A reverse mortgage is a mortgage loan, usually secured over residential real property, which enables the borrower to access the equity value of the property.  Specifically, it is a financial agreement in which a homeowner relinquishes equity in their home in exchange for regular payments or a lump sum of money based largely on the value of the house, the age of the homeowner(s), and current interest rates.  These loans are typically promoted to older homeowners (62 years of age and older) as a means of supplementing retirement income.  Unlike a traditional mortgage, in which principal declines as you pay down the loan, with a reverse mortgage, the amount owed rises over time as interest on the loan accrues.  Furthermore, while all mortgages have costs, reverse mortgage fees, such as the interest rate, loan origination fee, mortgage insurance fee, appraisal fee, title insurance fees, and various other closing costs, are high when compared to a traditional mortgage—and these costs are typically rolled back into the loan.  That said, reverse mortgages usually do not require monthly mortgage payments.  Rather, the loan is required to be paid back only once the last surviving homeowner dies, sells the house, or permanently moves out.

While reverse mortgages can be a great help to older homeowners in need of additional cash flow, they can, unfortunately, be a nightmare for the heirs of the homeowner.  When the homeowner passes away, whether with a will or without (intestate), the house passes to the homeowner’s legatee(s) or heir(s), respectively.  The fiduciary of the deceased homeowner’s estate has the following options:

  1. Pay off the loan;
  2. Buy the house from the lender at 95% of its value;
  3. Sell the house and use the sale proceeds to pay off the loan;
  4. Deed the house to the lender; or
  5. Do nothing and let the lender foreclose on the house.

If the value of the house is less than the principal and interest of the loan, the lender cannot pursue the estate of the deceased homeowner or the heirs of the deceased homeowner for the remaining balance of the loan.  Instead, the lender will be paid the entirety of the proceeds of the sale of house and will consider the reverse mortgage satisfied.

If the value of the house is greater than the principal and interest of the loan, then that portion of the sale proceeds necessary to satisfy the reverse mortgage will be paid to the lender and the remaining balance will be retained by the deceased homeowner’s estate.

The fiduciary of the deceased homeowner’s estate has only thirty (30) days from the homeowner’s passing to determine what option they would like to proceed with the reverse mortgage and up to six (6) months to arrange financing.  Unfortunately, many lenders are not notifying fiduciaries of their rights and are instead immediately beginning foreclosure proceedings upon learning of the homeowner’s passing.  Additionally, many fiduciaries are not aware that if the family wants to keep the house, they can either pay off the reverse mortgage or buy the house from the lender for 95% of the appraised value.

For these reasons, it is important that a fiduciary of an estate hires counsel to address the avenues they may take when dealing with a reverse mortgage of a deceased homeowner.

 

Choosing and working with a law firm can be stressful. Often you don’t know what the process is, what it will cost, and whether the law firm will even be able to help you! To feel confident in your choice, and to know that your confidence is not misplaced, you should look for much more.
Our team of elder law attorneys, estate planning attorneys, and special needs (disability) attorneys have represented the elderly and persons with special needs/disabilities and their families since 1985. In most professional occupations there is no replacement for experience. At Russo Law Group, P.C., our caring and compassionate staff have been involved in literally thousands of cases. Our experience is your protection.
Here are just a few reasons why.

There comes a time where a child or family member may need to have tough conversations with an aging parent or family member with regard to their driving and housing.

While there is no clear scientific evidence that indicates how old is too old to drive, there is indeed a point in everyone’s life where their decline in physical and/or mental condition affects an individual’s ability to safely drive a motor vehicle.

It is important to understand that driving is more than a utility for an elder individual.  When a teenager passes their driver’s exam and gains the ability to legally drive a car, a feeling of independence and freedom is instilled in them.  It is no different as an individual enters the later years of their life—driving is a kind of personal sovereignty that allows an elderly individual to maintain the freedom to decide when and where to go.  Most Americans over the age of fifty live in the suburbs and rural areas, where few transportation alternatives are available.  While the advent of transportation network companies, such as Lyft or Uber, has had a revolutionary effect on transportation services, it has also taken a bite out of the traditional taxi industry.  As such, seniors living in non-urban areas, who may not be as technology savvy, have found it harder to get a ride from a traditional means of alternative transportation that they may be more comfortable with.

