Your Assets may Not Be Protected

It’s no secrete that many people are concerned that they may suffer some injury or disability that may require hospital or nursing home care. This is not an attractive prospect. Depending on the level of ones stay or care, both may be very costly. Although nobody expects to end up in either facility, the possibility of such a prospect is always looming as people get older. Therefore, the question is, how do you protect your assets in the event you have no insurance or are receiving Medicaid Benefits.

Placing assets into an irrevocable trust is the best strategy. It not only protects family assets from creditors, it also eliminates the countable assets for Medicaid eligibility purposes and therefore accelerates the time when Medicaid benefits can kick-in. An irrevocable trust is a legal structure that cannot be amended or undone once signed into existence. It is a structure recognized by Medicaid administrators as being validly used by families to protect assets from hospital bills and/or the nursing home spend-down. Establishing an irrevocable trust and placing a portion of your assets in that trust is an effective strategy for protecting those assets from Medicaid and/or creditors.

It is not unusual to transfer the major portion of family assets into the trust, even the family house, so as to leave only a small amount of assets outside the trust. A transfer into an irrevocable trust can be considered a gift for Medicaid eligibility purposes. This gift status will be helpful for people applying for Medicaid assistance. In particular, both “penalty period” and 60 months “look-back period” rules apply.

You should think ahead and determine whether you believe that you will need Medicaid sometimes in the near future. If so discuss the matter with your loved ones and seek legal advise from an attorney who is an expert in Estate and Trust matters. If necessary, you should have an irrevocable trust prepared well ahead of the time Medicaid assistance is expected to be needed for the most comprehensive protection. If the person needs nursing home care during the 5 year look-back period and there are no funds available to pay for that care because they have all been placed in the trust, a common tactic is for other family members to finance that interim care. It may be possible to draft the trust deed so as to allow the trust to distribute income to those family beneficiary members to cover for this eventuality. A Medicaid irrevocable trust is a binding, rigid structure for the outside world and relatively flexible for the beneficiaries when drafted correctly. If assets placed in the trust are suddenly needed, they will be difficult to access by outside creditors, but the assets can be accessed by the beneficiaries if implemented properly. Thus, it is critical to have an expert do the trust writing and in some instances, maintain some assets outside the trust. Trust assets will no longer be “owned” by the person that established the trust, although they may still receive the benefit of the assets as a beneficiary. They will, in time, upon the grantor’s death, transfer to the beneficiaries in accordance with the terms in the trust.

Disclaimer
This article is strictly a way to assist in your estate matters. Please note that the content is written on a broad level and is general in scope, therefore your personal information is not considered. You should not consider the content personal advice or guidance, nor should you consider it personal financial advice or personal financial guidance. We recommend that you consult with an attorney or a professional who is familiar with your individual circumstances before making any final personal decisions or financial decisions.

Disinheriting Your Spouse

While it is more common to hear of people disinheriting their adult children, disinheriting a spouse is rare. That’s because in the State of New York, you cannot disinherit your spouse. You cannot leave the surviving spouse with nothing nor can you leave the surviving spouse with a mere portion of your estate. Stating it in your will or leaving your spouse completely unmentioned in your will is not enough to disinherit your spouse, despite your reasoning.

Spousal Right of Election
New York’s spouse’s right of election essentially protects the spouse from getting disinherited or receiving a small token of the estate. As is common with wills, surviving members of the family often disagree and contest against the contents of the will. According to the spousal right of election, the surviving spouse can elect against the contents of his or her spouse’s will. The surviving spouse can take half of the estate if there are no children involved. If children are involved, the surviving spouse can take a third of the estate or $50,000 depending on which is the greater of the two. The remaining estate then goes to the children or whoever was mentioned in the will. The surviving spouse has six months to elect against the will.

Dying Intestate
Dying intestate or dying without a will does not disinherit your spouse. If there are no children involved, then the surviving spouse gets the entire estate. If children are involved then the surviving spouse receives $50,000 and half of the estate after taxes and debts are settled. The remaining portion of the estate then goes to his or her children or grandchildren. The surviving spouse has two years after the spouse’s date of death to assert his or her right of election.

