Episode Transcript
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Speaker 1 (00:00):
The following is a paid podcast. iHeartRadio's hosting of this
podcast constitutes neither an endorsement of the products offered or
the ideas expressed. The following program is sponsored by New
York Priority Medical Care. Now it's time for the Laws
of Your Money, a weekly call in show with legal
(00:20):
tips to help you protect your money. Here's your host
and Margaret Carosa.
Speaker 2 (00:25):
Hello and welcomed to the Laws of your Money. This
is a show dedicated to protecting you from legal and
financial mayhem when it comes to personal finance. I believe
that legal protections are the most important considerations, because what
(00:48):
does it matter how brilliantly I save and invest if
there's a forty percent chance of losing assets to a
long term illness, expensive divorce taxes. This can be capital
gains taxes, estate taxes, not to mention ordinary lawsuits, which
(01:11):
we all know are on the rise. I am asset
protection attorney and Margaret Carosa joined today by my co host,
the Reverend Paul Slapkus. Welcome to the program, Paul.
Speaker 3 (01:26):
Hi Ane, how you doing so?
Speaker 2 (01:28):
You remember Paul? A few weeks ago we talked a
little bit about reverse mortgages, and I've been trying to
get an expert to join the program to be able
to answer you in concrete terms what exactly a reverse
(01:49):
mortgage is and how it may or may not benefit you,
depending upon your individual situation. So before we jump in,
I believe we have our expert ready to join the conversation,
but before we do, I want to encourage everyone to
(02:10):
join our conversation by calling eight hundred three two one
zero seven ten. Eight hundred three two one zero seven ten. Okay,
we have my personal mortgage expert, Jim Flaherty. Good morning, Jim.
(02:33):
Thank you so much for being with us.
Speaker 4 (02:36):
It's my pleasure.
Speaker 2 (02:37):
So can you tell our listeners what exactly is a
reverse mortgage.
Speaker 4 (02:45):
Reverse mortgage is the loan that enables all the homeowners
over sixty two convert part of the equity of their
home into tax free money without having to sell the home,
give up title, or take on a new monthly mortgage payment.
You actually own the home and title throughout the life
of the reverse mortgage.
Speaker 2 (03:03):
I think you know, and I'm sure you experienced this
south there, Jim. There is a knee jerk negative reaction
when this comes up. Do you agree with that point?
You hear reverse mortgage. You think it's a scam, and
you know my experience with a reverse mortgage. My first
(03:26):
experience was about twenty years ago. I had a client
who was the widow of a physician living in a big,
beautiful house in Bayside Gables, which is a very lovely
area of Northeast Queens And the reality is that she
(03:48):
had absolutely no money left. So the traditional advice was
that she should sell and downsize and move into a
condo or something. And she's the first person I ever
recommended that she should sit down with someone knowledgeable about
(04:11):
this new product at the time, the reverse mortgage. So
her home was worth around eight hundred thousand at the time.
She pulled two hundred thousand out in the form of
the reverse mortgage, and she was able to stay in
her beautiful house, and she had some money that she
(04:34):
could continue to pursue her love of the opera. She
could take a car into Manhattan once a month, and
she really lived out her days in the manner that
she deserved. Right, So at the end of her life,
(04:54):
the reverse mortgage was paid back and her heirs under
the will received what was left. So, I mean, do
you see those types of stories play out.
Speaker 4 (05:08):
Oh, I definitely do. But that's always the first piece
of advice I give people is to downsize. But oftentimes
they want to stay in their home. They don't want
to move, they're settled in. And then you have to
look at different parameters their age. What's the reason for it?
Are you short of monthly payments, you know, to pay
your bills? Is it that you have a big mortgage
(05:29):
and a lot of debt, so there's a lot to
go over. So I normally sit with people, Yeah, go ahead,
I'm sorry.
Speaker 2 (05:35):
No, no, let me ask you, you know, cutting right
down to it, it's my understanding that the interest rate
on a reverse mortgage is going to be a little
bit higher than a conventional mortgage. Is that right?
Speaker 4 (05:53):
It definitely is. The fixed rate program is definitely higher. Okay,
So the sixth rate program is only for a lump sum.
The heckum is no juicable going up and down. So
it's a little bit high now, not much higher than
the going six rate, but it's probably going full we're
going to tend to come down.
Speaker 2 (06:11):
So let me ask you this. If I were to
pull out two hundred thousand from my home today in
a lump sum, what would be the rate approximately, I believe.
Speaker 4 (06:22):
The rate on something like that is about eight percent.
Speaker 2 (06:24):
Okay, So you know, take someone who has a home
worth one million dollars, right, and they pull out, they
sit down with you, they go through the education to
determine whether or not it's a good fit for them.
