Trust Your Real Estate

Trust your real estate

What do I mean?  I trust you house to hold my stuff?  LOL…No!

If you know me I’ve been helping people buy and sell real estate for over 20 years

I meet with lots of people in different situations and There’s one situation that always causes me a little pain and even anxiety

2 stories just from these past two weeks alone.

1.  Mom not doing well, been through a lot in the last 6 months and got pretty banged up and the doctors aren’t even sure if she’s OK to move in with family yet and while she’s recovering there’s still a lot of unknowns.  Her caretaker is one of her children who came in from out of state and is staying at mom’s place and she has a durable power of attorney so her child is taking care of all the paperwork.

2.  Dad with what seems to be mild onset of dementia and numerous other health issues that he just can’t take care of himself.  He’s still mostly aware but needs help and they see him slipping.  Again, the family member has a durable power of attorney.

Because I’ve been doing this for so long and I’ve seen so many situations like this…my natural instinct was to ask…Do you have a living trust?

In both cases they said no…much to my horror.  Why am I horrified?

Well, while I absolutely hope that this isn’t the case for either of these folks but I can’t sugar coat it.  The fact of the matter is that people die.  There’s no way around it. 

And while mom looks like she’s on the road to recovery and dad is in good hands there’s a nasty 7 letter word that gets used when someone dies without a living trust.  P-R-O-B-A-T-E.

Powers of Attorney in my experience will not help you avoid the probate process.

*** Read “What is a durable power of attorney***

*** Read “When does a durable power of attorney end***

But so what…big deal.  The courts will sort it all out right?  Of course they will but at what expense?

And probate is just for real estate right?  NO…
it is to determine every aspect of the estate including what to do with the deceased loved one.

Probate is the proving of the will. 

So that assumes that everyone has a will right?  Do you have a will?  Go ahead and put in the comments section what percentage of homeowners have a trust.

Ok let’s assume there’s a will.  It does a good job of outlining who gets what and how the other affairs of the estate are handled.  That solves the problem right?  NOPE.

Why?

First we have to understand the difference between a will and a trust.

Will…basically a document that says, yeah these are my wishes if I die.  The court says prove it.

Living Trust… essentially a living breathing entity that owns everything

If you have a Will…it can take months for the court to go through it…

                in the mean time, the property has been ransacked for grandma’s coin collection and the cash she hid in her sweater pockets.  The bank account is magically depleted to zero basically stealing from heirs.  Most of the “good” jewelry comes up missing.  All while waiting for the probate court to make a decision.  Also in the mean time mortgage payments, taxes, insurances and utilities have to be maintained on the property.  Do you have the extra cash to do that if you were assigned as the Administrator?  Most people can’t withstand the financial burden.  Oh but trust me there’s plenty of people who will help you out with that at a hefty fee.

Do you know someone who has gone through this?  Tell your story right here in the comments section.  I’m always interested to hear about these things.

Then there’s the probate attorney.  How much do they get paid in California?

4% of 1st 100k
3% of next 100k
2% of next 800k
1% of next 8,000,000

If your family member had a home worth 750,000 (average around me) the probate fees alone would be approximately  $18,000.  Oh wait that’s just accounting for the home.  These fees are tied to the entire estate.  What if mom or dad had a retirement account that had $150,000 in it and a new $25,000 car.  What is all that jewelry worth?  What about the time share and the gun collection?  You see it ALL gets factored in when calculating the fees.  Again this is on top of paying the mortgage, utilities, taxes HOA fees, yard maintenance etc. 

What happens if the home is worth less than what is owed?

It doesn’t matter.  The fees are not tied to the equity of the estate but instead, the total value of the entire estate and all it’s belongings regardless of whether there’s equity or not.  Dad left money behind for the kids, guess what, that money is gone to pay for the fees and outstanding debts against the estate.

If you’re one of my attorney friends, feel free to drop some additional knowledge in the comments section below.