As adults, we take our independence for granted and cannot easily fathom a day where our freedom and mobility may be limited.  Furthermore, the debate on seniors driving is often so focused on the safety of the senior and those on the road with them that we do not often understand the greater meaning and emotions that driving provides to seniors.

Similarly, it is a widely held belief that “one’s home is one’s castle”.  However, there may come a time where one’s castle no longer meets one’s needs.  Whether it may be the result of physical decline or cognitive decline, there may come a point where a person can no longer safely reside in their abode.  We as people identify greatly with our home and the collection of memories accrued over our residency there.  As such, it is important to remember that when moving a senior from their home it should be as much about how that senior identifies with their home as it is about accessible and safe housing.  While children or family members of an elderly homeowner are ordinarily deeply concerned with their comfort and safety, they sometimes do not take into consideration the symbol that the home represents to the elderly homeowner.  It is a place that evokes emotions and memories that the senior cherishes greatly.

Ultimately, a discussion with a senior family member about relinquishing their motor vehicle or leaving their home often places two sets of critical values at odds – freedom versus safety.   These discussions are crucial and tough and, as such, there are three strategies that you can use to maneuver.

  1. Look for Patterns and Cite Examples of Diminished Physicality or Capacity;
  2. Do Your Homework by Finding Viable Transportation Alternatives or Identifying Housing Alternatives located near friends, family and familiar surroundings; and
  3. If Possible, Collaborate with the Senior in the Decision-Making Process.

 

Choosing and working with a law firm can be stressful. Often you don’t know what the process is, what it will cost, and whether the law firm will even be able to help you! To feel confident in your choice, and to know that your confidence is not misplaced, you should look for much more.
Our team of elder law attorneys, estate planning attorneys, and special needs (disability) attorneys have represented the elderly and persons with special needs/disabilities and their families since 1985. In most professional occupations there is no replacement for experience. At Russo Law Group, P.C., our caring and compassionate staff have been involved in literally thousands of cases. Our experience is your protection.
Here are just a few reasons why.

Just a few words on a deed may seem inconsequential, but where two or more individuals own title to real property, it is important to understand the multiple forms of ownership that are available, and unavailable, to property owners.  Whether it is residential real property, a condominium, or a cooperative apartment, the form of ownership, or rather “tenancy”, can determine to whom or how the property is transferred in the future. The three forms of tenancy are (1) Tenancy in Common; (2) Joint Tenancy with Rights of Survivorship; and (3) Tenancy by the Entirety.  Each type of tenancy is distinguishable from the others by the rights they convey to the co-owners of the real property.

Tenancy in Common provides each party a concurrent, or simultaneous, undivided ownership interest in the real property.  Thus, each party has the unalienable right to transfer or sell their ownership interest in the real property during their lifetime or by means of a Last Will and Testament.  Among the three forms of ownership, Tenancy in Common allows a property owner the greatest flexibility with regard to their ownership interest. Each party can sever their relationship with the other owners by conveying their undivided interest to another party (or even a trust), who then becomes a tenant in common with the other owners.  Furthermore, it is not required that each party owns an equal ownership interest in the property.  Rather, each party can own a different percentage of the real property, such as two owners each with an undivided ownership interest of 40% and a third owner with an undivided ownership interest of 20%.  Additionally, each tenant in common may acquire their interests in the real property via separate instruments. Where the form of tenancy is silent on the instrument, the ownership interest is presumed to be a Tenancy in Common.

Joint Tenancy with Rights of Survivorship (“JTWROS”), by contrast, requires that all co-owners maintain an equal share of the real property.  Furthermore, when a “Joint Tenant” passes away, their undivided ownership interest ceases to exist and the other Joint Tenants automatically receive the deceased Joint Tenant’s interest in equal shares. For example, if John, June and Joan own the property as JTWROS, and John dies, June and Joan will then automatically own the property equally.  Unlike Tenancy in Common, the execution and recording of a deed is not required to effectuate the transfer of a deceased Joint Tenant’s undivided ownership interest to the other Joint Tenants.  Thus, a benefit of JTWROS is that it avoids the need to probate a deceased co-owner’s Last Will and Testament.  A Joint Tenant may transfer or sell their undivided ownership interest without the approval of the other Joint Tenants, but by doing so they sever their ownership interest from the “Rights of Survivorship” and said interest becomes a Tenancy in Common.   However, the other Joint Tenants still maintain their interests with “Rights of Survivorship” with all owners.