They pull out two hundred thousand with an eight percent
(06:47):
interest rate, and in one year, the interest on the
two hundred thousand is sixteen thousand, right, correct. But because
they did not sell the house, they're getting market value
appreciation on the entire one million, right. So with an
(07:12):
average appreciation in the city of New York of four
percent per year, this family at the end of the
day is up forty thousand dollars and they had to
pay sixteen thousand on what they took out in the
form of the reverse. So I just think for so
(07:33):
many people, you're actually financially ahead of the game by
not selling, not downsizing. And when you downsize, you're going
to a condo or some fifty five and over community
where you have steep monthly you know, homeowner association fees,
(07:54):
and your taxes are going to be higher because it's
newer construction. So I just think they're There are a
lot of things for people to educate themselves about and the.
Speaker 4 (08:07):
Capital gains that they likely.
Speaker 2 (08:08):
Would pay exactly right. Good point, Jim, capital gains.
Speaker 3 (08:13):
I have one question, Jim, a second mortgage. What's the
difference between a reverse mortgage and a second mortgage?
Speaker 4 (08:20):
A second mortgage, like a home equity loan, for instance,
you basically have to make payments every month on a
reverse mortgage. There's no payments to.
Speaker 3 (08:27):
Be made, Okay, thank you.
Speaker 4 (08:30):
So if you have a senior citizen who lets fort
for instance, they're in their home and their pensions and
the social stority is not keeping up with today's inflation,
and let's say there are one thousand and two thousand
a month short, they can take a type of loan
that acts like a home equity on a reverse mortgage,
and they can draw the money as they need it,
(08:50):
and they only pay on the money as they draw.
If they took out a let's say you're two hundred
thousand dollars home equity, they can draw the money the
same way, but they're going to have to make monthly
payments along with it, and that's going to put them
behind the eight ball again.
Speaker 2 (09:02):
Thank you, so, Jim, my last question to you involves
co ops. Can co op owners benefit from a reverse mortgage?
Speaker 4 (09:14):
Not on the standard FAHA reverse mortgage. There are there
are atique products that are sting to the market that
allow it, but they're very expensive and they require a
full MP sum, which for a lot of people doesn't
make sense. So if you have let's say you have
a ninety year old person and they own a call
up with one million dollars, they may be entitled to
(09:37):
maybe six hundred thousand, they would be forced to take
that six hundred thousand dollars and one long sum, whereas
you know, on an FAHA product with the kind of
minimum a home, they could take what they needed as
they needed it. That's the disadvantage.
Speaker 2 (09:53):
Well, Jim, that's what I love about you. You are
very honest, and you know full disclosure, I have used
Jim Flaherty many, many, many times for mortgages in my
life and I wholeheartedly, you know, recommend him as a
source of information. And Jim, how can people get in
(10:17):
touch with you?
Speaker 4 (10:18):
The best way to get in touch with me, hands down,
is to call myself five one six, three, three zero
seven seven nine one five one, six, three, three, zero
seven seven nine to one. Please leave a voicemail. I
work for a small bank. I'm salaried. There are no
consultation fees. I'm happy to come and sit down with
(10:39):
you and go over everything. There's no charge for that either,
so you know, don't hesitate to call and ask any
questions you can think of.
Speaker 2 (10:46):
Well, you know, many of our listeners are driving right now,
so I know that they're not able to write down
that number. So I would encourage anyone who's interested in
connecting with Jim to reach out to me. All of
you should have my contact and I can give you
(11:10):
Jim's number again. All right, Jim, thank you so much
for being with us, and have a great day.
Speaker 4 (11:17):
Thank you very much and thanks.
Speaker 2 (11:21):
Switching gears, Paul, have you been following the gyrations of
the stock market unfortunately?
Speaker 3 (11:31):
Yes?
Speaker 2 (11:32):
Yeah, I mean it is no joke, causing a great
deal of stress for so many people. And you know
they say that financial stress is the number one contributing
(11:55):
factor to insomnia.
Speaker 3 (11:57):
I would believe it makes sense to me.
Speaker 2 (12:00):
And yeah, I remember.
Speaker 3 (12:03):
Not having enough money sometimes to make a show is stress.
Speaker 2 (12:07):
I remember doctor Phil saying, you know when money is
a problem. Everything is a problem. It's not so easy
to compartmentalize your finances if you're just feeling out of control. So,
you know, what can people do to deal with the
(12:29):
stress that you know, the Wild Wall Street rollercoaster ride
is inducing. Do you have any advice for people?
Speaker 3 (12:39):
I suggest to do nothing, do.
Speaker 2 (12:41):
Nothing well, and pray, pray. I would encourage people. You know,
we have no control over it, and obviously we want
to avoid you know, uh, panic induced decision making, right,
We certainly don't want to sell stocks when they may
(13:05):
be at a low point. So what can we do
to feel some measure of control over our financial lives?
And for me, the number one go to is to
reduce or eliminate discretionary spending. Go on like a two
(13:30):
week financial boot camp where you're trying to get creative.
