If you have a reverse mortgage on your home, should you put it into the name of your living trust?

Attorney Tom Olsen: Tom has a reverse mortgage on his home, which means that within typically about a year of Tom passing away, his heirs, his kids are going to have to pay that mortgage off, either they're going to have to refinance and pay it off or sell the home and pay it off. Having a reverse mortgage is no different than having a regular mortgage. You still want to avoid probate. Tom already has a living trust so, yes, he should put his home into his living trust to avoid probate on it. That's really what we're talking about is avoiding probate.

Attorney Chris Merrill: Exactly. When you're saying then, too, again, because he has a living trust, that is a tool to avoid probate and one option for Tom is that he can put his home in there to avoid probate. I think the other component to this is just because we know that now there are more people that have reverse mortgages, once in a while, we talk with the company, the reverse mortgage company, and no need to do a trust or Lady Bird deed or anything because the ownership goes to them.

Attorney Tom Olsen: If you're upside down, if you owe more on your home in this reverse mortgage than what the value of the home is, yes, there's no reason to think in terms of avoiding probate because your kids are going to want it. There's no equity in it.

Attorney Chris Merrill: Exactly.

Attorney Tom Olsen: Is that what you're saying?

Attorney Chris Merrill: Yes, and in addition, there have been some situations where the reverse mortgage company is handling things where the homeowner does not have to put it into a trust or worry about that. Oftentimes, it starts by talking with that reverse mortgage company and finding out that you-- and really everybody who has a reverse mortgage, should know this answer. They should find out if they don't already know from that company. If they pass away, will the home go into probate or will it go automatically to the reverse mortgage company?

Once you know the answer to that, assuming that it says, "Oh, no, it would go into probate," then, Tom would want to make sure that that's in his trust because that'll be one less expense that his family has.

Attorney Tom Olsen: Exactly. Tom, the bottom line is that if there's equity in your home, and if that home is going to be passed on your kids when you pass away, yes, you'd want that home in your living trust even if you've got a reverse mortgage on it.