Shawn Sullivan, Broker Associate, CRS's Blog
74 Broadsound Ave, Revere, MA 02151
74 Broad Sound Ave, Revere, MA 02151
Most people do not think of creating an estate plan before they are in their 40s or even their 50s. However, if you own a home, regardless of the cost of the home and regardless of your age, you should create an estate plan. Even if you are in your 20s, your family could end up losing a high-end home if you are in an accident and become incapacitated or you lose your life. Always contact an experienced estate attorney for help drafting your will and other estate documents, including trusts.
Titling Your Home
In today’s day and age, many people decide to live together without formally getting married. Most closing agents will title your home so that you own one half and your significant other owns one half. In most states, your significant other’s half of the house will have to go through probate unless the house is appropriately deeded. The ways you may title your home include:
Joint Tenancy: Gives you equal rights to the property. If one party passes, the ownership of that person’s half passes to the surviving tenants. However, if you are not married, you will have an extra step to take if you want to transfer your half to someone not listed on the deed.
Tenancy in Common: This is the most common way deeds are titled if two people buying a house are not married. Both parties have equal rights to the property. However, if one person passes, their half goes to their heirs and not to the other person on the deed unless that person is an heir. Each person can take out a mortgage on their half without getting permission from the others on the deed. This type of title usually has to go through probate.
Tenants by the Entirety: Only those legally married may title their home as tenants by the entirety. The house is automatically transferred to the living spouse. The property does not have to go through probate if it is titled as tenants by the entirety.
You may title your home in other ways, though those ways are not as common. Creating a will and a trust, along with titling your home properly, ensures that your half goes to the person you want it to go to, and, if done correctly, could save your spouse or significant other the hassle of going through probate.
Creating a Trust
Many types of trusts exist. When you choose the right type of trust for your situation, you may be able to avoid probate and avoid some taxes when your home transfers on your death. However, the main reason for a trust is so that your loved one may continue living in the home or taking care of the financial responsibility of your home should you become incapacitated. Certain trusts also keep your home and its equity from being eaten up by creditors such as nursing homes and doctors. Always consult an attorney to discuss the complexities of creating a trust and the rest of your estate plan.
108 Maple St, Malden, MA 02148
You may know that when you buy a home, you should purchase homeowner’s insurance. You may have never wondered if the coverage is required. Usually, insurance will be taken out of escrow and a part of our monthly mortgage payment. You may pay a yearly premium separate from your mortgage payment. Home insurance is a nuisance so if you could find a way around it should you forego it?
You can legally buy a home without a home insurance policy, but if the house is financed with a lender, the mortgage company usually requires that you have insurance on the property. A lender can also request that your home carry additional policies such as earthquake or flood insurance. There are minimums you must meet based on the value of your home and the lender you do business with. These standards exist so that you as the homeowner will have enough coverage to replace the property should it be a total loss in some type of natural disaster or fire.
The amount of coverage you need depends on how big the mortgage is that you have taken out. There are certain supplemental coverages that may not be required yet are sensible to carry. These extra coverages include:
Personal liability coverage
Personal property coverage
The good news is that as a homeowner you have a choice. You can shop around and see which insurance companies will give you the best coverage for the lowest price.
The bottom line is that you shouldn’t risk going without home insurance. Even if your loan company allows you to cancel your home insurance after a certain point, the risk is really not worth saving money. Without coverage or permission to cancel coverage, there is a chance your mortgage company could put your loan into default.
High deductible, basic insurance policies are better than nothing. If you’re going to pay a premium for home insurance, you should look into getting the coverage that makes the most sense for you and your family. You don’t need over the top coverage amounts, but you should aim for comprehensive protection for your property. The key is to balance the cost of your insurance with the value of the property. If your house burned down, you’d want to know that you could replace your property without worry. If you didn’t have insurance, you could really face some issues. You may not want to pay for home insurance, but you genuinely need it. Make sure you understand your coverages.