You're looking in the back of the pantry and you know,
you google, you know the different ingredients that you happen
to have in the back of the pantry, and you're
going to come up with dinner. The more discretionary spending
(13:52):
that we can eliminate from our lives, the more power
and control we're going to have over for our finances.
Speaker 3 (14:02):
Very very smart, very.
Speaker 2 (14:04):
I think we also want to be very aware of
our finances. You know, many people say, don't open your statements,
you know, it's just going to make you feel sick.
But I disagree with that. I think we need to
be aware of where we are financially, where we want
(14:26):
to go, what are our financial goals. And for people
who are part of a couple, I strongly recommend that
you not abdicate your role in the finances. You know,
your partner may be a financial genius and you just
(14:49):
kind of abdicate all of the financial decision making and
bill paying to that other person. But that can be
very dangerous, you know. And I'm thinking back to is
anyone old enough to remember John dolorian I do and
Christina Ferrari I do and you know she claimed innocent spouse,
(15:15):
you know, during his fraud trial, and that worked. It
does not work as much today because there is an
expectation that both partners are involved and aware of the finances,
so super important to be involved in things. Do you
(15:38):
remember I don't take you as someone who watches the
Real Housewives franchise, no, but you may remember Teresa and
Joe Judce from New Jersey. No you don't, okay. So
they were in a little hot water because there was
(15:58):
a discrepancy between the numbers that were on the tax
return and the numbers that were on a loan application.
So for the loan application, this guy made a ton
of money, but on the tax return he didn't make
quite so much money. And Teresa claimed innocent spouse. She
(16:24):
said she simply signed whatever was put in front of her,
and that didn't work for her the way it did
for Christina Ferrari decades earlier. She ended up going to jail.
So we want to be aware of things. I had
a woman come in to see me last year. She
was an accountant, okay, super savvy about all things financial,
(16:50):
but it was her husband, also an accountant, who was
responsible for all of the bill pay paying and financial matters.
He worked from home for a couple of years, and
what ended up happening, their home was foreclosed on because
(17:16):
without her knowledge, he wasn't working from home. He was
watching daytime TV all day. He lost his job, and
he was afraid or embarrassed to let her know, so
he just kept up this game that he was working
from home. Drained their savings, drained their retirement accounts, and
(17:39):
because she had given him an unlimited power of attorney,
he was able to sign her name legally to mortgages
on the home. And you mentioned a second mortgage. They
had a second mortgage on the home and they ended
up losing it and it was a total disaster. But
(18:03):
I just you know, I didn't say to her at
the time because she was crying and distraught, but would
it have killed her to open a bank statement once
in a while. So you know, we need to keep control,
We need to stay aware of our finances. And the
(18:24):
third thing that I would recommend people consider if they're
feeling very stressed and financially fragile, is to focus on
people who have less than you do. Because no matter
what your finances are, if you can afford the radio,
(18:44):
you know that you're listening to this on, you're better
off than a lot of people. So consider giving to
other people. You know, we say givers gain and it's
going to give you a boost, it's going to make
you happier, and it's going to put you on a
plane of being able to affect change, if not in
(19:10):
your own life, in someone else's life. Now you remember, Paul,
we had Kate Durgey as a guest in December on
the program, and she founded in honor of her sixteen
year old daughter, Penny, the Penny's Flight Organization. That's a
(19:31):
great example of a grassroots charity that I encourage people
to get involved with. And recently I've become aware of
another great organization. Have you ever heard of City of Hope? Yes, okay.
It is one of the most advanced cancer research and
(19:52):
treatment organizations in the US, and they are having a
special awards luncheon June sixth, No, I'm sorry, June third
at the Plaza. This is the Spirit of Life Awards
luncheon that I learned about from my friend Amy Rosenbloom.
(20:15):
Super organization. Great people to become acquainted with and help
try and change the world for the better.
Speaker 3 (20:25):
They're a great group. But I've made shows about them.
Speaker 2 (20:28):
Yes, So anyone who's interested in learning more about the
luncheon go on to the City of Hope website or
you can reach out to me. And you know, we
have joked before about, you know, going out of our
way not to eat lunch at the Plaza, but this
is a very good reason to have lunch at the plaza.
Speaker 3 (20:51):
And you're really a well rounded lawyer. I'll tell you
that this is these are commentary that is a not
unusual realm of well, somebody might think a lawyer is sharing.
Speaker 2 (21:06):
But you know what, it's important to get out of
our own heads. Right. If we focus too much on
ourselves and our finances and it's all me, me, me, me, me,
that's not a good place to be, so especially right now.
Exactly right.
Speaker 3 (21:26):
Yeah, I have some good questions that are really important
ones that have been presented to me. Am I legally
responsible for my mother's nursing home bills?
Speaker 2 (21:35):
Okay, so what do you think the answer to that is?
Speaker 3 (21:40):
I think no.
Speaker 2 (21:41):
Well, the surprising answer is it depends on what state
you live in. In Pennsylvania, there's a law on the books.
