DEAR BRUCE: I have a friend whose father is in hospice care. They have some money left but they do own property worth more than a million dollars. She doesn’t want to sell this building and would like to use Medicare to help pay for his medical bills. Is there any way that they can shelter this building from the government so it doesn’t get sold? — T.R., Wisconsin
DEAR T.R.: Shouldn’t they sell the building to help pay for his medical care? What you’re telling me is that we have a couple that are millionaires that are looking to have the government, through its poverty programs, pay their bills. That just isn’t right.
DEAR BRUCE: I recently married someone who had been previously married. I was told that my spouse is entitled to half of the ex-spouse’s Social Security earnings for the time period of their marriage. Is that correct? — T.T., via e-mail
DEAR T.T.: If the couple were married 10 years or more, the spouse is entitled to claim against the other’s Social Security, which doesn’t prevent a new spouse or ex from making a claim as well. However, the rules are somewhat complicated if the person you married was employed, that spouse must first make a claim on her own account, and then, if there is a potential advantage that she will be paid some retirement on her ex’s account. This can be a bit complicated. There are attorneys who specialize in this type of practice of law.
DEAR BRUCE: I wish you would give us a general talk about reverse mortgages. I am not sure that I trust the advice I have been receiving from someone who is selling them. Are there any special criteria that set candidates apart? — S.W., via e-mail
DEAR S.W.: Essentially, a reverse mortgage allows someone who has a lot of equity in a home but a relatively modest store of available cash to draw on the equity, not be obligated to make monthly payments as a traditional mortgage would require, and have the matter settled upon their demise as to return to the lender. Both parties must be at least 62 to qualify for a reverse mortgage. Somewhere around 75 makes more sense. The costs are generally higher than a traditional mortgage as will be the interest rates. There is no penalty to you — your heirs, yes, but not to you. You are permitted to stay in the home as long as you live, as long as the taxes and insurance are paid. You never have to make a repayment; that is done after you pass away and the house is sold by the lender, assuming that your heirs don’t wish to pay off the mortgage and retain the mortgage property.
If there are insufficient funds left in equity in the house to pay the lender, then the lender loses. Even though you have drawn out more money than can ever be recovered by the lender, you have incontrovertible life tendency as long as you meet the obligations contained to your end. It’s a very good deal for some and a lousy deal for others.
Send your questions to: Smart Money, P.O. Box 2095, Elfers, FL 34680. E-mail to: firstname.lastname@example.org. Questions of general interest will be answered in future columns.