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Should I plan to liquidate my IRA and get a reverse mortgage?

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Q. I live with my 79 year old sister and her daughter and granddaughter. She has a reverse her mortgage on her house and I’m her 64, old enough to pay for my own reverse her mortgage. If my sister dies intestate, her daughter is too young to qualify for her own reverse mortgage, but I can liquidate her IRA and pay off the reverse mortgage on the property. So can I put the house in trust in my name instead of in a will to avoid inheritance tax on my siblings?

– sister

A. There are many things to consider here.

Before we do anything, we need to gather more information.

a reverse mortgage Catherine Romania, a estate planning attorney for Wittmann Stadtmauer in Fourham Park, said that since it is a contract with a financial institution, there are terms regarding repayment upon transfer and death.

So your first step is to have your sister talk to the mortgage company. determine the details Regarding her loan repayments, including outstanding amounts and fees, she said.

Romania said that if your sister dies, the mortgage will become a liability on the property.

“Generally, when an heir dies, he or she will have to repay the loan balance or 95% of the home’s appraised value, whichever is less,” she said.

A local real estate agent can provide an estimate of the home’s value. If your sister’s house is inherited by your sister’s daughter, no inheritance tax will be levied, and if it is inherited by you, only your net worth will be subject to inheritance tax. Above $25,000, Romania said.

“Plans to liquidate the IRA and get your own IRA reverse mortgage It may not take into account the income tax incurred when liquidating the IRA and all the fees incurred when obtaining your own reverse mortgage.”Both of these amounts can be substantial.” Yes, we need an estimate of these taxes and fees before making a decision.”

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Karin Price Mueller wrote: deception It is a column of NJ Advance Media, NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJ money help. seek NJMoneyHelp on Facebook. Apply NJMoneyHelp.comof Weekly electronic newsletter.

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