In about twenty something states, not New York, there are
laws on the book saying that we are re responsible
for parents' nursing home bills. Now in New York or
(22:06):
in the other states that do not have that as
a legal responsibility, adult children can unwittingly undertake that obligation
by signing paperwork that is sort of indiscriminately given to
them when they're bringing their parent into a rehab. So
(22:29):
my advice for adult children navigating the long term care
arena with a parent is you need to protect yourselves
or you can unwittingly undertake that obligation. Now, people who
are responsible for each other's nursing home bills are married couples,
(22:52):
and that's true in all fifty states. A spouse is
legally responsible for the nursing home bills of the other.
So it's super important for people thinking about getting into
a second marriage, a later in life marriage. You want
(23:13):
to make sure that your prospective spouse has long term
care insurance or has made plans and arrangements so that
you are not on the hook for their nursing home bills.
Speaker 3 (23:30):
Did I understand that right? And that is at the
application when you go to a nursing home a part
of this answer, So.
Speaker 2 (23:38):
None of us wake up and say I want to
go to a nursing home today. The way it typically unfolds,
there's an acute problem, a broken hip, a stroke, and
we go to the hospital where Medicare and the supplement
do a beautiful job of covering everything. We enter a
nursing home through the door that says rehab. Right when
(24:02):
we leave the hospital. We all go to rehab today
because the hospitals release us quicker and sicker right compared
to thirty years ago. So we go to rehab and
here Medicare and the supplement only cover up to the
first hundred days. Beyond that the bills will start coming
(24:23):
in to the tune of about sixteen thousand per month.
And when that individual's own assets run out, their spouse
is legally on the hook. So super important to protect
the assets ahead of time, and that means doing a trust,
(24:46):
getting that five year clock ticking so that we're protecting
assets for those people who do not have long term
care insurance.
Speaker 3 (24:57):
Okay, I have another question here, also extremely important. In
your book, you say that life insurance should be owned
by a trust. My life insurance already has a beneficiary.
Won't this avoid probate?
Speaker 2 (25:11):
Yeah, so there's you know, there are a few goals
out there we should all want to avoid probate. But
having beneficiaries on the life insurance does not protect the
cash value of that policy from nursing home bills or
(25:31):
from other liabilities. So you know, there are two types
of insurance policies out there. There's term which only has
a death benefit, it has no cash value, and there's
whole life or universal that has a death benefit and
a cash value. I think it's super important. If your
(25:56):
insurance has a cash value, you want that to be
owned by a trust so that the cash value is
invisible to long term care claims. Sure right, yes. And
whether it's a policy with a cash value or a
term policy, they both have death benefits, and you want
(26:22):
to avoid having that death benefit taxed as part of
your gross taxable estate. You know, this is especially true
for people who buy life insurance products to help their
loved ones pay for estate taxes. So it's kind of
(26:45):
bonkers that the death benefit on this policy in turn
is adding to the tax bill.
Speaker 3 (26:54):
This should be part of the insurance salesperson job to
be bringing that to the atention of who they're selling to.
Speaker 2 (27:01):
Yeah, I would think so that. You know, insurance serves
many purposes out there, but you want to you know,
avoid the negative aspects of it. You know, paying taxes
is mandatory. Over paying taxes is what Paul.
Speaker 3 (27:21):
That so smart?
Speaker 2 (27:22):
It is stupid, right, And it's super easy to create
this life insurance trust. I remain the so called measured
life My beneficiaries are whoever I select. But the owner
of the policy is the trust.
Speaker 3 (27:42):
Now does the I mean we're talking a lot about trusts, okay,
and you talk that you know there's different kinds of trust. Yes,
So when you go for a trust or maybe for
next week or whatever, because there's a lot going on
with trusts, do need various trusts? Do are you need
one trust that carries all on with all these important things?
Speaker 2 (28:05):
Well, I would say, you know the threshold difference between
a will and a trust. The will quite simply determines
who gets my stuff. With the trust if it is
properly drafted, and this involves, you know, an interaction between
(28:27):
you and the attorney you're working with. If the trust
is properly drafted, it's going to take us from who
gets my stuff to how do they get my stuff?
If I have a child with a gambling issue, a
substance abuse issue, developmental disabilities, I don't want them getting
(28:51):
a lump sum from my estate because it's going to
be gone in no time flat. So we want to
consider a special needs trust, a spendthrift trust, a discretionary trust,
many many different kinds of trusts to benefit your family
(29:13):
you just have to know what's out there and educate yourselves.
There you go, all right. So with that, thank you
everyone for tuning in. Please reach out to me with
any questions you have during the week at my Asset
Protection Attorney dot com. Have a great day everyone.
Speaker 1 (29:43):
The preceding program was sponsored by New York Priority Medical Care.
The proceeding was a paid podcast. iHeartRadio's hosting of this
podcast constitutes neither an endorsement of the products offered or
the ideas expressed.
