Things to Know About Condos

2 May

Metro®Boston, Publication Date: May 2, 2012
By Attorney George Warshaw

If you are buying a condo there are three things that are commonly overlooked.

First, condominium living is not for everyone. You are living in a building with others, some of whom you may not like, and others whom you may adore. You won’t know that in advance.

In larger condominium buildings a problematic neighbor or two is rarely much of problem. Besides, you have a management company and an administration to step in if needed. In small condominium projects, one crazy owner can make your life hell.

In smaller buildings it is wise to ask about the people in the building before buying: do they get along? Is there anyone that others complain about?

Second, buyers will carefully inspect the condo before buying, but rarely ask the seller about noise. Has the seller made or received any noise complaints? Are children roller skating on hardwood floors overhead?

Buyers also rarely ask about leaks. Have there been any water leaks into the apartment or from the apartment in the last several years?

Last week I posted the Due Diligence Checklist that I use when checking out a condo. See http://georgeinthemetro.com or email me for the list – and contact me if I can be of help in your purchase!

© 2012 George Warshaw.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com.

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Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com.

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Condo Due Diligence

27 Apr

Metro®Boston, Publication Date: April 25, 2012
By Attorney George Warshaw

Expanded Content:

Buying a condo? The condo market has heated up. Do you know what to look for – or look out for? Here are a few of the things that you should consider or ask about:

The Budget.

  • Is the budget adequate to cover the operating costs or running at a deficit?
  • Are any Unit Owners more than 30 or 60 days in arrears in monthly payments?
  • Are there any sharp increases in specific expense items?

Reserves.

  • Do reserves meet the Fannie Mae minimums (10% of budget + separate insurance deductible)?
  • Are reserves for improvements and major repairs sufficient?
  • Have there been major increases or decreases in reserves or expense items over time?

Repairs, Improvements and Assessments

  • What repairs are presently planned?
  • Any special assessments or improvements currently in effect, planned or being discussed?

Litigation

  • Is the association involved in any litigation?

Occupancy

  • How many units are owner-occupied or rented?
  • Have there been any sound and noise complaints?

Condo Docs:

  • Verify parking rights, locations and space numbers.
  • Review recorded condo plans. Do they match the present layout of the unitt?
  • What exclusive use rights are assigned to the unit? Who pays for repairs/maintenance for exclusive use areas?
  • Are there restrictions on pets?
  • Are there limitations rentals?

Board of Directors and Unit Owners Meeting Minutes

  • Do the minutes indicate upcoming major repairs, improvements that could result in a special assessment?
  • Do the minutes indicate upcoming increases in fees or charges?
  • Do the minutes indicate problems that you should know about?

My view: ask for two years worth of minutes.

Call or email me if I can be of help in buying or selling your condo, or if you have questions you need answered. metro@warshawlaw.com, 617-262-7800.

 © 2012 George Warshaw.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com.

Is Your House Haunted?

18 Apr

Metro®Boston, Publication Date: April 18, 2012
By Attorney George Warshaw

The Amityville horrors right in your neighborhood.

A murder, a suicide or unimaginable event occurred years ago. You hear cries and whispers at night. It’s eerie.

It’s your home?

You didn’t know it when you bought, but now you want to sell or rent your house or apartment. Can you sell or rent it without disclosing it was the scene of a violent crime or haunted? Will you be sued if you don’t?

Under Consumer Protection Laws, real estate agents usually have to disclose all facts that would be material to a person making an offer.

When it comes to “psychologically impacted” property, the answer is “not unless you’re asked.”

Several years ago, the Massachusetts Legislature adopted its own form of a “Don’t ask, Don’t tell” policy where the real property was the site of a felony, suicide or homicide, or an alleged parapsychological or supernatural phenomenon.

Section 114 of chapter 93 of the General Laws protects a seller, landlord or a real estate agent from failing to disclose to a buyer or tenant that the real property is or was “psychologically impacted” – unless the seller, landlord or agent was asked about the possible occurrence of an event at the house or apartment and then failed to disclose it.

And if your house is haunted, well, there’s always Ghostbusters!
© George Warshaw 2012

George Warshaw is a real estate and estate planning attorney in Massachusetts.  He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts for individuals and families. George welcomes new clients and questions at metro@warshawlaw.com.