I’ve had several cases where the parents left a free and clear home for the kids and the kids to take over when they passed away and because of the expenses associated with a probate process, they were very sad that they had to sell the home because they just were not in the position to absorb the costs associated with a Probate.  It’s heartbreaking.

I was prompted to tell you this story because coincidentally I had two appointments with two different people in similar situations.  They’re elderly, they are dealing with issues so it’s kind of hard to not think about the worst potential outcomes.

But I’m not making this video for them.  Yes I hope they take my advice and get a living trust before it’s too late and everything gets put to a screeching halt. 

No, I’m making this video for those of you watching who might be thinking…I’m 30,40, 50 and I feel great.  Nothing is going to happen to me.  I’ll be alright, I’ll get around to it later.  Let me implore you to get yourself a living trust because the living trust does a whole lot more than decide who gets what.

it also covers things like

Medical decisions…pull the plug

Organ donation

Who do we want to take care of the kids?  People will volunteer to take care of the kids only because they’re trying to get to everything else.

I’ve seen families violently explode over things like this.  All to get their little piece of the pie and…end up not speaking to each other again for years or even for the rest of their lives.

I recently had a friend go through this and while she was the only family member to take care of her mom for the last 15 years, when mom passed away, people who haven’t seen mom in a decade suddenly descended on the estate like cockroaches literally barging in the house and tearing through things looking for valuables and police get involved.  It’s nuts.

Have you ever seen a situation like this?  If you think this is good so far, on FB give me a bunch of  hearts and if on YouTube or somewhere else a thumbs up would be cool and helps other people get this message.

Don’t let your estate end up in Probate because you think you have time.  It says it right in the book of Matthew, no one knows the day or hour.  We’ve all been shocked when we see that post about someone suddenly passing away.

The good news is we’re going to be selling their homes using the amazing Open House program at AmazingOpenHouse.com to get the homes sold for full price in just one day so they won’t have to sit on the market for weeks. I’ll put it in the comments below or if someone could type it in the comments for me.   Also this makes the proceeds available from the home so they can be taken care of the way they deserve.

Folks I’ve done hundreds of sales that were either a family related sale where they had to sell mom or dad’s house or they were already in the probate process so if you know anyone dealing with a similar situation and they can’t risk sitting on the market forever, please share this video with them and ask them to reach out to me directly.  They can send me a message via FB or YouTube or they can visit AmazingOpenHouse.com and connect with me there.

Folks…TRUST your real estate!

And one last final piece of advice…, in my experience there’s 3 different levels of Living Trust. 

There’s Out Of The Box like Legal Zoom and other legal sites. You fill in some details, hope you do it right and it spits out a trust you hope is complete.  This is the cheapest of the options.  In extreme cases this will do in a pinch but definitely is not my first choice.

There’s the Burgundy Binder Brigade.  These are usually attorneys or maybe a Paralegal who is basically using a template just like Legal Zoom that they try to fit everyone into.  You would expect that they would have a better understanding of what should and shouldn’t be appropriate for your family trust but…because they rely on doing volume for a lower price, unfortunately they may not pay as much attention to the details.  And I can speak to this from experience.  This is the path my mother in law took and oh boy there were so many things that we had to fix at a significant expense to us.  If it was just done right to begin with, things would have been easier.

Finally my recommendation is to find a great estate attorney that will take the time necessary to discuss and work through your unique situation and lay out a solid trust that your family can rely on for a long time.  It’s the more expensive route but if your intention is to not burden your loved one’s when you pass away, then it’s very much worth the expense.  If you’d like a referral to my attorney, just message me and I’ll pass along his info.

Hey…and if you’re looking to buy a home, if you use us to purchase that home with our rebate program we’ll basically pay you to get a trust trust to go along with your new home.  You can find out about that at SoCalHomeRebate.com if someone would be kind enough to type that in the comments for me.

And remember the Trust (as I understand it) is only valid once notarized AND it should be reviewed and updated periodically or whenever you experience any major life changes.

Thanks for listening and take care.