The following is a paid podcast. iHeartRadio's hosting of this
podcast constitutes neither an endorsement of the products offered or
the ideas expressed. The following program is sponsored by New
York Priority Medical Care. Now it's time for the Laws
of Your Money, a weekly call in show with legal
(00:20):
tips to help you protect your money. Here's your host
and Margaret Carosa.
Speaker 2 (00:25):
Hello and welcomed to the Laws of your Money. This
is a show dedicated to protecting you from legal and
financial mayhem when it comes to personal finance. I believe
that legal protections are the most important considerations, because what
(00:48):
does it matter how brilliantly I save and invest if
there's a forty percent chance of losing assets to a
long term illness, expensive divorce taxes. This can be capital
gains taxes, estate taxes, not to mention ordinary lawsuits, which
(01:11):
we all know are on the rise. I am asset
protection attorney and Margaret Carosa joined today by my co host,
the Reverend Paul Slapkus. Welcome to the program, Paul.
Speaker 3 (01:26):
Hi Ane, how you doing so?
Speaker 2 (01:28):
You remember Paul? A few weeks ago we talked a
little bit about reverse mortgages, and I've been trying to
get an expert to join the program to be able
to answer you in concrete terms what exactly a reverse
(01:49):
mortgage is and how it may or may not benefit you,
depending upon your individual situation. So before we jump in,
I believe we have our expert ready to join the conversation,
but before we do, I want to encourage everyone to
(02:10):
join our conversation by calling eight hundred three two one
zero seven ten. Eight hundred three two one zero seven ten. Okay,
we have my personal mortgage expert, Jim Flaherty. Good morning, Jim.
(02:33):
Thank you so much for being with us.
Speaker 4 (02:36):
It's my pleasure.
Speaker 2 (02:37):
So can you tell our listeners what exactly is a
reverse mortgage.
Speaker 4 (02:45):
Reverse mortgage is the loan that enables all the homeowners
over sixty two convert part of the equity of their
home into tax free money without having to sell the home,
give up title, or take on a new monthly mortgage payment.
You actually own the home and title throughout the life
of the reverse mortgage.
Speaker 2 (03:03):
I think you know, and I'm sure you experienced this
south there, Jim. There is a knee jerk negative reaction
when this comes up. Do you agree with that point?
You hear reverse mortgage. You think it's a scam, and
you know my experience with a reverse mortgage. My first
(03:26):
experience was about twenty years ago. I had a client
who was the widow of a physician living in a big,
beautiful house in Bayside Gables, which is a very lovely
area of Northeast Queens And the reality is that she
(03:48):
had absolutely no money left. So the traditional advice was
that she should sell and downsize and move into a
condo or something. And she's the first person I ever
recommended that she should sit down with someone knowledgeable about
(04:11):
this new product at the time, the reverse mortgage. So
her home was worth around eight hundred thousand at the time.
She pulled two hundred thousand out in the form of
the reverse mortgage, and she was able to stay in
her beautiful house, and she had some money that she
(04:34):
could continue to pursue her love of the opera. She
could take a car into Manhattan once a month, and
she really lived out her days in the manner that
she deserved. Right, So at the end of her life,
(04:54):
the reverse mortgage was paid back and her heirs under
the will received what was left. So, I mean, do
you see those types of stories play out.
Speaker 4 (05:08):
Oh, I definitely do. But that's always the first piece
of advice I give people is to downsize. But oftentimes
they want to stay in their home. They don't want
to move, they're settled in. And then you have to
look at different parameters their age. What's the reason for it?
Are you short of monthly payments, you know, to pay
your bills? Is it that you have a big mortgage
(05:29):
and a lot of debt, so there's a lot to
go over. So I normally sit with people, Yeah, go ahead,
I'm sorry.
Speaker 2 (05:35):
No, no, let me ask you, you know, cutting right
down to it, it's my understanding that the interest rate
on a reverse mortgage is going to be a little
bit higher than a conventional mortgage. Is that right?
Speaker 4 (05:53):
It definitely is. The fixed rate program is definitely higher. Okay,
So the sixth rate program is only for a lump sum.
The heckum is no juicable going up and down. So
it's a little bit high now, not much higher than
the going six rate, but it's probably going full we're
going to tend to come down.
Speaker 2 (06:11):
So let me ask you this. If I were to
pull out two hundred thousand from my home today in
a lump sum, what would be the rate approximately, I believe.
Speaker 4 (06:22):
The rate on something like that is about eight percent.
Speaker 2 (06:24):
Okay, So you know, take someone who has a home
worth one million dollars, right, and they pull out, they
sit down with you, they go through the education to
determine whether or not it's a good fit for them.
