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Essential Estate Planning

It is never too early to plan your estate and to prepare estate planning documents. A very high percentage of people do not have estate plans.  Many of those who do have something in place have documents that are out of date. Do not  wait until you or your family  need these documents before consulting with Massucco & Stern, P.C..  If you wait until there is an urgent or critical need, it could be too late.

Explained below are some documents recommended for every adult:

• Last Will and Testament.  This document sets forth your wishes for the distribution of your property upon your death.  You can specify who will manage your estate and, if applicable, who will become guardian of your minor children after you die. Die without a will and the state makes these decisions, and they may not be the decisions you would like.
• Durable Power of Attorney. This document allows you to appoint someone you trust to legally handle your financial affairs should you become disabled or incapacitated. Without this, no one may be able to access your bank account, securities, or any other property in your name without lengthy legal proceedings such as a guardianship. 
• Advance Directive.  This document allows you to appoint someone you trust to make health care decisions for you should you become incapable of doing so on your own.  It also allows you to set forth your wishes for things like end of life care, pain management, organ donation, and even funeral and burial arrangements.  It is much easier for you to make these decisions before the time is critical than to leave it to your loved ones in a time of need.  In fact, if critical decisions become necessary, without an Advance Directive, it may not be possible for your loved ones to carry out your wishes without your written authority.
• HIPAA Release.  Any individual over the age of 18 is protected by the Health Information Privacy and Accountability Act.  In short, this means that medical providers cannot release your personal information to anyone other than an insurance company.  Even a spouse or parent cannot call a hospital for information on your condition without prior written authorization.  With a HIPAA Release already signed, your loved ones could use it to speak to your doctors and obtain critical information if the need arises.
• Letter of instruction. A “letter of instruction” is an informal document that gives your survivors information concerning important financial and personal matters.  You should list things like the location of important documents, account numbers and locations, and if applicable, online login information.  Because this document has no legal weight, your attorney does not need to prepare it.  Just as with all your other estate planning documents, be sure your loved ones know where your letter of instructions is located.

Options

Depending on your family and financial circumstances, you may also benefit from other estate planning documents, including trusts. For those with large estates, a trust may be useful to reduce taxes.  Massucco & Stern also offers services to our clients to protect assets in the event of future need for long term care with Medicaid assistance.  The best way to find out if any of the “optional extras” would be useful for you is to speak to one of our experienced attorneys.

MISCELLANEOUS FEES INVOLVED IN BUYING A HOME

When buying a home, most people focus on how much it costs and what interest rate they can get on the loan.  While that is certainly very important, the other fees that come with buying a home are often overlooked.  Here is a list of the most common fees involved when buying a home.  Some or all may apply to your purchase.

Private Mortgage Insurance:  If you only provide a small down payment, you may be required to purchase private mortgage insurance.  Sometimes this means you are required to pay a full year’s worth at the time of purchase, or it will be rolled into your monthly payment.

Homeowner Insurance:  When borrowing money to purchase a home, insurance is required.  In many cases, this means buying a policy before closing on the home.

Title Insurance:  This insurance covers you in the unlikely case that the person who sold you the house did not actually own it, or if information on the title was false.  Some common hidden risks protected under a title insurance policy are:

False impersonation of the true owner of the property by your seller(s) or the other person(s) formerly in title.

Forged deeds, releases and other documents.

Deeds by persons of unsound mind.

Deeds by minors.

Invalid documents executed under expired power(s) of attorney.

Invalid deeds delivered after the death of the grantor(s).

Deeds by supposedly single persons, but actually married.

Fraud.

Liens for unpaid estate inheritance and gift taxes against prior owner(s) of your home.
Unrecorded easements – rights of way. 

Undisclosed heirs of former owner(s) of your home or the land on which it is situated.

Loan or Lender Policy:  Most, if not all, Lenders will require a Loan or Lender Policy.  A loan policy insures your lender’s security interest against loss due to defects in your title that were not discovered at the time of the sale.  The loan policy offers NO protection for the homeowner.

Homeowner(s) or Owner(s) Policy:  Just as lenders want security with their title policy, you should strongly consider protecting the equity in your new home with a title policy.  For a one-time premium you can receive the protection of a title insurance policy against “hidden risks” or undiscovered interests.  Our office can provide this coverage in addition to any required loan policy.

The Owner(s) Policy provides:

Protection from financial loss due to covered claims that may be asserted against the title to your home, up to the face amount of the title policy.

Payment of legal costs if the title insurer has to defend your title against a covered claim.

Payment of successful claims against the title to your home covered by the policy, up to the face amount of the policy.

Once purchased, an Owner(s) Title Insurance Policy remains in effect for as long as you own your home.  Title insurance adds security and peace of mind to home ownership.

Legal Fees:  Legal fees are paid to our firm for representing you, as well as to the attorney representing the lender should the lender require their attorney to review all of the closing documents.  Legal fees are paid for the attorney to perform the title search, prepare the necessary title documents, prepare and review closing documents, as well as attending the closing and representing your interests at the closing.

Appraisal Fees:  An appraisal is needed so that a current fair market value for your home can be established for tax purposes.

Escrow Fees:  During the closing process, an escrow account will usually hold the money while the buyer(s) and seller(s) finalize the agreement.  In addition, you will probably have a portion of your monthly mortgage payment go into escrow in order to pay for property taxes and insurance.

Points or Origination Fees:  An origination fee is paid to the lender for their services in creating the loan.  A point is one (1) percent of the loan, and is often worked into the total cost of the loan.

Credit Report Fees:  In order to secure a loan, the lender will require a verified credit report.

Document Preparation Fees:  The lender or broker will usually have a fee to cover the preparation of the required documents for the loan.

Survey Fees:  If an existing survey of the land cannot be obtained, a new survey may have to be conducted in order to determine exact boundaries of the property.

Inspections:  While not required, the purchaser(s) may want an inspection for pests such as termites, mold, asbestos, radon, water potability and structural and operational conditions of the heating, wiring, plumbing, roofing, siding, septic system and foundation of the dwelling located on the premises by a reputable home inspection company.

Property Taxes & Assessments:  In some cases, you may owe some property taxes immediately if the seller(s) has/have already paid taxes for a time period where you will be the owner(s).  Also, there may be other municipal taxes or fees for sewer or water that need to be taken care of.

Recording Fees:  There will be a fee required for recording the documentation regarding the sale.

Transfer Tax:   Vermont requires a transfer tax be paid at the time of closing based on the purchase price of the property.  A tax at the rate of one-and –one quarter percent (0.0125%) is imposed on all property other than a purchaser(s) principal residence, property enrolled in the current use program or a working farm.  Real property that will be the purchaser(s) principal residence is taxes at one-half of one percent (0.005%) on the first $100,000.00 of value, and one and one-quarter percent (0.0125%) of the value over $100,000.00.  A subsequent purchase of contiguous land on which there is no dwelling and no immediate plan to construct a dwelling is subject to tax at the higher rate.

Keep in mind that not all of these fees will always apply.  Some may be waived or paid for by the lender or seller(s).  Even so, it is important that you understand what the fees are and who is responsible for paying them before finalizing the purchase of your new home.