The Flip Side of Reverse Mortgages

Recently, I read with interest an article in USA Today about reverse mortgages and how they can be costly. Indeed, I have seen situations where people have used reverse mortgages to solve some problems, only to create others. High fees, aggressive selling techniques, and unforeseen situations have resulted in people I’ve worked with wishing they had considered other alternatives.

The church offers an excellent alternative to the reverse mortgage—a charitable gift plan that combines a life estate with a charitable gift annuity. Those who qualify receive multiple benefits from such a plan: 1) the donor(s) retains the right to live in their house for their life, 2) they receive increased income that is guaranteed by the church for life, 3) they receive benefit now through a tax deduction, and 4) they have the opportunity to benefit the church’s mission through a future gift. Those who decide to combine a life estate and gift annuity plan have peace of mind, knowing that their home is secure and free from the debt of a reverse mortgage.

Think of a life estate like a split in time—one part represents your lifetime use where you have the right to use the property for your life. The other part represents the remainder the church receives after you pass away. In other words, you are giving part of your home (the part after your lifetime) to benefit the mission of the church.

With a combination life estate and gift annuity plan, the gift annuity is a contract between you and the Community of Christ where the church agrees to pay you a fixed payment based on your age. Usually gift annuities are funded with cash or stock, but the “remainder portion” of your house may also be a good choice. In this plan, when you transfer your house to the church, you may remain living there until your death and the church will pay you income for the rest of your life.

These benefits can often be more appealing and result in a better alternative to a reverse mortgage, while furthering the work of the Community of Christ throughout the world. It can be a win-win situation for all concerned. The team of caring professionals in Estate and Financial Planning is here to help you explore this alternative, as well as assist you with all of your estate and financial planning needs. Contact us at 1-800-884-7526 or by e-mail at efp@CofChrist.org.

Visit our Web site, www.CofChrist.org/estate, to sign up for our free eNewsletter, which contains articles on planning alternatives; personalized Web presentations; financial updates on stocks, bonds, and interest rates; and the popular Savvy Senior Column.

—Jared Fears, reporting (summer 2009)

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