Exceptions to the Spouse’s Right of Election
In the state of New York, you cannot disinherit your spouse nor can you give him or her less than $50,000. Unfortunately, divorce is one of the most effective solutions if you do not want your spouse to inherit a portion of your estate. While New York law protects the disinheritance of a spouse, it does not protect the disinheritance of a former spouse. Divorce, essentially, terminates the spouse’s right of election. Unlike the spousal right of election, you can, however, state in your will that you want your former spouse to inherit from your estate. Abandonment by a spouse is also an acceptable occurrence that can waive the surviving spouse’s right to elect. Spouse’s right of election can also be waived in a prenuptial agreement if both parties enter into the agreement completely informed of what they are waiving and the consequences of waiving this right of election. If your spouse has disinherited you in the will or did not establish a will at all, our expert attorneys are here to help guide you.

Disclaimer
This article is strictly a way to assist in your estate matters. Please note that the content is written on a broad level and is general in scope, therefore your personal information is not considered. You should not consider the content personal advice or guidance, nor should you consider it personal financial advice or personal financial guidance. We recommend that you consult with an attorney or a professional who is familiar with your individual circumstances before making any final personal decisions or financial decisions.

You May Not Be Sufficiently Protected

Many people are not told by their brokers regarding the importance of Uninsured and Underinsured motorists coverage when they’re buying auto insurance. This coverage is most commonly seen on insurance policies as UM/UIM coverage, and going without this coverage completely or having too little could cost you much more in the future than it does in premium. This coverage is there to protect you, and passing on it means you’re rejecting an important coverage you may need one day.

People often say, “I have full coverage”, assuming their policy covers them in an accident. However, “full coverage” means your insurance company will pay for damages suffered by another person if the accident was your fault.  That’s what your liability coverage does (bodily injury and property damage). People get liability coverage because they know it’s required by law and in most cases will protect them from personal liability.

UM/UIM coverage is there to protect you. If you’ve ever been in an accident, you know the immediate, sickening feeling that follows. You also know how that feeling mounts when you start wondering if the at-fault driver has insurance or enough insurance to pay your damage or medical bills. Now imagine how sick you’d feel if you did find out the driver didn’t have coverage or speeds off, leaving you with the bill.

If the person that caused the accident does not have insurance and can’t pay for your medical bills, legal costs, property loss, and other incidental expenses like lost wages, the UM/UIM coverage on your policy would pay for these expenses. If you don’t have this coverage and the person at-fault doesn’t have insurance, you’re out of luck when it comes to recouping any damages, losses, or expenses you incurred from the accident. The only thing you could do is take the person to court and cross your fingers, but odds are, if they don’t have insurance, they’re probably not going to have thousands and thousands sitting in their checking account to pay for your damages. Unfortunately, the odds are against you if you’re in an accident with someone who doesn’t have auto insurance.

UNINSURED/UNDER-INSURANCE MOTORIST COVERAGE (UM/UIM)

 

UIM coverage helps pay for any differences in expenses and losses that you incur if the person who is at fault doesn’t carry enough insurance to pay for the damages. If your loss, damages, medical bills, or other expenses cannot be covered by the other person due to an insufficient amount of coverage, UIM coverage will kick in once your expenses have exceeded their limits.

For example, let’s say you’re in an accident and have a great insurance policy, as they say, you have “full coverage” with comprehensive, collision, and bodily injury liability of $100,000. You also have a UM/UIM coverage limits of $100,000. If you get into an accident and are injured and the other car which was at fault carried only a $25,000 liability coverage, your UM/UIM coverage can pay up to $75,000 to you for your injuries. Again, UM/UIM coverage is to protect you against other motorists, if necessary.

Another plus in that situation is that once you’ve reported the accident to your insurer and they’ve discovered the driver has insufficient coverage, your insurer may pay the difference and then go after the driver to get paid back. this is known as subrogation.

Bottom line:Make sure your UM/UIM insurance policy is at least $100,000 in order to protect yourself from an uninsured or underinsured motorists when in an accident.

