10 Estate Planning Mistakes

Top 10 Estate Planning Mistakes

 

Contrary to popular belief, estate planning is not just for the rich because most people own a home. In California, if your home gross value is over $150,000 and you don't have a trust in place, then a probate is eminent when you die because all homes in Southern California are worth at least $150,000, irrespective of any mortgage balance on the home. A typical probate in California will tie-up your property in court for at least one year and the court will decide how your property will be distributed if you don't have an estate plan. These are some of the most common mistakes people make when planning their estates.

  

1. Procrastination -- Not having an estate plan at all.

The number one mistake is not having an estate plan at all because people don't want to acknowledge their mortality, people think they are not dying anytime soon; thus procrastination kicks in and unfortunately we cannot escape death. The consequence of not having an estate plan is that the State of California's intestacy law will determine who gets your property; which might not be in alignment with your wishes. If you want to make sure your loved ones are taken care of then take a cue from Nike's commercial "Just Do It".

  

2. Grant Deed Not Titled in the Trust's Name

If you have a trust then you need to fund it because a trust is just a contract. Funding the trust means titling all your assets in the name of the trust.   A trust with no assets is worthless. Therefore, you should check to make sure that the grant deed to your house is titled in the name of your trust. If the grant deed to the house is not titled in the name of your trust, then your heirs will have to endure the painstaking process of the probate court to get the house.

  

3. A Will is NOT enough in California

A basic will CANNOT accomplish every goal of estate planning, in fact, it cannot even accomplish the most basic goal of avoiding probate. If all you have is a will, then surely your house will end up in the probate court, which is time consuming and expensive. A will cannot be used to change or override the beneficiary of a pension plan, 401k plan or life insurance (you must change them with the financial institutions prior to your death). A will is only good after you have died. An integrated estate planning trust package will allow you to manage your financial affairs in the event you are temporary incapacitated.

  

4. Leaving Assets as Joint-Tenancy

One of the main reasons why married couples vested title in their homes as joint tenancy with right of survivorship is because they think that by doing so they will avoid probate. That is half-truth because there will be no probate on the death of the first spouse; however, there will be a probate upon the last surviving spouse's death.   Furthermore, if the surviving spouse sells the house; there will be a capital gains tax. Adding an individual as a joint tenant on your property is a bad idea because the creditor of the joint tenant can attack the property.

  

5. Not Communicating with Your Trustees and Beneficiaries

It is important to let families and friends who are named in the estate planning documents, especially those named as trustees, know what role they are being asked to play in your trust. It is important to ask if they want to be a trustee of your trust. Proper communication with these trustees will ensure a smooth transaction during the trust administration process after your death.

  

6. Not Updating Your Estate Plan

People feel a sense of accomplishment when their trust is completed and tend to file them away for safekeeping and forget about it. The danger is that every few years or so Congress makes tax law changes that effect trusts in a negative way and if you don't update your trust, you end up paying unnecessary taxes. Another reason to update your trust is when you have meaningful changes in your life; such as marriage, divorce, children or increase or decrease in assets.

  

7. Giving Assets Outright to Heirs and Beneficiaries

Giving assets outright to heirs and beneficiaries is dangerous because the assets will be exposed to the heirs and beneficiaries' creditors, predators and divorcing spouses. It is much better to leave the assets in a trust with a spendthrift clause that prevents the heirs and beneficiaries' creditors from grabbing them, as well as protecting the beneficiaries themselves from voluntarily giving their assets away. The spendthrift clause will protect beneficiaries who are not good with money, have an addiction that could cause them to squander the funds, can or might be easily deceived, or those who are heavily into debt with creditors.

  

8. Forgetting Pets

Sometimes people forget about their pets and when they die the pets are often left to follow them to their grave. As of January 1, 2009, California Probate 15212 effectively says pet trusts are enforceable. This California Probate code gives pet owners absolute assurance that their wishes to provide for their animal companions will be carried out.

  

9.Thinking you're too young for estate planning.

Estate planning is an integrated term that includes financial planning, debt management and asset protection. It is easy for someone in their early 30's to not think about estate planning. However, estate planning is more than just about assets. For example, if you wind up in the hospital with no way to communicate because you are temporarily incapacitated, you will wish that you had a durable power of attorney for your parents or loved one to decide on treatment and carry out the most basic financial decisions on your behalf.

