For the most part, the answer to this question is, yes. A reverse mortgage is loosely defined as a type of home loan for retired or elderly individuals which allows them to access the equity in their home to supplement retirement income. The most common type of reverse mortgage is a Home Equity Conversion Mortgage, typically called an HECM, which is the only reverse mortgage insured by the Federal Government and is available only through a Federal Housing Administration (FHA) approved lender or bank. For more information, see the U.S. Department of Housing and Urban Development (HUD) at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmhome
A revocable living trust, also known as an inter vivos revocable trust, is a trust that is created during an individual’s life. An individual who has a HECM type reverse mortgage on their home is able to transfer the home into a revocable living trust without causing any issue to the lender or bank which holds the reverse mortgage so long as the revocable living trust language meets all of the requirements of HUD. HUD’s requirements for the language of the trust differs depending on whether the home is part of a trust which is already in existence at the time the individual applied for the HECM reverse mortgage or whether the trust is created after the home is already subject to the HECM reverse mortgage. In either case, because the revocable living trust language needs to be carefully drafted to meet the requirements of HUD, anyone seeking to transfer their home with a reverse mortgage into a revocable living trust should seek an attorney’s advice. For more information about the above two scenarios, see HUD at: http://portalapps.hud.gov/FHAFAQ/controllerServlet?method=showPopup&faqId=1-6KT-1837
Anyone who has a reverse mortgage and is considering an estate plan should contact the Chilina Law Firm or another law firm focusing on California estate planning law for legal advice on the legal issues with reverse mortgages and revocable living trusts.
Authored by Greg Chilina and Co-Authored by Karen Chilina
Chilina Law Firm, a Professional Corporation, is a full-service estate planning, probate, trust administration, business law, and real property law firm that provides a wide-range of advising, transactional, and litigation services to its clients from its office located in Atascadero, California. The firm’s attorneys represent individuals and business entities in an assortment of transactional and litigation matters involving estate planning (including trusts, wills, powers of attorney, and medical directives), probate, trust administration, as well as general business law, contracts, corporate governance, land use, and real property. Chilina Law can be contacted by telephone at (805) 538-5038 or by email at info@chilinalaw.com or visit the Chilina Law Firm at www.chilinalaw.com. Chilina Law Firm is based in Atascadero, California and serves North San Luis Obispo County communities, including Santa Margarita, Atascadero, Templeton, Paso Robles, and San Miguel.
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