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Probate is the process used by the court to supervise the processes that transfer legal title of property from the estate of the person who has died (the "decedent") to his or her beneficiaries.
Usually, you have to fill out court forms and appear in court to:
Prove to the Court that the Will is valid (this is usually routine),
Appoint a legal representative with authority to act on behalf of the decedent,
Identify and inventory the decedent's property, and have that property appraised,
Pay debts and taxes, and
Distribute the remaining property according to the terms of the Will or to the decedent's heirs.
If the person who died did not have any property to transfer, probate is usually not necessary. The deceased person’s survivors may decide to open a probate if there are debts owed or if there is a need to set a deadline for creditors to file claims. When there is property to transfer, the probate process also provides for the distribution of the estate's property to the decedent's heirs.
The term "probate estate" refers to any property subject to the authority of the probate court. Assets distributed outside the probate process are part of a person's “non-probate estate.” California has "simplified procedures" for transferring property for estates worth under a certain amount (from $20,000 to $150,000 depending on the circumstances and the kind of property). There is also an easy way to transfer property to a surviving spouse, property held in Joint Tenancy or Community Property with Right of Survivorship, and life insurance and retirement benefits.
The probate process can be slow, costly and very stressful to the person who has to deal with all the issues.
Here are three ways you can avoid probate:
Write a living trust: Many people believe that simply having a last will and testament will prevent their loved ones from going through probate. This is not necessarily so. The truth is that all the assets that you own and will pass on to your beneficiaries are subject to probate. A revocable living trust circumvents the probate process which can leave your beneficiaries waiting indefinitely for the income from the probate assets. A revocable living trust is a document whereby you can create a living trust as a separate entity from yourself. The trustee can easily transfer the property it holds to the family and friends it was left to without probate.
Joint Ownership of Property: By taking joint ownership of a property you can avoid probate after the first owner dies. You must be sure you have stated on your deed how you want the title to be held. This way the property goes to the joint owner when the primary owner(s) dies, avoiding probate completely. You avoid probate using the following kinds of joint ownership: Joint tenancy with right of survivorship, tenancy by the entirety and community property with right of survivorship.
Pay-on-Death Accounts and Registrations: You can designate a beneficiary or beneficiaries on your bank accounts, insurance policies, pension plans, 401K plans, IRA accounts, stocks and bonds. This is actually quite easy and these financial instruments often include language that allow you to do so when you open them. This means you are then able to ensure that your assets are immediately dispersed without having to go through probate first which can save much time and expense!
If you're looking to improve the appearance of your home for resale, or you just want an updated look for your own enjoyment, there are a few things you must consider before beginning any costly project.
Sure, you can spend a lot on something purely for the personal pleasure of having it - like that outdoor Jacuzzi under the attached gazebo - or you can go the practical route and make an improvement that will increase your home's market value, such as installing energy-efficient air-conditioning or repairing those shabby shingles. Be forewarned, however, and don't expect to recoup your costs on both counts. Many real-estate brokers agree that just because you put $25,000 worth of improvements into your home doesn't mean that your house is worth $25,000 more!
Exactly how much of your investment you'll recoup depends on a number of factors, such as the "big picture" housing market, the value of the homes in your neighborhood, when you plan to sell and the exact nature of the improvement. Also, consider that the longer you live in your home after a project is completed, the less likely you are to recoup its value. Just try to convince a potential buyer that Harvest Gold is cutting edge.
Let's review some examples of a few improvements that usually pay off - and some that rarely make a difference (no matter how much you paid for them) when it comes time to sell your home.
Painting - If you're planning to sell your home in a year or two, a fresh coat of a neutral-toned paint could make the sale easier. A professional exterior paint job may also recoup close to 75% of its cost. Let's face it - we all like things fresh-looking.
Kitchen - With just a few basic improvements, your kitchen can practically pay you back with interest! New paint, wallpaper and flooring are always appreciated; plus, you might even consider sanding, staining or painting worn-looking cabinets. Replacing old cabinet hardware is a low-cost improvement that makes a big difference in appearance. According to Remodeling Magazine, the average spent on major kitchen-remodeling is around $39,000; refinishing an outdated one averaged $15,000. The full kitchen remodeling recouped 80% of its cost, the more moderate remodeling was valued at 87%.
Area Conversions - Generally speaking, increasing the functional space of your home holds its value longer than remodeling just to make a house look better. It's also much less expensive than adding an addition to your home. Converting attic space into a bedroom, for example, usually costs around $30,000 and returns about 73% of its cost, according to Remodeling magazine. Turning your basement into extra living space costs, on average, $40,000, with a recoup average of about 69% of your costs.
