Home protection strategies such as reverse mortgages, long-term care insurance, and irrevocable trusts overwhelm and confuse many people as they begin the process of estate planning and making wills.
On Monday, March 5, Attorney Arthur P. Bergeron helped remove some of the mystery from those topics at the Tisbury Senior Center. About 40 people attended his free legal clinic, “Protecting Your Vineyard Home,” the first in a three-part series sponsored by the Tisbury Council on Aging.
As Mr. Bergeron explained, home-protection strategies often overlap and must take may factors into account, such as a person’s marital status and heirs, financial assets, and goals for how those assets will be used, controlled, and bequeathed.
For example, Mr. Bergeron said the home-protection alternative most talked about is the transfer of property to an irrevocable trust. Once property is placed in such a trust, however, it can’t be retrieved. While an irrevocable trust may be a good strategy for a surviving spouse who wants to hold on to his or her home, Mr. Bergeron said the downside is that it cuts off the option of a reverse mortgage, which might provide needed income later on.
A reverse mortgage is a special type of Federally insured home loan that enables homeowners age 62 and older to withdraw some of the equity in their homes as cash, Mr. Bergeron said. The payment amount is based on age. Repayment of the loan must be made when the last surviving borrower dies or within one year after he or she no longer lives in the home.
Mr. Bergeron said many people also debate about whether or not to buy long-term care insurance so they won’t have to sell their home to pay for nursing home care. Since insurance agents usually promote long-term policies with high premiums, he said people are often unaware that there are other less expensive options available. For example, it is possible to buy a long-term care insurance policy that goes into effect after someone has been in a nursing home for one year and pays $125 a day for two years.
Before taking questions from the audience, Mr. Bergeron concluded his formal presentation with the advice that peace of mind is the ultimate planning goal.
In a follow-up to last week’s clinic, The Times emailed Mr. Bergeron to ask what he considered three key pieces of advice from his presentation. First on the list is to know your options, which usually costs you nothing, and you’ll sleep better, he replied in an email.
“For example, typically a lawyer will give you an overview of possible asset protection and estate plans without charging you,” Mr. Bergeron said. “Similarly, a mortgage broker or banker will typically talk to you about reverse mortgages, and an insurance agent will talk to you about the costs and options of long-term care insurance, so you can figure out whether they fit into your plan.”
Secondly, Mr. Bergeron said, “Keep your options open; only use tools like transfers to an irrevocable trust and other things that cannot be undone as a last resort.”
And last, he suggests that homeowners reassess their home protection plan regularly, to make sure it is consistent with their current situation.
Mr. Bergeron, an attorney with the law firm of Mirick O’Connell in Worcester, has conducted free legal clinics at the Tisbury Senior Center since 2009. The next two are “Wills 101” on April 2 and “Wills 102” on June 11. The topic is especially timely because the new Massachusetts Uniform Probate Code is scheduled to take effect on April 1. While the new legislation will not invalidate previously existing wills and trusts, Mr. Bergeron said people who already have such documents may want to revise them based on changes in the law.
Both legal clinics start at 5:30 pm at the Tisbury Senior Center at 34 Pine Tree Road. For more information and to register, call 508-696-4205.