When you eventually sell your house you could owe taxes. Single taxpayers can exclude $250,000 of gains on every sale, and married taxpayers filing jointly can exclude $500,000. The method of holding title doesn't matter. Title can even be held in a revocable living trust, as millions do, to avoid probate. You can take that deal every two years. What about homeowners who have watched their homes soar in value over the past years? Even a one million-dollar profit dwindles when a single person can exclude only $250,000 of gain. If you're thinking of your family home as a significant part of your retirement fund, consider a Jumbo Reverse Mortgage, which allows you to withdraw huge gains tax-free as long as you live.

Consider the jumbo reverse mortgage for estate planning purposes. In this scenario, a wealthy couple withdraws equity from their home and gifts the funds to children or grandchildren through Section 529 college savings plans or outright, thereby reducing their estate. They also fund an irrevocable insurance trust (ILIT) to purchase a "second to die" life-insurance policy. Trust ownership keeps the insurance out of their estate. When the couple dies their children receive the life insurance proceeds, enabling them to pay off the reverse mortgage and keep the house, if they wish. If they elect not to retain the house, they simply keep the life insurance cash plus the retained equity after the sale of the property. Mom and Dad enjoyed the difference during their lives!