They pull out two hundred thousand with an eight percent
(06:47):
interest rate, and in one year, the interest on the
two hundred thousand is sixteen thousand, right, correct. But because
they did not sell the house, they're getting market value
appreciation on the entire one million, right. So with an
(07:12):
average appreciation in the city of New York of four
percent per year, this family at the end of the
day is up forty thousand dollars and they had to
pay sixteen thousand on what they took out in the
form of the reverse. So I just think for so
(07:33):
many people, you're actually financially ahead of the game by
not selling, not downsizing. And when you downsize, you're going
to a condo or some fifty five and over community
where you have steep monthly you know, homeowner association fees,
(07:54):
and your taxes are going to be higher because it's
newer construction. So I just think they're There are a
lot of things for people to educate themselves about and the.
Speaker 4 (08:07):
Capital gains that they likely.
Speaker 2 (08:08):
Would pay exactly right. Good point, Jim, capital gains.
Speaker 3 (08:13):
I have one question, Jim, a second mortgage. What's the
difference between a reverse mortgage and a second mortgage?
Speaker 4 (08:20):
A second mortgage, like a home equity loan, for instance,
you basically have to make payments every month on a
reverse mortgage. There's no payments to.
Speaker 3 (08:27):
Be made, Okay, thank you.
Speaker 4 (08:30):
So if you have a senior citizen who lets fort
for instance, they're in their home and their pensions and
the social stority is not keeping up with today's inflation,
and let's say there are one thousand and two thousand
a month short, they can take a type of loan
that acts like a home equity on a reverse mortgage,
and they can draw the money as they need it,
(08:50):
and they only pay on the money as they draw.
If they took out a let's say you're two hundred
thousand dollars home equity, they can draw the money the
same way, but they're going to have to make monthly
payments along with it, and that's going to put them
behind the eight ball again.
Speaker 2 (09:02):
Thank you, so, Jim, my last question to you involves
co ops. Can co op owners benefit from a reverse mortgage?
Speaker 4 (09:14):
Not on the standard FAHA reverse mortgage. There are there
are atique products that are sting to the market that
allow it, but they're very expensive and they require a
full MP sum, which for a lot of people doesn't
make sense. So if you have let's say you have
a ninety year old person and they own a call
up with one million dollars, they may be entitled to
(09:37):
maybe six hundred thousand, they would be forced to take
that six hundred thousand dollars and one long sum, whereas
you know, on an FAHA product with the kind of
minimum a home, they could take what they needed as
they needed it. That's the disadvantage.
Speaker 2 (09:53):
Well, Jim, that's what I love about you. You are
very honest, and you know full disclosure, I have used
Jim Flaherty many, many, many times for mortgages in my
life and I wholeheartedly, you know, recommend him as a
source of information. And Jim, how can people get in
(10:17):
touch with you?
Speaker 4 (10:18):
The best way to get in touch with me, hands down,
is to call myself five one six, three, three zero
seven seven nine one five one, six, three, three, zero
seven seven nine to one. Please leave a voicemail. I
work for a small bank. I'm salaried. There are no
consultation fees. I'm happy to come and sit down with
(10:39):
you and go over everything. There's no charge for that either,
so you know, don't hesitate to call and ask any
questions you can think of.
Speaker 2 (10:46):
Well, you know, many of our listeners are driving right now,
so I know that they're not able to write down
that number. So I would encourage anyone who's interested in
connecting with Jim to reach out to me. All of
you should have my contact and I can give you
(11:10):
Jim's number again. All right, Jim, thank you so much
for being with us, and have a great day.
Speaker 4 (11:17):
Thank you very much and thanks.
Speaker 2 (11:21):
Switching gears, Paul, have you been following the gyrations of
the stock market unfortunately?
Speaker 3 (11:31):
Yes?
Speaker 2 (11:32):
Yeah, I mean it is no joke, causing a great
deal of stress for so many people. And you know
they say that financial stress is the number one contributing
(11:55):
factor to insomnia.
Speaker 3 (11:57):
I would believe it makes sense to me.
Speaker 2 (12:00):
And yeah, I remember.
Speaker 3 (12:03):
Not having enough money sometimes to make a show is stress.
Speaker 2 (12:07):
I remember doctor Phil saying, you know when money is
a problem. Everything is a problem. It's not so easy
to compartmentalize your finances if you're just feeling out of control. So,
you know, what can people do to deal with the
(12:29):
stress that you know, the Wild Wall Street rollercoaster ride
is inducing. Do you have any advice for people?
Speaker 3 (12:39):
I suggest to do nothing, do.
Speaker 2 (12:41):
Nothing well, and pray, pray. I would encourage people. You know,
we have no control over it, and obviously we want
to avoid you know, uh, panic induced decision making, right,
We certainly don't want to sell stocks when they may
(13:05):
be at a low point. So what can we do
to feel some measure of control over our financial lives?
And for me, the number one go to is to
reduce or eliminate discretionary spending. Go on like a two
(13:30):
week financial boot camp where you're trying to get creative.