Disclaimer

This article is strictly a way to assist in your insurance decisions by providing answers to readers’ insurance questions. Please note that the content is written on a broad level and is general in scope, therefore your personal information is not considered. You should not consider the content personal insurance advice or personal insurance guidance, nor should you consider it personal financial advice or personal financial guidance. We recommend that you consult with a professional who is familiar with your individual circumstances before making any final insurance decisions or final financial decisions.

Make Sure Your Insurance Company Is Not Dealing With You In Bad Faith

Insurance companies are notorious for being resistant when dealing with the approval of a claim. This is especially true in cases such as personal injury claims that are the result of an automobile accident.

Many car accident and personal injury cases can be complicated when all competing versions of events are entered, which can provide considerable latitude for crafting an argument that at least reduces the level of negligence for their client. And then, there are insurance companies that negotiate in bad faith as a standard policy in dealing with all claims, choosing to force the plaintiff into court or settle quickly for a very low offer. Any of these situations could be proven as bad faith tactics by an experienced personal injury attorney who understands how to prove bad faith in court.

Explaining Bad Faith: Depending on the size and management of an insurance company, different companies use different approaches to settling claims. Knowing the policy of the insurance company being petitioned for damages can be very helpful when claiming benefits, especially if the company policy adjuster is being difficult. Sometimes the tactics are actually being ordered from the claim supervisor level. That is why handling a personal injury claim without legal counsel is usually a bad idea. And, when an insurance adjuster realizes there will be no attorney in involved, it is easy for the adjuster to negotiate in bad faith while the injured party is never aware of the potential coverage level. Luckily, this is a point where a personal injury attorney can intercede and investigate the case for bad faith activity by the insurance company. There are specific laws that govern how insurance claims are handled legally, and a violation of these rules in any manner could constitute bad faith on the part of the respondent insurance company.

Additional Damages: The real issue with bad faith insurance companies is avoiding a separate claim for bad faith negotiation. Insurance adjusters are trained professional negotiators and methods of settling claims can often borderline on illegal activity. While many adjusters will not offer all policy information in the initial stages of a claim payment, adjusters must still answer questions honestly and document communications. Failure to do so can result in an additional lawsuit against the company for demonstrated bad faith in the insurance claim process resulting from the actions of their responsible insurance policy holder. A bad faith claim is not an addendum to the original insurance claim. It is a separate legal issue, which could result in a significant punitive damage enhancement.

Signs of Bad Faith Tactics: One of the primary signs that an insurance company will be difficult to settle with is how quickly they respond to the initial claim contact. It is always a bad sign if the company is quick to want a settlement, but are requesting a full future medical release. While this may seem like the company is compassionate and concerned about the claimant, it could easily be a sign of a high level of insurance coverage for their client and a willingness to want the negotiation complete. After all, their duty is primarily to the employing company and client to reduce the total claim payout as much as possible. Ceasing benefits during the process of recovering from an injury can also be evidence of bad faith when the company cannot justify the stoppage of benefits. Many times a claimant will realize quickly that a solid lawyer for injury claims will be necessary for a full damage recovery.

Bad faith insurance companies are the main reason that it is never a good decision for a typical injury victim to attempt negotiating with an insurance company regarding the injury. Personal injury cases can get complicated and often the insurance company is successful in deflecting the level of fault assigned to their client. approaches to settling claims. Knowing the policy of the insurance company being petitioned for damages can be very helpful when claiming benefits, especially if the company policy adjuster is being difficult. Sometimes the tactics are actually being ordered from the claim supervisor level. That is why handling a personal injury claim without legal counsel is usually a bad idea. And, when an insurance adjuster realizes there will be no attorney in involved, it is easy for the adjuster to negotiate in bad faith while the injured party is never aware of the potential coverage level. Luckily, this is a point where a personal injury attorney can intercede and investigate the case for bad faith activity by the insurance company. There are specific laws that govern how insurance claims are handled legally, and a violation of these rules in any manner could constitute bad faith on the part of the respondent insurance company.

