Last week we looked at new ways seniors are demystifying rather than denying death, and how smart pre-planning can help families mitigate conflict once the HECM recipient dies.
What happens when a reverse mortgage client is approaching the end? One option many might overlook for easing their passage is hospice.
For someone with a HECM, hospice care at home may be ideal. In general, patients are spending less time in skilled nursing facilities (SNFs) and more time at home with outpatient care.
Hospice care involves a team that usually collaborates closely with family and other caregivers to create optimal end-of-life care. A hospice team may include:
- The patient’s primary doctor
- Nurses and home health aides
- Social worker
- Clergy or spiritual counselor
- Trained hospice volunteers
- Speech, occupational, and physical therapists
- Bereavement counselors
Of course, a patient who requires extensive medical care and monitoring may be better served in a hospice care center, hospital or SNF. However, if they improve to the point that they no longer require hospice care, they might be able to return home with caregivers. Healing is not an exact science, and people’s lives often take surprising turns.
How Hospice Care at Home Helps A Non-Borrowing Spouse
If someone who is the sole HECM borrower leaves their residence for hospice care in another location and is able to return home within one calendar year, their HECM should not be called due-and-payable, as long as the property and appropriate taxes and insurance are paid on time.
However, if the HECM borrower has a non-borrowing spouse, the issue becomes trickier. Non-borrowing spouse (NBS) protections only apply in the event of the death of the primary borrower. In the case of a non-borrowing spouse named in a HECM, when their spouse passes, the loan’s due-and-payable status is deferred as long as the NBS:
- Continues to live in the home as their primary residence
- Signs and returns the required annual certification of occupancy to the loan servicer
- Maintains the property to HUD standards
- Makes timely property charge payments.
These NBS protections do not apply when (1) the primary borrower is absent from the property longer than six months, or (2) a medical professional has determined that return to the home is unlikely. Each of these events may trigger the loan being called due-and-payable, as they are outside HUD’s NBS protections.
This is why hospice care at home may be the wisest choice when there is a younger (under 62 at the time the loan closed) non-borrowing spouse. Caring for the senior at home protects both residence and residents, while allowing the person who is receiving hospice care to spend their final days surrounded by the people and place they love.
Ways the Family Can Help
When a beloved elder is approaching end of life, it’s hard enough to focus on the tasks leading up to this loss, let alone think about all that will require attention afterwards.
Some key issues family members (or whoever is appointed POA) can set in motion before someone is at this stage include:
- House appraisal, followed by family discussion;
- Inventory of house contents in preparation for an eventual estate sale or online auction;
- Hiring a professional organizer to clear out the house (heirs would be wise to put aside money in advance for this purpose);
- Decision to sell the house or pay off the HECM. If one of the senior’s children or another relative wishes to live in the home rather than sell it, nothing precludes this possibility, assuming they are able to pay off the loan balance. The heirs would have up to one year (with extensions) to sell, or refinance and purchase the home.
- Hire an estate lawyer to create a clear legal agreement about terms, and what happens if someone can’t comply.
Commonly Overlooked Tools for Incapacity Planning
The Office of Chronic Care Advocacy suggests several often- underutilized resources to assist in planning for disability, incapacity, or death:
- Elder law attorneys. Beyond providing the legal documents and tools for effectively coordinating decision-making and financial management, elder law attorneys provide an experienced concierge in areas most people have not confronted, such as coordination of benefits, hiring of supplemental providers, and coordinating financial planning. Further, elder law attorneys focus on the effective implementation of their documents.
- Financial advisors. Building a solid relationship with a financial planner/coach can be an extremely effective way of coordinating assets at death, preventing or mitigating financial exploitation, and budgeting for medical expenses. Financial advisors and elder law attorneys need to be on the same page to effectively coordinate a senior’s legal and financial plans. A financial advisor is also a useful hedge against scammers, because they can place alerts for unusual expenditures, large withdrawals, and other changes in financial behavior.
- CPA. Many individuals think their income picture in retirement is so simple that they do not need a CPA. However, having tax returns filed with a CPA provides a quick and easy place for a substitute decision maker or executor to go in the event of incapacity or death. In addition, individuals who self-file may miss out on important tax benefits available to older clients, such as deductions for long term care premiums and healthcare expenses, and “catch-up” contributions to retirement savings.
- Account coordination. Services and apps have proliferated to coordinate banking, health, and other information. Most banks have created smartphone apps to manage accounts, a great help for a family caregiver. Mobile payment platforms for in-home care services dispense with the need for new caregivers to have access to cash or checkbooks, while delivering instant and direct payment for services with a clear record for tax and other reporting purposes. Most of these services quickly justify their costs in the security, comfort, and protection they provide.