Tenancy by the Entirety is a form of Joint Tenancy only available to married or civilly united couples.  Where a married couple owns real property as Tenants by the Entirety, one spouse cannot transfer their undivided ownership interest without the prior consent of the other spouse.  Similarly, upon the death of one spouse, his or her undivided ownership interest automatically transfers to the other spouse, thus acquiring full ownership of the real property. Creditors of a spouse may place a lien on the real property held by Tenancy by the Entirety, but if the debtor spouse passes away prior to the other spouse, the surviving spouse will take full ownership of the real property free and clear of the lien.  This benefit is specific to Tenancy by the Entirety, as a Creditor’s lien follows the debtor owner’s share in the other forms of tenancy.  Tenancy by the Entirety is not automatically conveyed to married couples.  As such, where a couple purchases property and subsequently marry, the form of ownership of the real property must be re-titled via deed.

 

 

Choosing and working with a law firm can be stressful. Often you don’t know what the process is, what it will cost, and whether the law firm will even be able to help you! To feel confident in your choice, and to know that your confidence is not misplaced, you should look for much more.
Our team of elder law attorneys, estate planning attorneys, and special needs (disability) attorneys have represented the elderly and persons with special needs/disabilities and their families since 1985. In most professional occupations there is no replacement for experience. At Russo Law Group, P.C., our caring and compassionate staff have been involved in literally thousands of cases. Our experience is your protection.
Here are just a few reasons why.

It was February 27th when Fox announced that the beloved 90s television hit, Beverly Hills, 90210, was picked up for a reunion series of six episodes. It came as a shock when, a week later, star Luke Perry, largely known for his portrayal of teen heart-throb Dylan McKay, passed away at the young age of 52. Perry suffered a serious stroke and was hospitalized under heavy sedation. Following a second stroke, and it becoming apparent that Perry would not recover, his family made the decision to remove life support. That Perry appeared healthy and vibrant less than a week earlier and died from a condition that many believe only inflicts the elderly, is a reminder of our own mortality.

It appears that Perry adhered to the preaching of Elder Law and Estate Planning attorney’s everywhere: planning and advance directives are crucial legal documents that everyone should have. That Perry’s family had the ability to end life support meant the Luke Perry likely had executed the proper legal documents, such as a Living Will, so that his family could make that difficult decision based on his wishes. Without the proper legal documents, Luke Perry’s family would have most likely needed to petition the proper court for an order to terminate life support—which would have been a public and emotional process that could have prolonged Perry’s suffering.

After suffering a cancer scare in 2015, Luke Perry reportedly had a will drafted and executed, thereby leaving all of his assets to his two children, 21-year-old son, Jack, and 18-year-old daughter, Sophie, and protecting their inheritance. Sources close to Perry informed the media that he no longer wanted to “leave anything to chance.” If Perry had the same forethought with his assets as he apparently did with his advance directives, it is likely that Perry, who had a reported net worth of around $10 million, created a living trust in addition to his reported will. By transferring his assets into a living trust, Perry would help his family avoid the need to probate his will and have his estate pass through the (public) probate court. All of this planning will likely make the process of transferring and distributing his estate much easier and timely.

A question that remains is whether Luke Perry provided any bequests or assets for his fiancé. Because Perry passed away before marriage, his fiancé is not “entitled” to inherit anything by law. Assuming that Perry did not include his fiancé in his 2015 will, she would only stand to inherit those assets that Perry would have had her as a joint owner or beneficiary. It is possible that Perry never intended for his fiancé to inherit a share of his wealth, but if he did it may have been prudent for him to have executed an updated will, trust, or codicil.

Luke Perry’s shocking and tragic passing highlights an important lesson: that no one should wait until they reach an arbitrary “old” age to conduct their estate planning.

A constant concern here on Long Island is the continued increase in Property Taxes and the ever-increasing cost of living.  The application for state program real estate tax exemptions (such as Basic STAR, Enhanced STAR or Veterans exemptions) may help to ease the burden, but there are instances where homeowners may not be eligible for such exemptions, or the exemptions are only a drop in the bucket in savings.