Additional Damages: The real issue with bad faith insurance companies is avoiding a separate claim for bad faith negotiation. Insurance adjusters are trained professional negotiators and methods of settling claims can often borderline on illegal activity. While many adjusters will not offer all policy information in the initial stages of a claim payment, adjusters must still answer questions honestly and document communications. Failure to do so can result in an additional lawsuit against the company for demonstrated bad faith in the insurance claim process resulting from the actions of their responsible insurance policy holder. A bad faith claim is not an addendum to the original insurance claim. It is a separate legal issue, which could result in a significant punitive damage enhancement.

Signs of Bad Faith Tactics: One of the primary signs that an insurance company will be difficult to settle with is how quickly they respond to the initial claim contact. It is always a bad sign if the company is quick to want a settlement, but are requesting a full future medical release. While this may seem like the company is compassionate and concerned about the claimant, it could easily be a sign of a high level of insurance coverage for their client and a willingness to want the negotiation complete. After all, their duty is primarily to the employing company and client to reduce the total claim payout as much as possible. Ceasing benefits during the process of recovering from an injury can also be evidence of bad faith when the company cannot justify the stoppage of benefits. Many times a claimant will realize quickly that a solid lawyer for injury claims will be necessary for a full damage recovery.

Bad faith insurance companies are the main reason that it is never a good decision for a typical injury victim to attempt negotiating with an insurance company regarding the injury. Personal injury cases can get complicated and often the insurance company is successful in deflecting the level of fault assigned to their client. Always get an experienced and aggressive insurance claim attorney who knows when your claim can be enhanced by an additional bad faith legal action.

When Can You Leave Your Child Home Alone

Most parents understand that it is always wrong to leave an infant or toddler home alone while you go out – even for a quick run to the store. But when is a child old enough? Surprisingly, there aren’t many laws to guide parents who aren’t sure if their children are old enough to stay home alone. About 15 million children in the United States are home alone after school every day.

Enough to be Alone: State laws vary quite a bit. Some states have not set a minimum age. Others have set a minimum age of 10 years old, while states like Maryland do not allow parents to leave a child under the age of 8 alone at home or in a car. Some states set a minimum age for babysitters as well. If you aren’t sure about the law in your state, contact the state department of health or the child services agency for information.

At what age is it okay to leave my children home alone? Office of Children & Family Services is often asked questions regarding the appropriate age to leave a child alone, or what age is appropriate to allow a child to begin babysitting. There are no straightforward answers to these questions. All children develop at their own rate, and with their own special needs and abilities. Some children are responsible, intelligent, and independent enough to be left alone at 12 or 13 years of age. Likewise, there are some teenagers who are too irresponsible or who have special needs that limit their ability to be safe if they are left alone. Parents and guardians need to make intelligent, reasoned decisions regarding these matters.

Below there are some items for these decision-makers to consider before leaving a child alone. Be aware, this is just the beginning of issues to consider. It is not an all-inclusive checklist to guarantee intelligent and reasoned decision-making:

1. Consider the child: How mature is the child? How comfortable is the child with the circumstances? What has the child done in the past to show you he/she is able to take on this kind of responsibility?

2. Consider the child’s knowledge and ability: Does the child know how and when to contact emergency help? Is the child able to prepare food for him/herself? Are there hazards to the child in the environment such as accessible knives, power tools, a stove or oven?

3. Consider the circumstances: Where will the child be when left alone? How long is the child to be alone?

These same questions should be asked when considering whether a child is old enough to baby-sit. However, when considering a child as an adequate baby sitter, you must evaluate these factors for both the potential baby sitter as well as the needs of the child or children who will be cared for by the baby sitter. A child of 12 might be fine alone for two hours in an afternoon. Yet, the same child may be incapable of responsibly caring for a 5-year-old for that same period of time.

The law surrounding leaving a child home alone is complicated especially when something goes wrong. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic.

Three Estate Plannings Everyone Needs

Many people mistakenly believe that estate planning is only necessary for the wealthy. In reality, a basic estate plan is essential for everyone, regardless of income or net worth, because we all want to minimize our estate taxes, confusion, and stress for loved ones after a death.