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Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

Medicaid – The 5 Year Lookback Rule

13 Apr

Metro®Boston, Publication Date: April 11, 2012
By Attorney George Warshaw

Last in a Medicaid series

I’ve never met anyone who would rather give his or her money to the government than leave it for one’s children, heirs or charity. The government never has as well.

To combat the natural inclination of giving away one’s money and property to qualify for free nursing home care, Medicaid, like in hockey, has a penalty box.

If you impermissibly give away your assets in Medicaid’s eyes, the whistle blows, you are disqualified from further play and placed in the penalty box.

The penalty? Medicaid takes the value of your gift and divides it by the average monthly cost of nursing home care. The result is the number of months you must sit in the penalty box before you can apply again.

There is a safe harbor though, as lawyers like to say, where you can permissibly make a gift and avoid the penalty box: make that gift more than 5 years before you apply for Medicaid and your gift is usually safe.

Your gift is then no longer a countable asset on the government’s list of assets that you must sell and spend before you can qualify for care.

Be careful! Always consult an Elder Care Attorney for your particular Medicaid situation. © George Warshaw 2012.

Read the Medicaid series at www.GeorgeintheMetro.com

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com.

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Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

Medicaid – What’s Yours Is Mine!

3 Apr

Metro®Boston, Publication Date: April 4, 2012
By Attorney George Warshaw

Third in a Medicaid series

To qualify for Medicaid a person has to meet a limited income test and a limited asset test. The threshold amounts differ for married and unmarried persons. This article focuses on your assets.

Take everything you and your spouse own, throw them into a single pot, and then remove a few approved items. The government then counts or adds up the value of what’s left over. If these countable assets add up to too much, you don’t qualify.

If you don’t qualify, you must sell and spend your “countable assets” in a permissible way.

Think of it as a two-column list. Column A is the government’s list of what you must first sell or spend before you qualify. Column B is your list of what you can keep. It’s your safe harbor.

Your home is usually protected. It’s in your column; but if you put your home into a revocable trust, it usually shifts to the government’s sell and spend Column. If you are unmarried and the equity in your home is $750,000 or more (you should be so lucky!), your home shifts to the government’s sell and spend Column.

Be careful! Always consult an Elder Care Attorney for your Medicaid situation. This article provides general information only, not legal advice.

Next week, Medicaid’s Penalty Box!

© George Warshaw 2012

George Warshaw is a real estate and estate planning attorney in Massachusetts.  He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts for individuals and families. George welcomes new clients and questions at metro@warshawlaw.com.

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Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

Medicaid – Taming the 800 lb. Gorilla

29 Mar

Metro®Boston, Publication Date: March 28,  2012
By Attorney George Warshaw

Second in a Medicaid series

It is a Gorilla, though not necessarily as nice. It’s filled with rules, exceptions to rules, exceptions to exceptions and a time consuming and discouraging process.

I needed to learn how one protected or lost one’s home or inheritance. I spent weeks reading the MassHealth regulations, researching Medicaid online and reading more on the subject. I found a way to organize this mess of information to make sense of it – for you and me.

There are four key rules: rules that qualify you for Medicaid; rules that disqualify or penalize you; rules that protect you from the Gorilla; and rules that drain your children’s inheritance.

And for each rule, there is always one more question: is the Medicaid applicant married or unmarried, because the rules often differ if an applicant is married.

For example, there are circumstances where an unmarried Medicaid applicant can be forced to sell his home to pay for nursing home care before qualifying for Medicaid or retaining it; but if he is married, and his wife still resides in the house, the home is usually fully protected from a Medicaid required sale.

More next week!

Warning: only a personal consultation with an Elder Care Attorney can provide proper legal advice for your situation. This article provides general information only.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com

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Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

MEDICAID AND YOUR HOME

22 Mar

Metro®Boston, Publication Date: March 21,  2012
By Attorney George Warshaw

In the last few weeks we used the plight of 98 yr. old Mrs. K, who found herself being evicted by her son from the home she once owned, to review how a parent can protect oneself when transferring a home to one’s children. See www.GeorgeintheMetro.com.

