Andrew Ewalt's Law Blog

Living Wills

So what is a living will exactly? It is a legal document that directs your physician to discontinue life-sustaining procedures (cardiopulmonary, artificial respiration and artificial hydration and/or nutrition) if you are in a terminal condition or a permanently unconscious state.

Living wills are very important b/c family members or loved ones are most often put in the position of having to decide whether to terminate or continue life support when there is no hope for recovery.  Having a living will means you have made the decision for them.

Unfortunately, in Connecticut our current living will statute more heavily favors providing liability protection to health care provider (doctors or hospitals) rather than protection to the patient right to refuse medical treatment.  Given the recent Terry Schiavo case it is time for our legislature to reconsider the statute in favor of stronger patient's rights. 

However, though not as strong as the law could be it is never the less the best way of conveying your wishes on this most personal choice.  It is always important to take control of your life and equally important to take control of your dying.  Having a written living will provides just that....control. 

Mortgage Escrow: What Is It?

Many of my clients/borrowers are surprised and confused to discover at  closing that they will need to pay more than just interest and principal in their monthly payment to the mortgage company. The reason for this is often attributable to escrow accounts. 

Typically a mortgage company will use escrow accounts to accumulate money from the borrower on a monthly basis to ensure the timely payment of important real estate related expenses.  These are often property taxes, home owners insurance premiums, and other recurring expenses.

In addition to each months escrow payment  lenders can  keep an annual reserve cushion amount totaling up to two-months of each recurring expense.  Due to recent changes in the law (for new loans) borrowers are entitled to an immediate refund of escrow if the amount exceeds the two-month cushion and so long as the amount is less than $50.00.

Most of mortgagors use escrow services for collection of payments for customers, and customers get them through buy to let mortgages. But when they have to pay some money on monthly basis they get shocked to see the bill of free home mortgage. Most of banks do not provide full services for customers and customers even do not bother to calc mortgage. Whenever you proceed for loan, you should have to use amortization table to figure out what cost you annually and monthly basis. In selection of any mortgage loan, you need to consider mortgage rate.

Real Estate Closing Checklist Part II: The Closing

The actual real estate closing occurs when the Buyer and Sell come together to exchange documents and money and when the Buyer  officially becomes the new owner of the real estate.  Though this is a rather simplified summation of the closing, in truth there are a number of requirements for both the Buyer and Seller to meet in order for the transaction to be  complete. 

Buyer:  Your closing typically will take between 1 and 1.5 hours.  This all depends on whether you are taking a mortgage or are paying cash at the closing.  If you are taking a mortgage you will be required to sign a number of important bank documents in order to secure the loan. These documents include among many others the

-Promissory Note: This is the document outlining your promise to pay the lender the amount you are borrowing to purchase the real estate.  The amount of the loan, interest rate and term of the loan are outlined here.

-Mortgage Deed :  This document reflects the terms of the Note and the responsibility of the borrower.  The Mortgage Deed gives the lender the home you are purchasing as collateral for your promise to pay the Note. The Mortgage Deed is typically recorded on the local land records so that the mortgage becomes public record and so that the real estate can not be conveyed (sold) until the mortgage has been released (payed off).

-RESPA/HUD-1:  This form outlines very specifically all of the financial aspects of the transaction and accounts for every penny of the transaction. This document includes both the Buyer and Seller information.

-Title Search and Insurance:  A title search will be preformed by the Buyers Attorney and is important in identifying the specific legal details of the real estate and what if any encumbrances are recorded on the land records.  The encumbrances typically found are mortgages that must be released by the Seller before the closing.  Additionally, the Buyers lender will require a Title Insurance Policy be purchased by the Buyer in order to protect the lender if a future title issue where to arise.  Though not required it is also a very good idea that the Buyer purchase their own policy to protect their interest. The Title Insurance is available through your attorney.

Sellers:   The Sellers portion of the closing should not take nearly as long as the Buyers because there are not nearly as many documents for the Seller to sign, this usually last around half of an hour.  Traditionally, the Seller and their attorney will arrive at the Buyers attorneys office for the closing.  The Seller is responsible for:

-Deed:  This is the bill of sale for the real estate. Signed by the Seller it contains the legal  description of the property.  The most common form of deed used in Connecticut is the Warranty Deed.  This form of deed transfers the real estate to the Buyers free of and encumbrances.

- Conveyance Tax Return: Connecticut charges a conveyance tax (sales tax) on the sale of real estate.  This tax is paid by the Seller typically from the proceeds of the sale of the real estate.  A return which includes the tax ID numbers of both parties is filed by the Seller when the Deed is recorded in the land records.

-Payoffs and Encumbrances: The Seller is responsible for paying-off all loans or encumbrances attached to the property and recorded on the land records. These will be identified by the title search done for the Buyer.

Our firm represents many clients in both residential and commercial real estate transactions. This is a general outline of the important closing elements. Please feel free to call our office for more information on how we can assist you with your upcoming real estate purchase or sale.

Real Estate Closing Checklist

Often people can get very nervous when their real estate purchase is about to close.  In order to alleviate some of the butterflies it can be helpful to accomplish a few tasks prior to closing.

1.  Contact your realtor, attorney and lender to verify everything is in order.

2.  Review all loan documents and the purchase contract.  Discuss any issues with the attorney.

3.  Contact the utility companies (electric, telephone, cable, water/sewer, gas) to have the service changed to your account.

4.  Purchase homeowners (hazard) insurance.  If you are obtaining a loan the lender will typically require that one year of homeowners insurance be prepaid prior to the closing.

5.  Due a final walkthorugh of the property to make certain that everything the seller agreed to accomplish prior to closing has been completed and per the contract that nothing has changed or been removed.

