authority to fill out and submit the forms to VA on behalf of John. Although John was mentally sound, he was weak and tired and didn’t really want to do anything but watch television and eat. With this form, I was able to communicate with VA in his behalf.

There were several other forms to fill out and after all the paperwork was finished, my Veteran’s consultant gave us the address of where to send all of them. Our particular VA processing office was located in St. Paul, Minnesota.

After about two weeks, John and I each received a letter stating that VA was working on his case and they assigned him a case file number. After another two weeks, we received a letter stating that we needed to fill out some other paper work. I showed these to my consultant, who assured me, in our case, that it was standard procedure and that the paper work I had originally filed was sufficient. Within another two weeks, John received his first payment.

Because his care cost exceeded his income, he was awarded the full $1644.00 per month. VA sent another payment from the date that they had first issued his case number. So in the first month, we received two payments. These were sufficient to catch up the debt he owed to his assisted living and to continue with full payments each month.

Applying for the VA Aid and Attendance Pension was detailed, but it was not terribly frustrating because of the general information on the application process I received from my consultant. It did require extra work on my part, but it was well worth the end result of getting the care that John needed and the relief that Bryan and I needed in the end. I am grateful that we had such a wonderful resource in National Care Planning Council to help us find a capable and informative Veteran’s Consultant.

Bryan and I now see John twice a week and visit with his assisted living staff often to help him have a comfortable and enjoyable life in his new home. He is able to enjoy activities and meals with other people, have quality personal care and have the peace of mind that someone is always there to help him. I now sleep at ease through the night, knowing that his needs are taken care of and that there won’t be any middle of the night calls asking for help.

The National Care Planning Council wishes to thank Melissa for providing her experience. We maintain a list of consultants across the country which can be found at the following address: www.veteranslisting.com. We also provide a book with instructions to help people who want to file an application by themselves. This book can be purchased online at http://www.longtermcarelink.net/a16books.htm.

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Martin Higgins is a registered representative and investment adviser representative of Mutual of Omaha Investor Services, a securities broker/dealer and registered investment adviser. Home Office: Mutual of Omaha Plaza, Omaha, NE 68175-1020. Member FINRA / SIPC. There is no contractual relationship between Family Wealth Management and Mutual of Omaha Investor Services, Inc. Martin Higgins can only do business in states in which he is registered. The information presented on this web site is intended for educational purposes only, and is not intended to replace the advice of an attorney or qualified tax professional.