You're looking in the back of the pantry and you know,
you google, you know the different ingredients that you happen
to have in the back of the pantry, and you're
going to come up with dinner. The more discretionary spending
(13:52):
that we can eliminate from our lives, the more power
and control we're going to have over for our finances.
Speaker 3 (14:02):
Very very smart, very.
Speaker 2 (14:04):
I think we also want to be very aware of
our finances. You know, many people say, don't open your statements,
you know, it's just going to make you feel sick.
But I disagree with that. I think we need to
be aware of where we are financially, where we want
(14:26):
to go, what are our financial goals. And for people
who are part of a couple, I strongly recommend that
you not abdicate your role in the finances. You know,
your partner may be a financial genius and you just
(14:49):
kind of abdicate all of the financial decision making and
bill paying to that other person. But that can be
very dangerous, you know. And I'm thinking back to is
anyone old enough to remember John dolorian I do and
Christina Ferrari I do and you know she claimed innocent spouse,
(15:15):
you know, during his fraud trial, and that worked. It
does not work as much today because there is an
expectation that both partners are involved and aware of the finances,
so super important to be involved in things. Do you
(15:38):
remember I don't take you as someone who watches the
Real Housewives franchise, no, but you may remember Teresa and
Joe Judce from New Jersey. No you don't, okay. So
they were in a little hot water because there was
(15:58):
a discrepancy between the numbers that were on the tax
return and the numbers that were on a loan application.
So for the loan application, this guy made a ton
of money, but on the tax return he didn't make
quite so much money. And Teresa claimed innocent spouse. She
(16:24):
said she simply signed whatever was put in front of her,
and that didn't work for her the way it did
for Christina Ferrari decades earlier. She ended up going to jail.
So we want to be aware of things. I had
a woman come in to see me last year. She
was an accountant, okay, super savvy about all things financial,
(16:50):
but it was her husband, also an accountant, who was
responsible for all of the bill pay paying and financial matters.
He worked from home for a couple of years, and
what ended up happening, their home was foreclosed on because
(17:16):
without her knowledge, he wasn't working from home. He was
watching daytime TV all day. He lost his job, and
he was afraid or embarrassed to let her know, so
he just kept up this game that he was working
from home. Drained their savings, drained their retirement accounts, and
(17:39):
because she had given him an unlimited power of attorney,
he was able to sign her name legally to mortgages
on the home. And you mentioned a second mortgage. They
had a second mortgage on the home and they ended
up losing it and it was a total disaster. But
(18:03):
I just you know, I didn't say to her at
the time because she was crying and distraught, but would
it have killed her to open a bank statement once
in a while. So you know, we need to keep control,
We need to stay aware of our finances. And the
(18:24):
third thing that I would recommend people consider if they're
feeling very stressed and financially fragile, is to focus on
people who have less than you do. Because no matter
what your finances are, if you can afford the radio,
(18:44):
you know that you're listening to this on, you're better
off than a lot of people. So consider giving to
other people. You know, we say givers gain and it's
going to give you a boost, it's going to make
you happier, and it's going to put you on a
plane of being able to affect change, if not in
(19:10):
your own life, in someone else's life. Now you remember, Paul,
we had Kate Durgey as a guest in December on
the program, and she founded in honor of her sixteen
year old daughter, Penny, the Penny's Flight Organization. That's a
(19:31):
great example of a grassroots charity that I encourage people
to get involved with. And recently I've become aware of
another great organization. Have you ever heard of City of Hope? Yes, okay.
It is one of the most advanced cancer research and
(19:52):
treatment organizations in the US, and they are having a
special awards luncheon June sixth, No, I'm sorry, June third
at the Plaza. This is the Spirit of Life Awards
luncheon that I learned about from my friend Amy Rosenbloom.
(20:15):
Super organization. Great people to become acquainted with and help
try and change the world for the better.
Speaker 3 (20:25):
They're a great group. But I've made shows about them.
Speaker 2 (20:28):
Yes, So anyone who's interested in learning more about the
luncheon go on to the City of Hope website or
you can reach out to me. And you know, we
have joked before about, you know, going out of our
way not to eat lunch at the Plaza, but this
is a very good reason to have lunch at the plaza.
Speaker 3 (20:51):
And you're really a well rounded lawyer. I'll tell you
that this is these are commentary that is a not
unusual realm of well, somebody might think a lawyer is sharing.
Speaker 2 (21:06):
But you know what, it's important to get out of
our own heads. Right. If we focus too much on
ourselves and our finances and it's all me, me, me, me, me,
that's not a good place to be, so especially right now.
Exactly right.
Speaker 3 (21:26):
Yeah, I have some good questions that are really important
ones that have been presented to me. Am I legally
responsible for my mother's nursing home bills?
Speaker 2 (21:35):
Okay, so what do you think the answer to that is?
Speaker 3 (21:40):
I think no.
Speaker 2 (21:41):
Well, the surprising answer is it depends on what state
you live in. In Pennsylvania, there's a law on the books.
