Every day I get calls with questions, and the answers I give may be helpful for many clients. So here is one question or variation that surfaces often.
“My dad had stock investments, and in his Will he said those accounts should be split among my brother (2/6), me (1/6) and my three kids (1/6 each). I understand from my financial adviser in Georgia (my Dad died in New York) that in order to move the investments from the current account to an account for my kids, which I can control I have to become their financial guardian in the State of Georgia. I’m their dad how can this be right?” In Georgia a gift to a minor that doesn’t pass through a trust (for example life insurance proceeds and stock accounts) must be overseen by the Probate Court. This requires a parent or interested party to become the financial guardian under the control of the Probate Court, post a bond, and report spending and earnings to the Probate Court on a regular basis. This creates extra cost and hassle for the parties involved. Many times this diminishes much of the intended gift. Once the child turns 18 the money must be turned over to him. This however, can create a whole new set of issues. When drafting your estate plan. It isn’t just the Will and Health care Directives that are important. It is important that you know exactly how to name beneficiaries on your accounts as well.
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When you buy or sell your home, or any real property for that matter, do you use an attorney you trust and know? Or do you leave it up to your real estate agent or lender to refer you to someone? If you chose the latter, did you know that there could be a financial relationship between the two parties or that you may be paying for a service, but not receiving the personal attention you deserve? Buying real property is probably the biggest investment you will make in your lifetime. As the market begins to pick up, it is becoming painfully obvious to closing attorneys that attention to detail was not a huge concern in the past. Properties were selling so fast and all involved were so busy that errors from multiple sources are now surfacing.
I will share with you two painful examples that I have seen since starting the firm in March. Client A went to borrow money from his preferred Lender, and he wanted to use property he already owned..or so he thought as collateral. It turns out that years ago, Client A sold one of his many residential lots to Purchaser. However, the warranty deed drafted by Purchaser’s attorney included property in the legal description that was to be retained by Client A. Technically, Client A no longer owns the property. Oops! Not only that, but Purchaser obtained a loan on property, which included Client A’s property. Bigger Oops! I have spent two months, trying to get the attorney who handled this closing to correct the mistake; he has to get approval from the Purchaser and his lender, which is taking too much time. Maybe the Purchaser doesn't want to give up its bonus property?? Client A could have had documents reviewed by his attorney prior to sale; instead Client A must now spend a lot more money trying to correct a problem that he did not create. Client B loaned money to a business associate (“BA”) and took property as collateral. The promissory Note and Deed to Secure Debt contained a due on sale clause, which means that the loan was to be paid in full upon sale of the property. The loan deed was not indexed properly by the county clerk. When BA went to sell, the attorney, although he searched the title records of the County, did not find a copy of the Deed to Secure Debt in the records and therefore did not have notice of the recorded loan. BA fell on hard times and didn’t have any money to pay the loan at closing. BA sold the property and didn’t tell the closing attorney that there was a loan to be repaid to Client B. Client B can sue BA for nonpayment of debt and pursue criminal charges against BA, however it will now cost Client B time and money that it shouldn’t have to pay. No matter how small the transaction, or how easy it may appear, make sure you have someone involved that you know and trust to protect your interests. Let Lisa Shippel Law, LLC provide you with the personal service you should expect. Names and exact details have been omitted or modified to protect attorney client privilege. Now that real estate transactions are increasing, and purchasers are still looking to save money, I am getting asked (a bit more than I used to) by the purchaser: Do I really need title insurance? My answer is yes. Title insurance is a one time purchase for as long as you own the property. Do you question whether you should buy homeowner’s insurance? Chances are you will not have to make a claim, however you purchase it for the peace of mind that if you need it; it’s there.
The same should hold true for title insurance. Title insurance provides you protection in the event there is an existing lien that was not found at your Closing or a prior one. It also protects you in the event a lien is filed in the “gap”. For example, the people, who are selling you their house, get the requested repair work done in order to sell. Maybe they didn't pay the contractor or the contractor didn’t pay his subcontractor. One of the unpaid worker’s files a lien for nonpayment. He has 90 days from completion of work to do so. Since the work was so recent the purchaser most likely will not receive notice until after he closed and the seller has moved out of state. Purchaser didn’t incur the bill; however it is now a lien against his property, so it’s now his issue to handle. Title insurance covers this claim. Just this week, I had an instance where an old loan was not removed from record by the previous closing attorney. Although it was paid, it was still a recorded lien at the county court house. The seller was packing her house, dealing with the movers and the last thing she wanted to do was contact her last attorney (who by the way is no longer practicing law) or the bank that gave the outstanding loan to the previous owner. Guess what! The bank has merged two times since that closing…would you like to try and speak with someone at a large national bank and get transferred ten times to someone who has no records of a loan payoff from the predecessor bank? Closing was not an issue for the Seller at my closing because she had title insurance. A copy of that policy allowed me to issue new insurance to my purchaser/client and take the risk of any outstanding lien or loan away from the purchaser. There is enough to deal with when buying or selling a property. My advice is to allow your one time purchase of title insurance make things easier. Hopefully you won’t need it, but if you do it’s worth the investment. Effective January 1, 2013, the Federal Estate, Gift and Generation-Skipping Tax Exemptions are all $5,250,000. Not only is this a relief to most tax payers, the Estate Tax Exemption is portable up to $10,500,000, which means that a surviving spouse can use their late husband or wife’s unused exemption up to their total marital exemption amount of $10,500,000.
The American Taxpayer Relief Act of 2012 also changed the Annual Gift Exclusion to $14,000. During 2013 gifts to any one person during a given year up to $14,000 are not taxable. Any additional amount to one person may be gifted and credited against the maximum exemption, but when doing so you should seek assistance from your accountant to file a gift tax return as necessary. The new provisions keep the vast majority of my clients and most Americans from requiring extensive trusts in their Wills or otherwise, but it does not eliminate the need for well-constructed estate planning documents. Everyone with minor children in Georgia still needs a trust within their Will and to make sure the proper beneficiaries are named on assets that don’t pass through Probate. In Georgia, as I have said previously, it is not necessary in most cases to avoid probate, but it is necessary to have a well written comprehensive plan for probate. A proper plan gives you peace of mind and your survivors the tools needed to manage your estate appropriately and according to your wishes. |