  

10. The "Do It Yourself" Mentality

Paying a few thousand dollars for a good estate planning package will ultimately save you much more money in the end. People only grow old once and die once, and generally will only need one estate plan, and if they try to do the estate plan themselves, like anything else that you only do once, chances are they will do it very poorly. Even the most simple trust can be invalid and if it is an invalid trust then probate will be standing by and the cost of probate is exorbitant in terms of money and time.

Sales Up in Almost Every Price Range

The National Association of Realtors’ most recent Existing Home Sales Report revealed that home sales were up rather dramatically over last year in five of the six price ranges they measure. Only those homes priced under $100,000 showed a decline (-7.7%). The decline in this price range points to the lower inventory of distressed properties available for sale and speaks to the strength of the market. Every other category showed a minimum increase of at least 5.6%, with sales in the $250,000- $500,000 range up 16.9%!

Here is the breakdown:

What does that mean to you if you are selling?

Houses are definitely selling. If your house has been on the market for any length of time and has not yet sold, perhaps it is time to sit with your agent and see if it is priced appropriately to compete in today’s market.

9 Reasons why your property hasn't sold.

________________________________________________________________________________________

9 Reasons why your property hasn't sold.

1. Your property hasn't sold because your photos are "terrible". Yep, this is an actual photo from our MLS, predictably it's been on the market for quite a while.  All of the photos are this quality.

The vast majority of home buyers begin their search for a home on the internet, so your property had better look fantastic in print. Not just nice, it has to look downright fabulous.  Today an internet view is considered the same as a 'virtual showing'... if your house gets past the first virtual showing, then they might(just might) make anappointment to see it in person... You should really consider that your SECOND showing. Today's online viewers are expecting good quality photos (and lots of them...the picture to the right ... yep, that a really ugly, dirty and apparently wet basement. Can't you smell it from the photo?  That's a $300,000 listing... yuck.)

2. Your property hasn't sold because it's overpriced. Even in today's improved market it's still important to price as accurately as you can. Properties that are priced too high, just don't get lookers and bidders. Look at the home as though you were a "buyer"... if necessary, make an appointment with your Realtor to view other properties that are priced comparably to yours.  Be brutally objective.  Given the other options on the market (and yes, you DO have to include short sales and foreclosures on your list... your potential buyers are!), would YOU buy your home, over the others that are currently available on the market?

If the answer is "NO", (and try to be as honest as you can) well then you have your work cut out for you, don't you?  You either have to "update" your home to meet or beat the competition...that might mean an updated bathroom or kitchen, or neutralizing some decorating... remove that old wallpaper that was there when you bought the house or lower your price to adjust for it.  if you can't afford to sell it for the price, that you KNOW it should sell for, this may not be the right market for you to sell.  Consider taking it off-market.

3. Your property hasn't sold because it shows badly. This could mean almost anything... from the 60 pound Rottweiler, barking and drooling at the potential buyers from behind the flimsiest child-gate, to the lingering smell of 30-years of smoking.  Maybe the carpeting shows traffic-pattern wear, or your nicotine covered windows allow in slightly less than daylight.  All things that aren't visible from the internet, but whoa.... once you get inside the house... they show up, like a cat-urine-soaked-shag carpet on a 95 degree day in New Orleans! Maybe, as in this recent photo, your seller is a hoarder??

4. Your property hasn't sold because it's invisible. Today's buyer comes from the internet, almost exclusively.  Have you (or your agent) simply plopped the property on the MLS, and started praying?  Are you on all the websites...(Trulia, Zillow, Craig's List, Google Base, etc...) all the places that buyers are searching?  If not, you need to be, now! Don't try to be a secret, in today's electronic world.  You want to be found, and the sooner the better.  And make as much use of the number of photographs that are allowed.

If you're not making full use of the internet today, you're out of business before you've started.  C'mon people... get on board, the train is leaving the station. (I love a good train metaphor).