The risks in any such gift or transfer are apparent: what happens to a parent’s home if the child who is supposed to protect the parent gets divorced, sued or becomes bankrupt, or mortgages the house without the parent’s knowledge – or sells the house?

It happens despite the best of intentions. That’s why trusts are good. They can protect a parent through customized content.

But what often what works for one purpose doesn’t work for another. That’s true at times with Medicaid. Medicaid doesn’t like trusts. And trusts don’t like Medicaid.

The premise of Medicaid is simple: with certain exceptions, the government believes that a person should exhaust nearly all his or her personal assets before the government should pay a dime for nursing home care and Medicaid benefits. The government is the 800 lb. gorilla life looming over your life.

The Medicaid regulations are intricate, complex and not well understood. I’m going to explore several rules that affect one’s home in next few columns. Stay tuned. © 2012 George Warshaw.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com

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Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

Love and Kisses until Your House is Gone

15 Mar

Metro®Boston, Publication Date: March 14, 2012
By Attorney George Warshaw

It’s like a scene from “The Bachelor.”

It’s all love and kisses, “til death do us part,” and syrup on the pancakes – until reality sinks in. It’s back to the daily job and routine daily life? Does anyone get or stay married?

Is it any different when an older parent deeds the family home to one’s kids for love and affection? “We’ll use it to take care of you – and the government won’t get it!”

But the deed’s in someone else’s name! What if son or daughter gets divorced, sick or sued? Or if son or daughter needs personal money and borrows against the house – temporarily, of course?

One way of protecting a home is through a trust. A trust is a set of rules constructed by a lawyer to accomplish a goal or protect an asset, oftentimes both.

The trustees own the house on behalf of the trust and not personally – and a parent can name a trusted advisor as co-trustee who can have veto power on the sale or mortgaging of the home.

The house is thus protected from unnecessary sale or mortgage and the personal creditors of the son or daughter.

Caution: Check with a Medicaid attorney before transferring property out of an older parent’s name.

George Warshaw is a real estate and estate planning attorney in Massachusetts. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts for individuals and families. George welcomes new clients and questions at metro@warshawlaw.com.

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Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

Mom Strikes Back!

7 Mar

Metro®Boston, Publication Date: March 7, 2012
By: George Warshaw

Last week I wrote about the loving son who filed to evict his 98 year old mother from the home she previously deeded to him. The son gave up!

How can a parent protect one’s home while deeding it, with good intentions, to a child to manage or oversee?

The first caution I must mention is that planning to accomplish one thing for older parents often makes a mess of something else.

For example, you may wish to transfer the deed of a property into a trust for ease of inheritance; the transfer, however, may create an unintended Medicaid planning problem.

To safeguard a parent’s home, one should think twice (or three or four times) before deeding it to one’s children. The loss of control for the elderly Mrs. K almost cost her dearly.

There are several safeguarding techniques I like to use.

A parent can grant the home to a child or relative and reserve a “life estate”; i.e. a right to live in and use the house for one’s life; or place the property into a trust.

If using a trust, it is often valuable to require the consent of a trusted advisor (lawyer, financial planner, etc.) before a trustee can sell or mortgage the house.

More on this Next Week. © 2012 George Warshaw.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com.

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Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

Giving Mom The Boot

1 Mar

Metro®Boston, Publication Date: February 29, 2012
By: George Warshaw

You may have read about the loving son who filed to evict his 98 year old mother from the home she once owned.

Mrs. Kantorowski deeded her home to her son several years ago. Though he wants to move her to a facility that will better care for her, she doesn’t want to go. Perhaps if he wasn’t trying to sell the house, his motives might have better credibility.

Mrs. K has one thing on her side. She didn’t deed the house directly to her son; she deeded it to him as trustee of a trust for her benefit.

A trustee owes the beneficiaries very special obligations, in this case, mom. It’s called “fiduciary obligations”. It’s a very high standard that courts impose on trustees to act in the best interests of those whose money and property they’re holding in trust.

There’s a rule in trusts against “self-dealing,” meaning a trustee can’t use trust property for his personal benefit, unless the terms of the trust permit it. While a trustee may receive a fee for services, he can’t sell the house and pocket the money – or so mom hopes.

