It's a Jungle Out There

Lots of buyers looking, not a lot of inventory.  Bidding wars, multiple offers, lost opportunities.  The March 20, 2016 Business section of the Sunday Boston Globe has much to say about this topic.  Take a look.  Home Buyers' Blues.

Home Inspections

You are looking to buy a house.  You find something you love, and to your pleasure and possible amazement, your Offer is accepted.  So what comes next?  The home inspection.  The buyer wants to know absolutely everything about the property and be informed of all possible defects.  The inspector wants to find everything and cover their tail so that the buyer doesn't come back to them later alleging negligence for missing something.  (This often leads to inspectors flagging small issues that turn into big issues during negotiations.)  The seller, of course, doesn't think there is anything wrong with the property, and questions the inspector's conclusions.  So what happens?  The parties (usually via the brokers) will enter into negotiations to try and resolve their differences and come to some agreement about what seller will repair and what seller will refuse to address.  In some cases, seller will agree to perform, or have performed by a hired worker, a specific task.  In other cases, when seller doesn't want to get involved in the actual work, the parties will negotiate a dollar amount which seller gives buyer as a credit at closing to cover the defect.

Often, the buyers will see the inspection as an opportunity to negotiate price reductions or free repairs from the seller.  In truth, that is not the purpose of the inspection.  Generally, a buyer should be worried about major issues, and not whether the faucet leaks.  I often counsel clients that the issues to be addressed should be only of the sort that seller would have to repair in order to sell the house to anyone.  This includes things like a defective boiler or HVAC system, a leaking roof, the presence of  asbestos, mold, radon or other such substances, substantial rotting, or structural defects.  The seller is likely to be uninterested in loose toilets or dryer hoses, missing screens on windows and small matters of that sort.  Buyers should pick and choose those issues that are most serious and most important.

In a seller's market (where we are now), the seller is less likely to agree to address any inspection issues at all, because there are probably four more offers in the wings.  In those cases, the purpose of the inspection is only to give the buyer information and not to use as a point of negotiation.  Based on the inspector's findings, is the property sound?  Are the repairs limited in scope and within budget for the buyer to repair?  Or are there hidden defects that make a buyer choose to walk away?

Except in cases of substantial defects, buyers are best served by examining the home inspection for informational purposes, and not for the opportunity to extract concessions from the seller.

End of Life Care: Part Three

I have written twice previously about the important topic of discussing the subject of end of life care with aging seniors, a significant concern for those approaching the end of life and and those who care for and love them.  The discussion of this subject has, apparently, "gone viral", and this is a positive thing.  The topic that previously we rarely heard about in the context of estate planning, medicine and other relevant places is now everywhere.  Why the sudden global interest?  Whatever the case, the issue is being discussed in many different contexts.  Things are changing for the better. 

Seniors age 65 and older are entitled to Medicare coverage, which provides health care insurance to the older population during the last years of life.  And as I have discussed, in addition to strictly medical concerns, several other factors contribute to an assessment of whether patients are getting the care they want or need as they approach the end of their lives.  In many cases, the wishes of those patients are unmet.

To the credit of the Centers for Medicare and Medicaid Services, as of 2016, Medicare will begin covering advanced care planning, including discussions between physicians and other health care professionals and their patients regarding end-of-life care and patient preferences.  

I am encouraged that the populations of seniors approaching the end of life are finally being afforded the consideration and respect they have long deserved but not always received.

We all die.  Wouldn't it be nice if we could all express our philosophies and our wishes in a meaningful way, and be heard, so we can die with dignity, just as we have lived?

Are Mortgage Opportunities Coming Back?

The mortgage industry has been in a challenging place for several years, and many very qualified borrowers have been unable to obtain a mortgage loan simply because they lacked sufficient funds to provide the required down payment.  The New York Times now reports that once again, it may be possible to obtain a mortgage with a smaller down payment and without incurring the obligation to pay mortgage insurance.  Read more at http://www.nytimes.com/2016/03/12/your-money/mortgages/a-smaller-down-payment-and-no-mortgage-insurance-required.html?emc=edit_tnt_20160311&nlid=10789246&tntemail0=y&_r=0.

Testamentary Trusts

A testamentary trust is an estate planning tool whereby a trust is established through a testator’s will, and comes into effect when the testator dies.  In the past, absent a particular circumstance, clients were advised to avoid testamentary trusts for several reasons.  The Will would have to be filed for probate in order for the trust to take effect.  The court would then have continuing oversight of the testamentary trust, and the trustee was required to provide the court with annual accounts.  In order to avoid the ongoing administrative obligations and costs of probating an estate and managing a testamentary trust, most often estate plans would avoid testamentary trusts and instead include a “pourover trust”.  The testator’s will would provide for the estate to “pour over” into a separate trust over which the court would have no authority or supervision.  The pourover trust might contain essentially the same provisions as would the testamentary trust, but would be administered privately without the court’s involvement. 

Under the new Massachusetts Uniform Probate Code, testamentary trusts have come back into favor. The Court no longer has continued supervision over a testamentary trust, and the previous administrative obligations no longer exist.    With the relaxing of the former requirements, testamentary trusts will often be a more simple, direct and appropriate method for leaving estate assets in trust.

It should be noted, however, that although testamentary trusts may be a simpler yet equally effective method of trust planning, it will be necessary to file the will for probate in order for the provisions of the testamentary trust to be implemented.  If probate avoidance is an important component of a client’s wishes, a testamentary trust will not be the proper vehicle.  Rather, to avoid probate, all assets must be held in non-probate form, and the pourover trust will continue to play an important role in achieving the goal of probate avoidance.  Under the new MUPC, however, testamentary trusts have regained favor and are often the estate planning vehicle of choice.