It’s no secret that estate planning can be a difficult topic for many families to address, but it’s a necessary one. Without proper preparation and documentation, assets-like houses, retirement plans and savings accounts-can end up in limbo for years, sometimes requiring expensive legal assistance to straighten matters out.

At a minimum, everyone should have the following three items in place:

An up-to-date will or trust.

Wills are easy to create, but they require the distribution of assets to go through probate. Probate is a legal process that involves:

1.   Validating a deceased person’s will;

2.  Identifying, inventorying, and appraising the deceased person’s property;

3.   Paying debts and taxes;

4.  And ultimately distributing the remaining property as the will directs.

The probate process often requires a lot of technical paperwork and court appearances, and the resulting legal and court fees are paid from estate property-reducing the amount that’s passed on to heirs.

A trust can be more expensive to set up and requires professional assistance, but it provides benefits that a will cannot. First, when they’re structured properly, trusts will help avoid guardianship or conservatorship if you become incapacitated. A will only works after you’ve died; a trust, by contrast, works all the time, including periods of incapacity before death.

Trusts usually avoid probate, which helps beneficiaries gain access to assets more quickly as well as save time and court fees. Depending on how it’s structured, a trust may also reduce estate taxes owed and can protect an estate from heirs’ creditors.

A durable power of attorney.

A power of attorney is a written authorization that allows someone else to make financial and legal decisions for a person if that person should become hospitalized, disabled or otherwise incapacitated.

Not all powers of attorney are created equal. Some are put in place for short periods of time only, for example, while a person is vacationing overseas, but dealing with legal matters at home. That’s why it’s important to have a durable power of attorney in place, which simply means that the agreement is not for a temporary period of time. It may be valid immediately when it’s signed, or it may go into effect at a later point. But what makes it “durable” is the fact that it will survive your later incapacity. (If a power of attorney is not durable, it is revoked when you become incapacitated – the very moment when you need it most.)

Powers of attorney for property should only be given to trusted individuals, ideally those who are good with financial and legal matters. Medical powers of attorney can be separated and given to someone else, if desired.

Updated beneficiary designation forms.

Beneficiary designation forms on life insurance policies, 401(k) accounts and other assets will generally override any conflicting provisions within a will or trust. It’s essential to make sure all forms are checked and updated regularly, ideally on an annual basis.

Three Estate Planning Items Everyone Needs

Many people mistakenly believe that estate planning is only necessary for the wealthy. In reality, a basic estate plan is essential for everyone, regardless of income or net worth, because we all want to minimize confusion, unnecessary costs, and stress for loved ones after a death.

It’s no secret that estate planning can be a difficult topic for many families to address, but it’s a necessary one. Without proper preparation and documentation, assets—like houses, retirement plans and savings accounts—can end up in limbo for years, sometimes requiring expensive legal assistance to straighten matters out.

At a minimum, everyone should have the following three items in place:

An up-to-date will or trust.

Wills are easy to create, but they require the distribution of assets to go through probate. Probate is a legal process that involves:

1.   Validating a deceased person’s will;

2.   Identifying, inventorying, and appraising the deceased person’s property

3.    Paying debts and taxes;

4.    And ultimately distributing the remaining property as the will directs.

The probate process often requires a lot of technical paperwork and court appearances, and the resulting legal and court fees are paid from estate property—reducing the amount that’s passed on to heirs.

A trust can be more expensive to set up and requires professional assistance, but it provides benefits that a will cannot. First, when they’re structured properly, trusts will help avoid guardianship or conservatorship if you become incapacitated. A will only works after you’ve died; a trust, by contrast, works all the time, including periods of incapacity before death.

Trusts usually avoid probate, which helps beneficiaries gain access to assets more quickly as well as save time and court fees. Depending on how it’s structured, a trust may also reduce estate taxes owed and can protect an estate from heirs’ creditors.

A durable power of attorney.

A power of attorney is a written authorization that allows someone else to make financial and legal decisions for a person if that person should become hospitalized, disabled or otherwise incapacitated.