So when mom goes to court next month, we’ll see who gets the boot!

More on this Next Week. © 2012 George Warshaw.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com.

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Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

What’s Most Overlooked in an Offer to Purchase?

27 Feb

Metro®Boston, Publication Date: February 22, 2012
By: George Warshaw

You’re out shopping for a new home. You’re not too worried about getting or needing a loan to finance your purchase.

You submit an offer, it’s accepted, but the appraisal comes in lower than your offer. Can you cancel your purchase or renegotiate the price?

Quite often, no!

Buyers who finance 80% or more of their purchase price have a built-in protection.  The bank will turn you down if the appraisal comes in less than the purchase price.

Borrow more than 80% of the value of the home and the bank has too much risk.  80% LTV (Loan-to-Value) is considered the maximum safe-lending benchmark.

But, if you finance less than 80% of your purchase price, you may have no safety net. Let me explain by example.

Buy a home for $500,000, but request a loan for only $250,000 (i.e. 50% LTV). You may care if the appraisal comes in at $400,000, but the bank won’t. That’s because the appraised LTV is still well below the 80% safe-loan benchmark.

The time to protect yourself is in your offer. Ask your broker or attorney whether your offer should be subject to an appraisal of no less than the purchase price of the house.

It may protect you in the end.

© 2012 George Warshaw.

George Warshaw is a real estate and estate planning attorney in Massachusetts.  He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts for individuals and families. George welcomes new clients and questions at metro@warshawlaw.com.

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Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

Is Fluffy Named In Your Will?

15 Feb

Metro®Boston, Publication Date: February 15, 2012
By: George Warshaw

How many of you remembered to mention your best friend in your will or trust? Yes, I mean your cat, dog or horse.

Hardly anyone I suspect!!!

Recently I was at a “dog-in-park” charity event speaking on how to protect your pets should you become ill or die. I asked numbers of people if their pets were mentioned in their will.

Half didn’t have a will (shame on you!); and of the remaining so-called “dog lovers”, one person had a special trust for her pet, but only one out of ten mentioned their pets in a will or trust.

If you think your kids, your friends or someone you know will certainly take care of your pets, don’t be fooled! You’ll be shocked and appalled at the multiple thousands of pets needlessly abandoned each year upon the death or illness of their owner – and it could easily happen to you!

What to do in your will or trust.

First, pick several choices for your pet’s potential caretakers.

Second, set aside some money for your pet’s medical care, food and well-being.

Third, talk to a lawyer to make sure that the money you set aside will actually be used for your pet’s care.

Don’t delay! © 2012 George Warshaw.

George Warshaw is a real estate and estate planning attorney in Massachusetts. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts for individuals and families. George welcomes new clients and questions at metro@warshawlaw.com.

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Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

Do You Need A Children’s Trust?

7 Feb

Metro®Boston, Publication Date: February 8, 2012
By: George Warshaw

Is there anything more important than your children’s upbringing?  What would they do if you died?

Many people add a few scant words in their wills to provide for their children; others create a so-called subtrust as part of a 60-90 page master estate planning trust that requires a flow chart and diagrams to figure out.

Let me give you another idea.

Why not create a separate trust document devoted solely to your children, written in plain English, that they and you can read and understand. Call it a “Children’s Trust”.  Your will, life insurance or master estate planning trust funds the trust and all or part of your children’s upbringing.

You can fund their education, provide for medical care and reward personal accomplishments. You can provide incentives that broaden their personal growth and experiences. Here’s an example:

Let’s say you want your child to experience first-hand the heartbreak of a Katrina-like disaster and helping people in need. In your Children’s Trust, you offer to pay your child a handsome salary for spending a summer working for Habitat for Humanity or the like.

So consider what’s important to you and perhaps your child will “ace” your final exam!

Next week:  Protecting your Pets.

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© 2012 George Warshaw.  George Warshaw is a real estate and estate planning attorney in Massachusetts. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts for individuals and families. George welcomes new clients and questions at metro@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

Providing for Children and Pets in a Will

31 Jan

Metro®Boston, Publication Date: February 1, 2012
By: George Warshaw

Last week I wrote about the basics in preparing a Will.

Now, what about providing for your children and pets?