5. Your property won't sell because your listing is tired and stale on the market. We've all visited that old listing.  You know the one where it just smells musty as you walk in.  There's dust on every horizontal surface.  The dust floats through the sunshine through the dirty windows.  The water in the toilets has long since evaporated allowing the telltale smell of sewer gases to waft through the home.  How do you spell "ewwww".

Check in on your property regularly.  Flush the toilets,  mow the lawn, trim the hedges, shovel the snow, pick up the mail.  In other words, just pay attention!!
6. Your property won't sellbecause your house won't appraise. We're having less trouble with appraisers, these days, but that doesn't mean that the problem has gone away entirely.  While the market is hot, we do have the occasional seller who's trying to push the envelope.  And since the buyers are having trouble finding inventory, some of them will foolishly bite and any price.  The appraiser will often be the voice of reason. 

7. Your property won't sell because it's unavailable to show. You have a baby, and a 1-year old.  And they need their naps.  So you've told your Realtor in no-uncertain-terms, that you'll only allow showings between 9:00 a.m - Noon, and then again from 2:30-5:30 p.m.  And no showings on Saturday or Sundays.  "After all", you've told him "we still live here.. it's our home!".  Well guess what?  They can't buy it, if they can't see it.  As good as your online photos are, they're no substitute for an in-person visit. "If they really want to see it, they'll reschedule", you're already answering as you read this.  Nonsense!  What they'll do, is they'll just move on to the next property in line (there are dozens like yours available) and maybe they'll buy that one instead.  Once you put your property on the market it stops being your "home", and has become your "product".  And you want your product to be seen by as large a buying audience as possible.

8. Your property won't sell because you have the heat and power turned off. Okay... maybe it's an REO, or maybe you're no longer living in the home.  But viewers need to be able to feel comfortable when they've viewing your home.  You want them to spend time in the home and get a sense of the place.  You don't want them standing in the darkened foyer shivering, breathing on their hands to keep their knuckles from freezing in position.  If they can see their own breath, the house is too cold.  It's just not an invitation to spend time in the home.  Have the power on, and leave the heat running, at least high enough to keep viewers from shivering.  It doesn't have to feel like a tropical paradise, but it shouldn't feel like the north pole, either.  Ain't nobody gonna buy that igloo.

9. The Flintsones live next door. By "the Flintsones", I'm talking about the family who has a car without an engine on the front lawn.  A family next door who doesn't mow their lawn, has a series of rusted Flintsone-mobiles in the yard in different levels of deterioration.  One of them is more of a planter, than a car.  It's an eyesore.  Maybe you can offer to pay to have their lawn cleared of junk, or errect a new fence?

Benefits for the Nations's Heroes

Is it Time to Downsize your Home?

A recent study by Edelman Berland revealed that of homeowners who are contemplating selling their house in the near future 33% plan to scale down. Let’s look at a few reasons why that would make sense to many Americans. In a recent blog post, Dave Ramsey, the financial guru, discussed the advantages of selling your current house and downsizing into a smaller home that better serves your current needs. Ramsey explains three potential financial advantages to downsizing:

1. A smaller home means less space, but it also means less time, stress and money spent on upkeep
2. Let’s assume you save $500 a month on your mortgage payment. In 30 years, you could have an additional $1–1.6 million in the bank to get you through your golden years.
3. Use the proceeds from selling your current home to pay cash for a smaller one. Just imagine what you could do with no mortgage holding you down! If you can’t pay cash, aim for a 15-year fixed rate mortgage and put at least 10–20% down on your new home. Apply the $500 you saved from downsizing to your new monthly payment. At 3% interest, you could pay off a $200,000 mortgage in less than 10.5 years, saving almost $16,000 in the process.

Realtor.com also addressed downsizing in a recent article. They suggest you ask yourself some questions before deciding if downsizing is right for you and your family. Here are two of their questions followed by their answers (in italics) and some additional information that could help.

Q: What kind of lifestyle do I want after I downsize?

A: “For some folks, it’s a matter of living a simpler life focused on family. Some might want to cross off travel destinations on their bucket lists. Some might want a low-maintenance community with high-end upgrades and social events. Decide what you want to achieve from your move first, and you’ll be able to better narrow down your housing options.”