Not all powers of attorney are created equal. Some are put in place for short periods of time only—while a person is vacationing overseas but dealing with legal matters at home, for example. That’s why it’s important to have a durable power of attorney in place, which simply means that the agreement is not for a temporary period of time. It may be valid immediately when it’s signed, or it may go into effect at a later point. But what makes it “durable” is the fact that it will survive your later incapacity. (If a power of attorney is not durable, it is revoked when you become incapacitated – the very moment when you need it most.)

Powers of attorney for property should only be given to trusted individuals, ideally those who are good with financial and legal matters. Medical powers of attorney can be separated and given to someone else, if desired.

Updated beneficiary designation forms.

Beneficiary designation forms on life insurance policies, 401(k) accounts and other assets will generally override any conflicting provisions within a will or trust. It’s essential to make sure all forms are checked and updated regularly, ideally on an annual basis.

We can assist you to create or update these basic items as well as provide suggestions for additional steps, if needed.

How To Reduce Your Debt

Unless you live on Mars, you likely have outstanding debts to pay. You can throw the bills into a garbage can, but that won’t make them go away and you can’t simply wish them away. But you can pay it down with determination. Here are but a few ways to reduce your debts:

1. Pay more than the minimum
First, break the habit of paying only the minimum required each month. Paying the minimum, usually 2% to 3% of the outstanding balance, only prolongs the agony. Besides, it’s precisely what the banks want you to do. The longer you take to repay the charges, the more interest they make, and the less cash you have in your pocket. Don’t play their selfish game.

Instead, bite the bullet and pay as much as you can each month. If your minimum payment is $100, double that to $200 or more. Examine your normal expenses, you can find the money. We all have “luxuries,” and you know what yours are.

2. Snowball your debt payments
Take a long, hard look at all your credit cards. Pay particular attention to the one with the lowest interest rate. Have you reached the maximum limit on that card? If not, consider transferring a higher-interest bill to that one. Many credit cards permit this, and it’s positively foolish not to trade an 18% debt for one at 12%.

3.  Borrow against your life insurance
Do you have life insurance with a cash value? If so, borrow against the policy. Yes, you’re borrowing your own money. But the interest rate is typically well below commercial rates, and you can take your time repaying the loan. Do repay it, though. If you die before it’s repaid, the outstanding balance plus interest will be deducted from the face value of the policy payable to the beneficiary

4. Finagle family and friends
Perhaps your family or friends could lend you the money. Who else knows, trusts, and loves you like they do? Unless you’re really the black sheep of the flock, chances are you’ll get a very favorable interest rate. They may even tolerate a late payment or two. But if you want to maintain the relationship, it’s best to keep things on the straight and narrow by using a written agreement. You should clearly establish the interest and repayment schedule in writing to avoid misunderstandings and hard feelings. And it goes without saying that you must be scrupulous about adhering to that schedule. Otherwise, you can forget the family reunions and birthday presents.

5. Borrow from your 401(k)
Do you participate in a 401(k)qualified retirement plan at work? Most 401(k) plans have a feature that lets you borrow up to 50% of the account’s value, or $50,000, whichever is smaller. Interest rates are usually a point or two above prime, which makes them cheaper than that found on credit cards. Not only is the interest typically much lower than that on credit cards, the best part is you pay it to yourself. That’s right, every dime in interest paid on a 401(k) loan goes directly into the borrower’s 401(k) account, not the lender’s. Check with your accountant or financial adviser for more detail for any possible drawbacks.

6. Renegotiate terms with your creditors
OK, you’ve done all you can. Savings are gone; relatives have been tapped out; you don’t have a home or 401(k) to borrow against. You feel like you’re against that proverbial wall. The money just isn’t there. Is bankruptcy the only way out? No way. Try pulling an ace out of your sleeve prior to taking that step. What ace? The threat of bankruptcy, of course.     Let your creditors know your situation. Tell them that if you are unable to renegotiate terms, you’ll have no other recourse but to declare bankruptcy. Ask for a new and lower repayment schedule; request a lower interest rate; and appeal to their desire to receive payment.

7. As a last resort, file bankruptcy
What if you decide you can’t pay down your debt using any of the methods listed above? What should you do? The absolute last resort is bankruptcy. Although we firmly believe everyone has a moral obligation to repay their debts to the utmost of their ability, there are times when repayment may be impossible. In those cases, bankruptcy may be the only available course of action. Nevertheless, be aware of the significant drawbacks.