Pets are simpler to plan. Most people, however, in preparing a Will overlook them completely. That’s not the way to reward your devoted companion!

At a minimum, it’s important to list several choices as your pet’s future caretaker, since your first choice may not be available then or in the future. And don’t forget to provide some money for your pet’s future care.

Children are more complicated. There are three issues: guardianship, funding and planning their future.

Who will raise your children – and who are your first and second choices as substitute parents (i.e. guardians)?

Secondly, where will the money come from to help raise them, and do you want to provide economic incentives to encourage their personal growth and development?

This is part of your core planning.

I’m a believer in creating separate trusts for children and pets that provide for their future needs. A stand-alone children’s trust is a great planning opportunity that can better assure their education and future.

Next week, more on trusts for children and how you can accomplish specific goals. © 2012 George Warshaw.

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George Warshaw is a real estate and estate planning attorney in Massachusetts. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts for individuals and families. George welcomes new clients and questions at metro@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

Before making any legal decision, consult an attorney to see how the foregoing may apply to your circumstances.

Important Changes to Probate Law May Affect Your Will

20 Jan

Metro®Boston, Publication Date: January 18, 2012
By Attorney George Warshaw

Charles Dickens is now safely buried.

Remnants of ancient England that ruled our probate procedures in Massachusetts will be gone in a few months. Beginning this April, the Massachusetts version of the Uniform Probate Code will become the law.

And with it, a new informal procedure will allow one’s heirs to probate a simple estate in a speedy process.

Under the new law, a person filing a will now has a choice: utilize a formal process in which a judge oversees the probate or elect an informal process that lets court clerks, designated as Magistrates, approve the will or a petition where there is no will.

While certain types of estates must go before a judge, most are straight-forward, uncontested and are perfect for the new informal process.

The new law also changed many of the rules regarding wills and inheritance.

For example, the rule in Massachusetts that marriage revoked a will made prior to the ceremony unless the will directed otherwise has been changed, among other important revisions.

So don’t take chances. It makes good sense to review and update your will before the new law goes into effect.

And if you don’t have a will, well you can guess my advice!

© 2012 George Warshaw
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George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com.

DON’T BANK ON IT!

16 Jan

Metro®Boston, Publication Date: January 11, 2012
By Attorney George Warshaw

Imagine. You just sold your house or got a big payday on your job.

You have a check in hand for “real money.” You deposit it at your bank – but then you find out, days after you made your deposit, that you can’t access your money for at least 10 business days!

OMG!

You go back to the bank and yell and scream. If you had known, you would have asked for a bank check from your sale or big payday and deposited it instead.

“Sorry, it wouldn’t have mattered,” you’re told. “Even bank checks have to clear. They’re not the same as cash or a wire transfer.”

If your funds were hung up in the banking system and you needed them to buy a house the next day, where would you be? In default!!!

That’s where your bank matters.

At least one major bank treats any check over $5,000 as a large deposit and takes up to ten business days to clear it – unless, of course, you’re an important client.

And some investment or mutual fund companies take 4 business days to clear checks.

So ask about clear periods before depositing large checks.

Or better yet, have your funds sent by wire transfer. It’s treated as cash as soon as it arrives at your bank.

Next week: Important changes in probate procedures may affect your will.

(c) 2012 George Warshaw.

Where is Grandma’s Will?

11 Jan

Metro®Boston, Publication Date: January 4, 2012
By Attorney George Warshaw

Over family gatherings during the holidays, the topic often turns to one’s parent’s or grandparent’s will.

“It’s in the safe deposit  box, I think.”

“It’s in her sock drawer with her old letters from Dad.”

“It’s not where I saw it last. OMG! Maybe the lawyer has it?”

While a safe deposit box seems like a good idea to put the will, if your name isn’t on the box you will need authority from a court to open the box.

There’s another place you can store a will that is cheap and easy.

Try the Registry of Probate. The fee varies with the county but it’s not a lot.

In our office, we hold the original will for 12 months in case someone wants to make any changes or updates. We then file the will with the Probate Court.

Since most changes or corrections are made in the first year, it’s not likely to change for several years and the will can be easily retrieved for updating.

If the person later dies, the Probate Court checks its storage records when an estate is later filed.