Extra Bathroom - You usually can't go wrong by adding an extra bathroom. At an average cost of $14,200, a new full bath can recoup 81% of its total cost!
Deck - Adding a deck is a very cost-efficient way to add square footage to your house. Decks cost around $6,000 and generally recoup 75% of their value. Compared to other outdoor improvements (except painting), that's an excellent return!
New Windows - Your utility bill savings may make up for the iffy resale value, however, a good set of standard windows should get you around 68% back. If you start getting too fancy with custom shapes and sizes, though, don't expect to get as much in return.
Swimming Pool - In a word - don't! Unless you're putting it in for you and your family to enjoy, it's commonly agreed that a swimming pool has no resale value at all. Reason #1? Sure, they sound nice, but pools are very expensive to maintain. Running a close second is the fear of pool accidents - that's something nobody wants to experience.
Picture-Perfect Gardens - Another nicety, but who's going to spend all that time - and money? If the potential buyer is not horticulturally inclined, chances are your floral handiwork won't add to the offering price. The same can be said for expensive fences and stone walls - they look nice, but buyers don't pay up for them.
Basic Is Better - It may not sound very exciting, but it's the basic improvements you make to your home that may have the greatest return on its value: a beautiful new bathroom won't make up for a leaky roof. So if you're thinking of selling your house in the next year or so, be sure to address any problems the home may have before you, say, install those sunken gardens you've always dreamed of.
If you're thinking of selling your home, give us a ring, and we'll make sure you get all the information we can provide to ensure that your house makes a wonderful first impression!
Goals can be as short-term as buying a new pair of shoes next week, or as long-term as going on vacation next spring.
INVOLVE YOUR ENTIRE HOUSEHOLD
If it's just you, great. But if you have a spouse and/or children, create a budget together, and explain to everyone that they may be asked to make sacrifices.
BUDGET IN FUN
A budget that leaves no money for an occasional dinner out, or for a family outing at an amusement park is designed to fail. Your budget should help you, not put you in a bind.
MAKE THE EFFORT TO SAVE
Most people look at saving as putting away money for a rainy day. But a better way to look at it is putting away money for a nice vacation.
If you don't know where your money goes, how do you expect to manage it?
DISTINGUISH BETWEEN WANTS AND NEEDS
Buy what you need first. The wants belong in the "what's left over" category.
Look down the road, and get into the habit of thinking ahead.
GET RID OF HIGH-INTEREST DEBT
Focus on identifying high interest-rate debt, and work on paying that debt off.
FIND A SYSTEM THAT WORKS FOR YOU
It could be the envelope system, a bank or a credit union. If it works for you, use it.
STICK TO IT
Creating and sticking to a budget that works won't be easy, but in the end it will help you make the most of your hard-earned money.
Give us a ring if you're ready to make your money work for you! Investing in real estate is a great place to start.
Is now the right time for you to buy a home?
You have many options to consider and choices to make. Buying a home is a big responsibility, financially and emotionally, but most people want to own a home. Homeownership often is referred to as "the American dream." Why is it so special? Among the reasons: Real estate often is an excellent investment, perhaps the number one source of wealth-building for families.
Owning a home has many benefits. When you make a mortgage payment, you are building equity - and that's an investment. Owning a home also qualifies you for tax benefits that may assist you in dealing with your new financial responsibilities - such as homeowners' insurance, real estate taxes, and upkeep - which can be substantial. But given the freedom, stability, and security of owning your own home, they are definitely worth it! Owning your own home also can be a great source of pride and stability.
But homeownership may not be for everyone. It's a big financial commitment - starting with the initial shock of your purchase (including a "down payment" and fees paid to a real estate agent, the lender and others) followed by years of monthly mortgage payments, real estate taxes, property insurance and maintenance costs. When you decide to purchase a home, you accept responsibility for paying for these expenses. There are additional costs to your monthly mortgage payment and should be included in your budget estimates: . Property Taxes and Special Assessments . Home/Hazard Insurance . Utilities . Maintenance . Home Owner Association (HOA) Fee if applicable.
One of the advantages of renting is being generally free of most maintenance responsibilities and the flexibility of moving almost as soon as you decide. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for your housing needs.
There are many considerations in choosing between renting and buying: There are tax advantages to homeownership in both the short and long terms. The mortgage interest and real estate taxes are tax deductible, which allows you to subtract part of your housingrelated expenses from your taxable income, which could reduce your tax bill. In many cases, the amount of money a renter spends on rent can be about the same as or less than the amount a homeowner spends on a mortgage. With the tax benefit for homeowners, the savings can be significant.