If a homeowner feels as if their property is being taxed too high, they have the opportunity to “grieve” their property taxes and request a review, and possible correction, of the tax assessment made on the property.  By doing so, the local Office of the Receiver of Taxes will review the tax assessment made on the lot(s) in question and determine whether or not the initial assessment was correct.  If the tax assessment is found to be incorrect, the Office of the Receiver of Taxes will reduce the tax assessment and therefore the property taxes.  A tax grievance can only lead to two possible results, (1) the tax assessment will be reduced or (2) it will remain the same.  The tax assessment will not increase due to the review.  That said, the local tax office provides only a certain window of time to protest the assessment, so the homeowner must be diligent in understanding the time period in which a tax grievance can be made.

A homeowner can grieve their property taxes on their own; however, the process can be daunting.  The homeowner will need to provide evidence that the assessment was inaccurate, which includes collecting photographs and information regarding the sale price of five or more homes in the homeowner’s neighborhood.  These homes must have similar square footage and property size.

An alternative is for the homeowner to contract with a firm that specializes in tax grievance proceedings.  By contracting with such a firm, the homeowner can sit back and allow the firm to apply for a review of the tax assessment on their behalf.  When choosing to use a firm, make sure the firm has experience and knowledge in tax grievance proceedings.  The firm should also have the manpower and resources necessary to provide a more informed argument than the tax assessment is inaccurate.  Most firms will only charge the homeowner for their services if they are successful in reducing the tax assessment, usually an agreed-upon percentage of the value of the savings (i.e. 50%).

What may be tricky with the contracting of a firm is the term of the contract.  Most firms require a homeowner to contract with them for multiple years.  This may become an issue where the homeowner or the Estate of a deceased homeowner is attempting to sell the property during the term of the contract.  Homeowners must be careful to read the fine print of the contract and understand what the term limit is and what effect the sale of the home may have on the contract. Most contracts indicate that the homeowner is still liable for the firm’s charge, even after the sale of the home, unless proper steps are taken to transfer the contract to the new homeowner.

Therefore, when you are selling the property to which a firm is contracted to reduce the property taxes, if the real estate attorney does not broach the subject, the homeowner or fiduciary of the Estate of a deceased homeowner should advise their real estate attorney of the contract.  The real estate attorney should then account for the need of an assumption of the contract by the Purchaser in the Contract of Sale.  Most firms require the new homeowner to sign an Assumption Agreement prior to or at the closing of the sale of the house and for the signed Assumption Agreement to be transmitted to them immediately thereafter.

If the proper steps are not taken, the original homeowner or his/her Estate may be responsible for the payment of the firm’s services for the remainder of the term of the contract, even though the new homeowner is reaping the benefit of the reduction.

It is important that homeowners or fiduciaries of a deceased homeowner understand the terms of a contract made with a property tax reduction firm.  It may be difficult for the fiduciaries of a deceased homeowner, because they may not even be aware of the contract.  As such, the fiduciary should make a diligent effort to examine the deceased homeowner’s papers to ascertain whether a contract exists and to act accordingly.

Scams are on the rise! Whether it be in the form of a phone call, email, or direct mailing, scam artists are trying to steal your personal information. The IRS has continuously warned taxpayers to think twice before providing any sensitive information to anyone, even if the request appears to come from the IRS.

Scams have gotten increasingly sophisticated. Scam artists have taken the time to recreate documents and may use your readily available public information to make requests seem more legitimate. In December 2018, the IRS warned taxpayers about Tax Transcript scams that included downloadable forms that could infect your computer with malware, which could seek out sensitive information on your computer.

While requests for information from the IRS can be time sensitive, if you receive a request (whether by phone, email, or mail), take an extra second to examine the correspondence and compare it to a previous request you may have received. If you receive a phone call that doesn’t seem legitimate, request a callback number so you can evaluate the legitimacy of the request. Also, if the phone number appears on your caller ID, try searching the phone number on the internet to see if it has been flagged as a potential scam.

If you have any questions regarding a request that you received, discuss with your tax preparer, tax attorney, family and/or friends.