So if you want to find it when you need it, consider using the Probate Court instead of a safe deposit box or Grandma’s sock drawer!

© 2011 George Warshaw.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

Before making any legal decision, consult an attorney to see how the foregoing may apply to your circumstances.

Is it Better to Inherit Real Estate?

20 Dec

Metro®Boston, Publication Date: December 14, 2011
By Attorney George Warshaw

Many people often want to give their home to their children before they die. It’s certainly simpler but it sometimes has unintended tax consequences. (See GeorgeintheMetro.com for last week’s story).

There is an important tax rule regarding inheriting real estate that could save you a bundle of taxes.

When a person dies, the fair market value of any real estate owned must be determined. If you inherit property, you inherit it at its fair market value.

Inherit a house worth $500,000, sell it a month later for $500,000, and there is no taxable gain. But what if your parents only paid $100,000 for it 20 years ago?

It matters not what your parents paid if you inherit it, but it may matter if you receive it as a gift during their lifetimes.

The basic tax rule is this: you inherit property at fair market value; but when you receive it as a gift, you acquire it at the same cost+ tax basis as the giver had in the property. Sell it later for more than cost+ and you could pay a tax that could have been avoided.

So before gifting real estate: always consult your tax advisor or attorney. The foregoing is not intended as legal advice.

© 2011 George Warshaw. All Right Reserved.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.  

Legal Advice: Laws, and court decisionsinterpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neitherintended as legal advice nor shall establish an attorney-client relationship.

Before making any legal decision, consult an attorney to see how the foregoing may apply to your circumstances.

Real Estate for Christmas

30 Nov

By Attorney George Warshaw

It’s Christmas and Hanukkah time. Naturally one’s thoughts turn to gifts.

As families get together, oftentimes the discussion shifts to a parent’s home. Is it better to gift it now or inherit it later?

While the answer requires a careful discussion with a tax advisor, it’s helpful to review a key gifting rule.

When a person receives a gift of real estate, the gift is valued for tax purposes at the same cost+ value (or “tax basis” in accountant-speak) as the giver has in it.

Bought a home years ago for $200,000, put $50,000 in improvements into it, and your tax basis is likely $250,000.

Give it to your kids today and the IRS will likely value the gift as worth $250,000. It doesn’t matter if the house is worth $1,000,000, the gifting value is still $250,000.

If your kids later sell it for a million, the IRS deems they made a profit of $750,000 (sale price minus tax basis) – and they may have to pay a tax on the $750,000 gain at the time of sale. That’s painful!

Next week: Is it better to Inherit Real Estate?

Always consult your tax advisor or attorney before gifting real estate. The foregoing is not intended as legal advice. Only an in person consultation with an attorney can establish an attorney-client relationship. © 2011 George Warshaw.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.

FSBO – For Sale By Owner

16 Nov

Metro®Boston, Publication Date: November 15, 2011
By AttorneyGeorge Warshaw

It’s tempting, very tempting.

Sell your home yourself and save the broker’s commission. But is it a false savings?

While people often underestimate the value of a good realtor, nonetheless, some homeowners have sold their homes successfully.

There are two parts of the FSBO process: marketing and legal.

Marketing involves finding a buyer and enticing your buyer to make an offer. Legal is about what’s needed to complete the sale.

MARKETING. You have to know how to price your home. Pricing requires research, time, and going to open houses. That can give you a false sense of price if you only look at properties that haven’t sold; i.e. they’re priced too high.

You may list your property on FSBO websites, Craig’s List, etc., but you’ve limited your market.

No broker is going to bring a client to see a FSBO and many potential buyers are leery of FSBO sales.

Try another approach! Don’t try to save all the commission, just try to save half.

Act as your own real estate agent. Hold an open house. Send out announcements to local brokerages that you’ll cooperate with brokers and pay a buyer’s broker fee of xx%. 

It may be a smart “savings” compromise.

Next week read the legal components of a FSBO.

© 2011 George Warshaw. All Right Reserved.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.  

Legal Advice: Laws, and court decisionsinterpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neitherintended as legal advice nor shall establish an attorney-client relationship.

Before making any legal decision, consult an attorney to see how the foregoing may apply to your circumstances.