Comments: Many homeowners are taking the profit from the sale of their current home and splitting it to put down payments on a smaller home in their current location and a vacation/retirement home where they plan to live when they retire. This allows them to lock in the home price and mortgage interest rate at today’s values. This makes sense financially as both home prices and interest rates are projected to rise.

Q: Have I built up enough equity in my current home to make a profit?

A: “For most homeowners, the answer is yes. This is if they’ve held on to their properties long enough to have positive equity that will be sizable enough to put a large down payment on their next home.”

Comments: A recent study by Fannie Mae revealed that only 37% of Americans believe they have significant equity (> 20%) in their current home. In actually, 69% have greater than 20% equity. That equity could enable you to build a life you have always dreamt about.

Bottom Line

If you are debating downsizing your home and want to evaluate the options you currently have, meet with a real estate professional in your area who can help guide you through the process.

How To Hire A Contractor

Is Granite Going Out of Style?

Is it true? Could granite’s 30-year reign be coming to an end? We can’t say for sure. In fact, we think granite remains a solid choice. After all, it’s both durable and attractive -- and it’s become increasingly affordable too. But there’s just no denying granite’s seeming decline. As homeowners opt for more modern kitchen designs, they’re also opting for more understated countertop alternatives. 

Here’s a quick look at some of the countertop’s hottest contenders:

Future Home Builders, Inc.

Engineered Quartz:

Perhaps granite’s top competitor, engineered quartz offers the beauty of stone without the maintenance. It’s tougher than granite, and it’s highly resistant to scratching, cracking, staining and heat. Unlike granite, which offers the unique qualities of natural stone, engineered quartz is largely uniform; because it’s engineered, there’s no choice of one-of-a-kind slab. There are, however, a number of colors and designs available – from stark modern whites to options closely resembling marble. And, because engineered quartz is non-porous, it never has to be sealed like natural stone.

Elegant Interiors of DFW

Wood:

Increasingly, homeowners seek and appreciate natural wood countertops – particularly easy butcher blocks and those custom-created by quality craftsmen. While wood countertops can add warmth, balance and beauty to any modern home, they also require a fair amount of maintenance. Because wood is susceptible to damage from heat and moisture, it must be sealed about once a month. The best part about wood, though, is that it can be refinished in the event that damage does occur.

Heritage Tile Marble & Granite, Inc.

Soapstone:

Soapstone is an attractive natural quarried stone that ranges from light gray to green-black in color. While the material is soft and pliable, it’s also nonporous (i.e., it doesn’t require regular sealing like granite). Soapstone is also resistant to stains and acidic materials. The downside to soapstone is that it is susceptible to scratches and deep indentations. Light gray soapstone will also weather and darken over time, occasionally developing a patina finish. The material comes in smaller slabs, so seams will be visible in soapstone countertops longer than seven feet.

Concrete:

Concrete countertops came onto the scene in the 1980s -- and they’ve evolved a lot since. These days, precast concrete countertops are available in a number of different colors. Generally, they’re flat and smooth, and they can run from 1.5 inches to 10 feet long. While concrete countertops have historically cracked and chipped easily, recent innovations have made them less prone to damage. Concrete is naturally strong and heat-resistant, and slabs can be sealed to prevent staining.

Stainless Steel:

There’s a reason restaurants use stainless steel countertops in their kitchens. It’s heat-, rust- and stain-resistant; it’s easy to clean; and it won’t absorb or harbor even the toughest bacteria. The downside to stainless steel countertops is that they scratch easily – and they show it too. For this reason, it’s best to use a cutting board any time you’re prepping food on a stainless steel countertop. Also, it’s a good idea to choose a brushed stainless finish that will help conceal any marks. At first blush, you may think that stainless feels ultramodern or cold, but a balance of stainless steel and wood can create a warm, timeless and uber-functional kitchen.

Not Sure Which Countertop to Choose?

When you’re remodeling your kitchen, the most important question to ask yourself is this: Are you remodeling for yourself or a potential buyer? If you’re remodeling for yourself, go with what you like best. (And if you love granite, by all means go with granite!) But if you’re remodeling with an eye toward selling, we advise going with a more neutral option. You’ll get the upscale look you’re going for without alienating granite-tired buyers.