THE IMPORTANCE OF ESTATE PLANING . . . .

                             To Bequeath or Not to Bequeath ? That´s NOT the Question!

by: Pamela Vuncannon 

An estate plan is a set of legal documents or tools that provide instructions for accomplishing the goals of an estate plan.  These documents usually include legal and medical powers of attorney, a will, trusts, and beneficiary designations.  Often, the only estate plan individuals make are the instructions they leave in a will and many people do not even make out a will.  Even people who do not have a plan of sorts ? to let the laws of the state control how they should be cared for, how their assets should be managed if they become incapacitated, and how their assets are to be distributed after death.  What is your plan?  Will you leave the state in control of your care and the distribution of your assets?  It is better to approach estate planning as a favor to yourself and your family.  Planning for the possibility of mental incapacity is preferable to facing it without a plan and planning for death can provide a great deal of relief for those who are left behind. 

Should I have a will?  Making a will is a smart thing to do, but it is not so much a matter of the mind as the spirit ? how a person feels about the people they are closest to in life.  When you make a will, you are making legal commitments affecting loved ones and some folks find it difficult.  The flip side is that by not making these plans in advance, you are subjecting the very people you should care about most to stressful ordeals at a time when they are most vulnerable.  Especially, in matters of final estate planning, it is best that the mind rules the spirit.  The good thing about wills is that they are not written in stone and can be changed as your life circumstances change.    

What is the first thing that happens if a person dies without a will?  When it is demonstrated to the probate court that the deceased left no legal statement regarding the disposition of their estate, the "laws of decent descent and distribution" take over and the judge appoints someone as the "administrator" to see that all creditors are paid, proper forms filed, valuable assets appraised and dispersed, and taxes paid.  That person may or may not be a family member or friend.  The state will dispose of a person´s life possessions without regard for original statements, individual need or charitable intent.  Because the state cannot look into the heart and mind of the deceased, it must use a formula and rules to define the plan.  The judge will appoint someone he thinks can get the job done.  A bond has to be posted along with several other things that will be at a cost assessed to the estate because of not having a will.  An administrator is appointed by the judge and an executor is someone that is appointed by the deceased.  Not having a will can double the time and expense it takes to settle an estate. 

Doesn´t owning everything as joint tenants take the place of having a will?   Ownership in joint tenancy with rights of survivorship does effectively transfer real property between individuals.  In fact, joint tenancy takes precedence over a bequest request under a will.  A common misconception about joint tenancy is that "both" own the property.  Wrong ? only the survivor really does.  Even if joint tenancy were perfect in every instance ? which it is not ? you still need a will if you want to properly transfer valuables to heirs not held in the title or deed.  All things considered, joint tenancy is a poor alternative.  The better alternative is to use beneficiaries on your assets in combination with a legal will. 

What is the relationship between wills and probate?  One exists for the other.  Having a will guarantees probate.  Probate is taken from the Latin word, probate, meaning "to prove".  The primary purpose of the probate process is to "prove" the validity of the will.  Was it written by the deceased? Is it properly signed and witnessed? Does it conform to the statutes of the state?  Probate is also where a will is made public, often revealing intimate and personal feelings.  Most people would be surprised to learn that you can go to probate court and for a few dollars receive a copy of the most private family affairs revealed in a person´s will. 

Is a will expensive?  The cost of your will is a bargain when you consider the thousands of dollars in costs it can avoid, the stress and heartache if can prevent and the joy that it can bring, the time and legal fees you spend now will be repaid many times over.  What will run up the cost of obtaining a legal will is when you go to an attorney unprepared.  There are plenty of good books on the subject of wills.  Reading one or two books beforehand, means that your lawyer will not need to be a teacher, in addition to preparing your legal documents.  Using a "fact sheet" that I can send to you to complete will help you convey your wishes from thought to paper and help you prepare to meet with an attorney.  Remember, the less time you spend with an attorney and the more work you do at home, the lower your legal expenses will be.  Call me directly or go to my web site for your free fact sheet and planning information.  I can refer you to a good attorney to help you put your affairs in order from personal property and financial assets to real property such as your family home.  Protect the ones you love.

"REMODELING THAT MAKES SENSE" . . . . Pay Back Time!
  by Pamela Vuncannon

Thinking of starting a major renovation or adding value to your home through some remodeling?  It is time to consider a few factors -

• How long do we plan to stay in our home and how much will we benefit from and enjoy the space?
• Is our home within the same standards as other homes in our neighborhood?
• How much will construction cost, how will it be financed, and how long will it take?
• What is the average rate of appreciation on property in our area and how is it affected by remodeling?
• If we decide to sell, what projects have the best rate of return and when will we break even?

 Remodeling Magazine reports that the best returns come from remodeling kitchens and baths or adding needed bathrooms, which recover 90% to 100% of their expense.  A couple of exceptions apply.  When home prices are rising rapidly, well done projects usually pay for themselves immediately and a project might net a 100% return if it involves bringing a house up to the standards of other homes in the neighborhood. Big pay backs often come from remedying deficiencies that will cause buyers to pass over your house,  such as adding a nice deck to extend the living space to the outdoors and let in light or adding a second bathroom.  Mud rooms have become a hot item for buyers in the mid-price range sporting lockers or wooden cabinets designed to hold belongings from shoes to computers and coats for each member of the family.  All things being considered equal, updating floor coverings with solid hard woods and stone or tile surfaces will increase a home's value every time.

When it comes to bathrooms and kitchens, you can rejuvenate simply by sprucing up good solid wood vintage cabinets with new hardware and a coat of varnish in many cases, saving a big chunk because wooden cabinets are expensive to replace.  Most move up buyers want a luxurious tub and a larger separate walk-in shower.  Stone or tile floors in master bathrooms and kitchens are attractive to home buyers.  Kitchen counter tops such as granite are far more popular with home buyers than laminates, which are still acceptable in starter homes.  Add new faucets and light fixtures in kitchens and baths along with an elegant hanging light fixture for an added touch. 

Using your home equity wisely is the key to financing your renovation project.  Interest on loans used to rehab or purchase a home are tax deductible, so you have a tax deduction that will put money back into your pocket each year during the life of the loan!  This can be especially good for families in higher income brackets, single home owners, or for those of you who want to stop paying private mortgage insurance by adding value to your existing home.  Home equity loans pay the proceeds in a lump sum for the remodel project and you begin paying interest at what is usually a fixed rate right from the beginning.  This option works great for a large one-shot project.  Home equity lines of credit are among the easiest and cheapest of financing options.  The rate is usually adjustable and tied to the prime lending rate.  You tap into the funds as needed and only pay interest and payments based only on the portion of money that is being used, which is best for smaller on-going projects done in phases.  Remodeling loans are also available based on the expected value of the home after completion of renovations totaling around $50,000.00 or more.  The bank will require a break down of expenses from the builder and draws for payment will be given to the contractors based on completion of certain benchmarks after inspections are done to verify that work is completed.

For more information on what types of projects will add value to your home, contact Brian and Angela and for answers to your questions about which loan options make the most sense for your renovation project, call me, your mortgage consultant for life and I will guide you through the process.