In about twenty something states, not New York, there are
laws on the book saying that we are re responsible
for parents' nursing home bills. Now in New York or
(22:06):
in the other states that do not have that as
a legal responsibility, adult children can unwittingly undertake that obligation
by signing paperwork that is sort of indiscriminately given to
them when they're bringing their parent into a rehab. So
(22:29):
my advice for adult children navigating the long term care
arena with a parent is you need to protect yourselves
or you can unwittingly undertake that obligation. Now, people who
are responsible for each other's nursing home bills are married couples,
(22:52):
and that's true in all fifty states. A spouse is
legally responsible for the nursing home bills of the other.
So it's super important for people thinking about getting into
a second marriage, a later in life marriage. You want
(23:13):
to make sure that your prospective spouse has long term
care insurance or has made plans and arrangements so that
you are not on the hook for their nursing home bills.
Speaker 3 (23:30):
Did I understand that right? And that is at the
application when you go to a nursing home a part
of this answer, So.
Speaker 2 (23:38):
None of us wake up and say I want to
go to a nursing home today. The way it typically unfolds,
there's an acute problem, a broken hip, a stroke, and
we go to the hospital where Medicare and the supplement
do a beautiful job of covering everything. We enter a
nursing home through the door that says rehab. Right when
(24:02):
we leave the hospital. We all go to rehab today
because the hospitals release us quicker and sicker right compared
to thirty years ago. So we go to rehab and
here Medicare and the supplement only cover up to the
first hundred days. Beyond that the bills will start coming
(24:23):
in to the tune of about sixteen thousand per month.
And when that individual's own assets run out, their spouse
is legally on the hook. So super important to protect
the assets ahead of time, and that means doing a trust,
(24:46):
getting that five year clock ticking so that we're protecting
assets for those people who do not have long term
care insurance.
Speaker 3 (24:57):
Okay, I have another question here, also extremely important. In
your book, you say that life insurance should be owned
by a trust. My life insurance already has a beneficiary.
Won't this avoid probate?
Speaker 2 (25:11):
Yeah, so there's you know, there are a few goals
out there we should all want to avoid probate. But
having beneficiaries on the life insurance does not protect the
cash value of that policy from nursing home bills or
(25:31):
from other liabilities. So you know, there are two types
of insurance policies out there. There's term which only has
a death benefit, it has no cash value, and there's
whole life or universal that has a death benefit and
a cash value. I think it's super important. If your
(25:56):
insurance has a cash value, you want that to be
owned by a trust so that the cash value is
invisible to long term care claims. Sure right, yes. And
whether it's a policy with a cash value or a
term policy, they both have death benefits, and you want
(26:22):
to avoid having that death benefit taxed as part of
your gross taxable estate. You know, this is especially true
for people who buy life insurance products to help their
loved ones pay for estate taxes. So it's kind of
(26:45):
bonkers that the death benefit on this policy in turn
is adding to the tax bill.
Speaker 3 (26:54):
This should be part of the insurance salesperson job to
be bringing that to the atention of who they're selling to.
Speaker 2 (27:01):
Yeah, I would think so that. You know, insurance serves
many purposes out there, but you want to you know,
avoid the negative aspects of it. You know, paying taxes
is mandatory. Over paying taxes is what Paul.
Speaker 3 (27:21):
That so smart?
Speaker 2 (27:22):
It is stupid, right, And it's super easy to create
this life insurance trust. I remain the so called measured
life My beneficiaries are whoever I select. But the owner
of the policy is the trust.
Speaker 3 (27:42):
Now does the I mean we're talking a lot about trusts, okay,
and you talk that you know there's different kinds of trust. Yes,
So when you go for a trust or maybe for
next week or whatever, because there's a lot going on
with trusts, do need various trusts? Do are you need
one trust that carries all on with all these important things?
Speaker 2 (28:05):
Well, I would say, you know the threshold difference between
a will and a trust. The will quite simply determines
who gets my stuff. With the trust if it is
properly drafted, and this involves, you know, an interaction between
(28:27):
you and the attorney you're working with. If the trust
is properly drafted, it's going to take us from who
gets my stuff to how do they get my stuff?
If I have a child with a gambling issue, a
substance abuse issue, developmental disabilities, I don't want them getting
(28:51):
a lump sum from my estate because it's going to
be gone in no time flat. So we want to
consider a special needs trust, a spendthrift trust, a discretionary trust,
many many different kinds of trusts to benefit your family
(29:13):
you just have to know what's out there and educate yourselves.
There you go, all right. So with that, thank you
everyone for tuning in. Please reach out to me with
any questions you have during the week at my Asset
Protection Attorney dot com. Have a great day everyone.
Speaker 1 (29:43):
The preceding program was sponsored by New York Priority Medical Care.
The proceeding was a paid podcast. iHeartRadio's hosting of this
podcast constitutes neither an endorsement of the products offered or
the ideas expressed.
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