6.  If you are required to bring additional funds to the closing, obtain a certified check from your bank for the exact amount required (your attorney will inform you of this amount within a day or so of the closing).  These funds will typically be deposited in your attorneys Clients Funds account along with your mortgage funds obtained from the lender.

Advantages of a Trust For Descendants

There are many advantages for leaving property in trust to descendants instead of leaving it to them outright. The degree to which each advantage is realized depends on the trust terms. Here are several advantages of using a trust.

1. A trust provides a mechanism for investment and management.

2. A trust prevents the beneficiary from squandering the property.

3.  A trust protects the property from claims of the beneficiary's creditors, including claims of a spouse upon divorce or the beneficiary's death.

4.  A trust enables the creator of the trust to control the ultimate disposition of the trust property instead of the beneficiary.

Planning For Your Heirs

Hey, I understand that estate planning is not the most exciting thing for most people to consider, but in the end it will save your loved ones a lot of headaches and money.  Here are some things to consider when planning for heirs.

1. How should each bequest be divided? Equally or unequally?
2. Are your heirs minors and if so at what age will each heir inherit?
3. How do you want to distribute indivisible property, such as a house or a family ring?
4. Will you disinherit any heirs?
5. What should you do if when spouses have children from other marriages?
6. Do you have an heir who is reckless and might spend their inheritance with abandon?
7. Do you have an heir with mentally or physically disabled?
8. Do you have a specific goal for your heir’s inheritance…like paying for college or a first home?
9. What will happen if your heirs die before you pass away?
10. Are there any special gifts (family heirloom or memento) that you would like to go to a specific individual or charity?

Life Insurance: Providing Certainty To An Uncertain Time

Once you have updated your will and executed a health-care power of attorney and durable power of attorney you must determine if you have enough life insurance.

One of the worst mistakes a person can make is underestimating the amount of money their families will need if the primary earner in the family should die unexpectedly.  The bottom line is not to skimp on life insurance, especially young families who may need the financial help for many years.

When considering insurance there are basically two types –Term and Permanent.

Term life insurance expires after a certain number of years, can be attractive because it is typically less expensive and when coverage is only needed for a predetermined period.  However, when the term expires, renewing may be very expensive. 

Permanent insurance can be more expensive but is often the better choice where there is a long-term need for coverage.  Typically, permanent life insurance builds up a cash value over time, which is different from term, which has no cash value.

It is very important to speak with a knowledgeable and qualified insurance professional who can provide you with an in-depth assessment of your financial needs and your long-term objectives regarding the need for life insurance. 

We would be happy to help you find an insurance professional.  Please contact our office for a great referral. 

Reasons To Have A Living Trust

Here are some reasons to have a Living Trust instead of a Will

§  A revocable living trust is private while probating a will is public.

§  Living trusts are easy to make and maintain

§  You can give what you own to whom you want and when you want   subsequent to your death through the use of a revocable living trust.

§  A revocable living trust can control, coordinate, and distribute all your property interests while you are alive as well as on your death.

§  By using a revocable living trust, you can arrange for your well-being under your terms as you advance in years, become ill, or become mentally incompetent.

§  The use of a revocable living trust assures that your plans and affairs will remain private, rather than being made public, on your death or incapacity.

§  It is not difficult for you to change or amend your revocable living trust at any time during your lifetime.

§  There are no adverse lifetime income tax consequences that result form the use of a revocable living trust.

§  Property that has been placed in a revocable living trust during your lifetime is not subject to and does not pass through the probate process on your death; it is probate free.

§  Opportunities of gift and estate tax planning available through will planning are equally available through the use of a revocable living trust.

§  Continuity of cash flow and investments in your portfolio can continue uninterrupted by your death.

§  Revocable living trusts are legal in every state.  Your trust can easily be moved with you as you cross state lines.

§  By using a revocable living trust, you can measure your post death trustees’ abilities to manage your assets while you are alive.

§  Revocable living trusts are more difficult to attack in court, and usually less successfully attacked, by disgruntled beneficiaries than are wills.

Cost of Life Insurance

According to the Insurance Information Institute, Individual Life insurance should cost less this year.  The reason is people are living longer, so mortality charges are lower, plus competition helps keep prices down.  Here are some tips for keep insurance on your life even lower:

1. Quit smoking.  Nonsmokers pay lower life insurance premiums.

2. Younger folks should consider term insurance (keep in mind this form of insurance has no "cash value" or savings aspect like with other permanent insurance)

3.  Overall health.  If you can get your insurance company to qualify you as a preferred risk (meaning your health is very good and you are at a low risk for dying), you can save up to 50 percent on premiums.

4.  Shopping low numbers on policies.  Consider what your goals for the insurance are.  If you are concerned about the final death benefit consider the Net Payment Cost Index and compare those prices between policies.  If you  expect to surrender the policy and hope to take its cash value consider the Surrender Cost Index and compare those prices between policies.

Special Needs Planning Part 2

A very important element of any estate plan, but especially so when planning for a special needs child is a letter of intent.  The letter of intent is a written document, created by the parents of a spacial needs child that serves as a blueprint of valuable information about the child.  It should provide a clear vision of how parents want their child to live when they are no longer able to care for the child.  The letter should answer the questions:  What will happen to our child when we can no longer provide daily care, supervision and financial support? However, this is not a legal document, and does not replace the parents special needs estate planning documents, but acts as a supplement to those legal document.

The letter of intent generally includes information about:

1.  Emergency contacts

2.  Behavioral condition and history

3.  Medical condition and history

4.  Current and desired living arrangement

5.  Financial Status

6.   School or work situation

7.  Funeral arrangement

8.  Parents feelings about the child's future

9.  Insurance

10.  Education