Q-My husband, 84, is in poor health, mostly heart problems. His doctor advised me to check everything to be sure his estate is in good order. I think that means my husband doesn’t have long to live.
One of the things I checked was the papers by which we took title to our house 39 years ago. It appears to me the title is in my husband’s name alone. His will leaves everything to me.
Is this a problem?
A-I presume your question refers to the title to the house being in your husband’s name alone, not the fact your husband’s will leaves everything to you.
Please consult a local estate planning attorney immediately. It appears some changes need to be made.
If title to the house is in your husband’s name alone, although you are his sole heir, in most states it will be necessary to transfer title by probate proceedings if your husband dies before you do.
You can probably avoid this unnecessary probate delay and expense by changing title now to joint tenancy with right of survivorship.
When a joint tenant dies, all that is usually necessary to transfer title to a surviving joint tenant is to record (a) a certified copy of the death certificate and (b) an affidavit of survivorship.
Although assets left to a surviving spouse, regardless of the amount, pass free of federal estate tax, if you and your husband have substantial assets you might wish to consider a living trust or other estate planning device.
Now is the time to do your estate planning to avoid unnecessary problems later.
Q-I have just received a job transfer and a big pay raise. I have rented an apartment while I get acquainted with my new job and new city.
My problems are (a) I will be in the 36 percent federal tax bracket unless I get some tax shelter, such as buying a house, and (b) my employer says I can expect another job transfer in two or three years.
Although I know I should buy a house, I’m reluctant to do so because I know I won’t be living here more than a few years.
Should I consider buying a house anyway?
A-It’s very difficult to break even on a home purchase and sale in less than five years of ownership.
The reason is that the sales expenses usually result in a net loss unless the home rapidly appreciates in market value.
Coming close to breaking even after only two or three years of home ownership will be very difficult.
Unless your employer has a relocation plan which includes paying for employee losses on the sale of their homes, in your situation I would not buy a house now.
However, the next two to three years will give you an excellent opportunity to save your money for a home down payment in the future when you aren’t subject to frequent job transfers.
Q-I am considering investing in one of the new real estate mutual funds, or perhaps a REIT (real estate investment trust).
I realize you can’t recommend a specific investment, but what do you think of this type of real estate investment?
A-I don’t recommend any type of group real estate investment. The big drawback is the individual investor is at the mercy of the general partner or fund manager.
The investors have no control over how their invested dollars will be invested. Getting your money out can be extremely difficult, or impossible, as past investors in real estate limited partnerships discovered.
My advice: Stay away.
Q-I have to reluctantly sell my Florida vacation home to pay off some credit card debts that got out of hand.
Two weeks ago, my real estate agent brought me a sales contract that I signed without reading it carefully. I was counting on my agent to explain the important terms to me.
As I study this contract, among other things I have discovered (1) I am obligated to pay for termite and dry rot repairs, but there is no maximum limit, and (2) I must pay up to two points for my buyer’s mortgage.
The termite inspector says repairing the damage will cost about $5,500. This will leave me very little cash to pay off my debts, which was my primary reason for selling.
Can I get out of this sale for misrepresentation?
A-The time to read a home sales contract is before, not after, signing it.
Although your realty agent should have gone over the contract terms paragraph by paragraph with you, it was hardly misrepresentation if she failed to do so.
However, it may have been fraud, which means intentional deceit, if your agent knew the contract had no limit on the seller’s obligation to pay for termite damage repairs and she failed to emphasize it to you.
As for paying up to two points (each point is one percent of the amount borrowed) for the buyer’s mortgage, the agent’s fiduciary duty to you requires explaining any terms the client doesn’t understand.
Please consult a local real estate attorney to discuss your best course of action.
Q-I will soon be moving away from this area for a temporary two-year job assignment. Since I plan to return then, I will rent my house to tenants while I am away.
I recall some time ago you gave a formula for determining how much rent a homeowner can get for their house. Please repeat it.
A-The traditional formula was a home should rent for one percent per month of its market value. To illustrate, if a house is worth $100,000, it should rent for $1,000 per month.
However, except for the least expensive residences, today it is virtually impossible to get that much rent for a house. In my community, for example, I’m lucky to get 0.50 percent per month of market value for a rental house.
The best way to determine the fair market rent of your house is to start with the newspaper classified want ads of houses for rent. See what houses comparable to yours are commanding in rents. Local real estate rental agents can also help you determine how much rent to charge.
Q-I was recently elected to the board of directors of our condominium homeowner’s association. Along with two fellow members of the committee, my primary duty is to shop for fire and liability insurance and take bids for our policy, which is up for renewal in June. Each insurance agent we consult has different recommendations.
We have a pretty good idea how much fire insurance we need, but liability insurance is a different matter. Currently, we carry $300,000 liability insurance. However, I think we need more for a 22-unit building. How much insurance should we carry?
A-Your condominium homeowner’s association is grossly underinsured. In the event of a liability loss, such as someone tripping on a defective stairway and being severely injured, it might be possible to hold the individual condo owners liable because of underinsurance. That happened last year in a California appellate case.
Check to see what laws your state has with regard to condominium associations and insurance. California, for example, recently passed a law requiring at least $2,000,000 per occurrence of liability insurance for less than 100 condos and at least $3,000,000 liability insurance per loss for over 100 units. Otherwise individual condo owners may be held liable.
Most states do not have similar laws, but this statute sets a minimum guideline.
Since liability insurance is relatively inexpensive for condo associations, I suggest you buy at least $2,000,000 liability coverage to be safe. In addition, be sure to carry condo officer’s and director’s liability insurance, as well as fidelity insurance on the association treasurer.
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Robert Bruss’ report “How Realty Buyers, Sellers and Agents Can Profit from Lease-Options” is available for $4 from Tribune Media Services, 435 N. Michigan Ave., Suite 1408, Chicago, Ill. 60611.
Please note: Real estate laws differ from place to place, so you should check local laws before making decisions on real estate problems.
Letters should be addressed to Tribune Real Estate Features Service, P.O. Box 280038, San Francisco, Calif. 94128.