Easy Ways To Buy A House In Foreclosure

One person’s misfortune can become someone else’s blessing – and that’s particularly true with foreclosures on residential property. When homeowners are unable to keep up with their mortgage payments, lenders foreclose and take the house back. But the lender doesn’t want the house. It wants the money it loaned for the purchase. The only way it can get that money is to sell the home to someone else.

 

Get Pre-approved for a Mortgage

 

When you bid on or make an offer on a foreclosed home, it’s a good idea to line up your financing ahead of time. The foreclosure process generally ends with the house being auctioned to the highest bidder. You’ll need cash for this type of sale.

The lender who foreclosed doesn’t automatically finance a new mortgage for you if you buy the house. If you buy from the owner or the lender during or right after the foreclosure process, you’ll need preapproval for a mortgage.

Buying a House Before Foreclosure

Foreclosure is a long, drawn-out process. The house you want may be scheduled for auction in approximately a month’s time, if the owner does’t come up with the past-due payments. In this case, you can approach the homeowner directly and make an offer before the auction takes place.

If your offer covers the existing mortgage, you can add a cushion so the owners have enough money to relocate. Even added together, this amount might still be below market value.

Buying a Home After Foreclosure

Lenders don’t have to let the house go to the highest bidder at auction if the bid is less than the mortgage balance. When this happens, the lender keeps the house. You can make a purchase offer to the lender, but it will generally want market value for the property, not just the amount of the outstanding mortgage.

Set Aside Money for Repairs

Whether you buy the home from the lender, the owner, or at auction, you take it in “as is” condition. If the house you buy needs repairs, neither the owner nor the lender will make them. It can be difficult to know how much to set aside for repairs if you buy at auction, because you may not have a chance to inspect the house first.

Be Wary of Liens on Property

If you buy at auction, and if one of the owner’s creditors took a lien against the property, you’re usually responsible for paying it after the sale. The lien transfers to you as the new owner.

A Foreclosure Lawyer Can Help

The law surrounding the purchase of foreclosured residential property is complicated. Plus, the facts of each case are unique.  For more detailed, specific information, please contact our office.

Pick The Right Insurance Policy

Owning a home may be the American dream. But it’s also a mighty valuable asset, often filled with some expensive possessions, which you will want to protect in case of fire, theft, lawsuits and more.

Enter homeowner’s insurance, which is a type of property-casualty insurance. The property insurance covers your home and its contents. The casualty insurance protects against legal liability caused by injury to other people or damage to their property.  Now, do you have enough coverage?

Grabbing An Umbrella Policy

If you’ve lived in your home for five years or more and haven’t reviewed your coverage, you may be underinsured against a major loss. It’s easy to fix this. First, read the coverage limits when your policy comes up for renewal each year. If it would be impossible to rebuild your house for the amount specified in the policy, call the insurance company and have the coverage increased. Since it may cost more to rebuild your home than its current market value, insure it for replacement cost. While the market value of your home includes the land, don’t include land in the replacement cost.

A yearly insurance check-up should also account for any major purchases or additions. If you have put in a new kitchen and appliances, added a room to your house or purchased a large home-entertainment system, you may want to increase your coverage. You may also want separate riders to cover expensive jewelry or artwork. But since the purpose of insurance is to prevent a financial disaster and to cover every small loss, consider whether you can afford to replace these items out-of-pocket.

All homeowner’s and auto policies come with liability coverage to protect against judgments arising from injury to others on your property or in an auto accident. But standard liability coverage, even if it’s $300,000 to $500,000, will not be enough to protect against a court judgment that could be $1 million or more. For this, you might want an “umbrella” or “excess liability” policy. According to the Insurance Information Institute, you can typically buy a $1 million umbrella policy for about $150 to $300 a year. The next million will cost about $75 and about $50 for every million after that. The cost may be higher in large metropolitan areas. You will likely have to buy the umbrella policy from your existing homeowner’s or car insurance company.