Funding Business Succession Without Compromising Retirement: A Home Equity Strategy for HNW Clients

June 10, 2025

As a financial planner, you often work with clients who have built substantial businesses and want to pass them on to the next generation. But what happens when liquidity is needed to make the transition, and the client’s primary asset is tied up in real estate or the business itself? In this article, we explore how a strategically structured Jumbo Reverse Mortgage helped one father fund his son’s business buyout—without jeopardizing his retirement security or triggering a large tax event.


The Planning Challenge



Client’s dilemma:

  • 81-year-old father, recently widowed, ready to retire.
  • Owns a $10M business; son (only heir) wants to buy it.
  • Son needs $1.5M down but traditional financing requires Dad to co-sign.
  • Father’s $1.5M Down Payment from the business is critical to his retirement.


How do you help a retiring client unlock liquidity for succession
without co-signing debt, liquidating taxable assets, or risking retirement stability?


The Solution – Home Equity as a Wealth Tool. Fathers home is mortgage free with a value of $5M

  • Father uses Jumbo Reverse Mortgage to unlock $1.5M of non-taxable home equity.
  • Loans $1.5M to son on 10-year, 7% interest-only term
  • Son uses $1.5M loan from father as down payment on the business.
  • Son’s interest only payments to Father are equal to interest on the RM, father pays interest received from son to the RM lender. 
  •  Father can deduct the interest


Key Points:

  • No disruption to invested assets.
  • No monthly principal payments required from the borrower.
  • Strategically matches inflows (interest from son) with outflows to RM lender.
  • Home value continues to grow as the appreciations is on 100% of the home’s value while the loan to value (LTV )  is only 30% of the home value


Long-Term Benefits and Estate Planning Impact

  • Home appreciation estimated at 7% outpaces loan cost: $350K / year in value vs. $105K annual simple interest.
  • Father maintains lifestyle and keeps control of the transition.
  • Upon death, step-up in basis allows the son to inherit the business and home without capital gains.


Ideal clients for this approach:

  • Business owners nearing retirement
  • Clients with significant home equity and limited liquid assets
  • Clients wishing to transfer wealth or a business to a child
  • Those concerned about taxes and legacy planning

Think Outside the Portfolio

For the right client, home equity—especially via a Jumbo Reverse Mortgage—can be a flexible, tax-smart solution that supports succession, retirement income, and estate planning goals all at once. As a CFP®, understanding when and how to use tools like this can set you apart as a strategic, forward-thinking advisor.




Could This Strategy Benefit Your Clients? Let’s Find Out!


Do any of your clients fit this scenario? Retirement in Reverse would be happy to provide a customized, hypothetical scenario to help you assess if this strategy could be a valuable solution. Let’s explore how we can make it work for your clients!


Retirement In Reverse offers Objective, Competent Advice to help you make informative decisions for your clients.

Furthermore, we have No Conflict of Interest, as we do not sell Financial Product, nor enter into financial planning engagements. We share your commitment to your clients’ financial stability and quality of life.


September 3, 2025
Physical activity is important at any age, but the biggest benefits of staying active might come in your golden years. Engaging in regular physical activity is a critical component of healthy aging, promoting wellness, functional independence, and an overall better quality of life. Key Benefits of Physical Activity Improved Attitude and Mood Exercise can significantly enhance mental health, reducing symptoms of depression, anxiety, and stress. Physical activity releases endorphins, which act as natural mood lifters, helping to improve your overall outlook on life. Better Sleep Regular exercise helps regulate your sleep patterns, making it easier to fall asleep and stay asleep through the night. Quality sleep is crucial for overall health and well-being, especially as we age. Stress Reduction Physical activity is a great way to manage stress. Exercise reduces levels of the body's stress hormones, such as adrenaline and cortisol. It also stimulates the production of endorphins, chemicals in the brain that are natural painkillers and mood elevators. Enhanced Mental Health Regular physical activity can help manage mental health conditions such as depression and anxiety. Outdoor exercise, in particular, can provide the added benefits of sunlight, which aids in the absorption of calcium and helps prevent depression. Physical Health Benefits Cardiovascular Health Sustained exercise improves cardiovascular function, reduces heart rate, lowers blood pressure, and enhances circulation. This can prevent conditions like myocardial infarction and atherosclerosis, leading to a healthier heart and vascular system. Bone and Muscle Strength Weight-bearing exercises and strength training increase muscle mass and bone density, which is especially important for aging women at risk of osteoporosis. Regular activity can delay or decelerate bone loss, reducing the risk of fractures. Improved Flexibility and Balance Activities such as stretching, bending, and twisting help maintain flexibility and coordination, which are critical for preventing falls and maintaining independence. Weight Management Regular physical activity helps control weight by burning calories and increasing muscle mass. This is crucial for managing and preventing obesity, diabetes, and other chronic conditions. Designing an Effective Exercise Program For physical activity programs to be effective for older adults, they should be multidimensional, combining: Weight Training for Strength Aerobic Exercise for Endurance Calisthenics for Flexibility Despite the clear benefits, only about 71% of adults aged 65 and over participate in leisure-time physical activity, and only one-third achieve the recommended levels. Interventions to encourage a sedentary older adult to initiate physical activity, as well as those to help maintain it, are essential. Incorporating physical activity into daily life not only enhances physical health but also contributes significantly to mental wellness and quality of life. It is never too late to start reaping the benefits of a more active lifestyle. Always consult with a healthcare provider before beginning any new exercise program to ensure it is safe and appropriate for your health conditions. By embracing regular physical activity, older adults can look forward to a more vibrant, independent, and enjoyable life. Find a physical activity that you love doing and do it every day, soon it will become a healthy habit. Have fun:) Author: Kinga Wulczynska-Lauer Disclaimer: Retirement In Reverse is a mortgage company dedicated to serving older adults, financial planners, and wealth managers with a strong focus on education and informed decision-making. While we strive to provide helpful information on a variety of topics, we are not experts in all areas. That’s why we collaborate with a trusted network of professionals—including attorneys, tax advisors, and financial planners—to help connect you with the right expert based on your individual needs. The information provided in this article is for educational and illustrative purposes only. Before making any financial, legal, or lifestyle changes, we strongly recommend consulting with a qualified professional who can review your personal situation. If you are considering Reverse Mortgage, call Ted Lange at 760-753-1568 to learn more.
September 3, 2025
Understanding Non-Borrowing Spouses and the Non-Recourse Feature of Reverse Mortgages
More Posts