At the Heart of Your Real Estate Transaction: Our Best Practices Ensure Your Best Interests

The terms curbside and virtual have come to hold important meaning during the Coronavirus (COVID-19) pandemic. Restaurants and other essential businesses are required to hand-off products to their customers curbside, and doctors are holding office visits via telemedicine sessions. In a similar manner, real estate attorneys are meeting with each other or with their clients to hold closings in law firm driveways and parking lots. Indeed, COVID-19 has changed our lives personally and professionally and placed restrictions on the way we live and work.

Our health officials, leaders and legislators tell us that the Coronavirus is not going away anytime soon. Therefore, accepting the limitations of our new normal and making the necessary adaptions to best practices in business and law is necessary both right now and in the future.

Experience matters

In this environment, experience matters. Whether you’re talking business or law, it’s imperative to choose experienced professionals. When it comes to real estate law, you want to work with attorneys who have repeatedly worked with buyers and sellers on multiple real estate transactions of varying degrees of complexity. You’ll also want to know they maintain excellent relationships with other attorneys, because these are the lawyers who will likely represent the other parties in a transaction.

Collaboration for best practice solutions

In mid-March with the lockdown imminent, our attorneys at Phelan, Frantz, Ohlig and Wegbreit, LLC joined forces with a regional group of New Jersey real estate attorneys who dialed in to discuss the public health crisis. Their goal was to anticipate potential pitfalls imposed by the COVID-19 environment and adjust best practices to the new landscape by devising solutions that would ensure their delivery of excellent client service.

The new driveway/parking lot locale for closings was an obvious outcome of these discussions.

But the solutions extended to the important behind-the-scenes best practices that would limit risk and protect you from the potential ways COVID-19 could derail your transactions. Zeroing in on the terms established in attorney review, lawyers have worked collaboratively to create new standard language to address potential pandemic-related issues and level the playing field. Their goal: to ensure that buyers, sellers and the attorneys representing them were playing by the same rules and with likeminded understanding of the contract language.

Beyond-your-control circumstances

Collective predictions have been on target. There’s a chance that a buyer or seller could become seriously ill with the Coronavirus or experience job loss. Either can delay or, even worse, require cancellation of your real estate contract.

In addition, reduction of staff in banks and other lending institutions has also created obstacles.  The lower headcount has delayed mortgage commitment turnaround and proven that now more than ever lenders are driving closing timetables. Municipalities and to a lesser extent home inspection firms have also been reducing staff, posing additional obstacles in obtaining certificates of occupancy or scheduling home inspections.

New standard contract language prevents you from being penalized because of changes in health or job status or delays caused by slower processes. These are all circumstances beyond your control that must nonetheless be circumspectly crafted for a just outcome. For example, we use specific language to prevent ambiguity and avoid broad wording like impacted by COVID-19 to discourage change-of-heart decisions that use Coronavirus to let buyers or sellers too easily off the hook.

Clarity an imperative

These additional contract components may make your real estate contract seem complicated, so it’s imperative that you understand the terms outlined in the contract before you sign. Your attorney must clearly define the scope of the permissions and limitations related to issues surrounding COVID-19 and set clear expectations about what will be reasonable in both negotiations and timelines in the current environment.

Also, if you are a first-time buyer, it’s important that you become familiar with the implications of mortgage signing and tax escrow and/or the realities of home inspection and title.  The parking lot is not the best place to explain these items, especially last minute. Zoom meetings may not fully replace the law firm library and conference table for face-to-face discussions. Still, they are currently the best venue to iron out contract details and reinforce understanding, even of simpler matters such as why greater precaution may dictate that less people be present at your home inspection.

Real estate market: still active

Despite the challenges of the current environment, we have seen that the real estate market is active, and homes are still being bought and sold. While the spring market has not been as robust as in the past, some real estate industry experts predict a stronger than usual summer market. This we are told follows the trend for families to exit the cities and move to the suburbs. As this continues, parents will likely want to be settled in before school hopefully starts in the fall.

If you’re buying or selling a house in the current market, keep these three takeaways in mind:

At Phelan, Frantz, Ohlig and Wegbreit, LLC, you can rest assured that we will act in your best interests throughout your real estate transaction. From contract negotiations, through inspections, and to your mortgage and financing requirements through closing, we have the knowledge, experience and excellent relationships to streamline your transaction—even in these challenging times.

Please call us at 908.232.2244 to kickstart your successful home sale or purchase.

Standby Guardianship: An Option for Parents Faced With Temporary Illness or Disablement

Peace of Mind for Parents During the Coronavirus Pandemic

It comes as no surprise that the common guardianship anxiety shared by parents of young children has heightened during the Coronavirus (COVID-19) pandemic. The nagging thought of Who will take care of my children if something happens to me is now very pointedly What if I’m exposed to or stricken by COVID-19—particularly if you are a single parent or healthcare worker on the front lines. The quarantine and isolation that result can be extremely traumatic for children who may be transferred to an unfamiliar environment.

Fortunately, Statute 3B:12-72 in New Jersey allows you to appoint a Standby Guardian.  A Standby Guardian is the trusted individual you designate to care for your children if you are temporarily physically or mentally disabled. During the pandemic or in any period of disablement, this option provides you with peace of mind knowing that someone you trust will be immediately available to help care for your children.

Custody during your lifetime

Much like with a Power of Attorney, a Standby Guardian receives custody of your kids during your lifetime. The Standby Guardian Designation allows you to grant temporary guardianship to a family member or friend until you recover. A specific event triggers the start of the standby role. Even then, you are able to maintain authority in your children’s lives but require the day-to-day assistance for their physical and financial care.

The Standby Guardianship Designation has been a helpful tool for any parent who faces a scenario that will temporarily interfere with the daily care of their children. Whether part of a single or two-parent family, Standby Guardianship can come into play for parents encountering a short-term career relocation or an illness. Now, with the pervasive threat of COVID-19, the statute serves as an affordable and easily accessible option that provides you with the security of knowing your children will be protected if you are in any way unpredictably affected.

In New Jersey the statute allows a six-month period. A Standby Guardian is typically needed to provide only limited remedial help with money management or other advice and guidance. It is distinct from a Permanent Guardianship which is typically designated in your will to provide for the care of your child in the event of your death.

Easily completed process

The process for appointing a Standby Guardian is straightforward and easy and does not require court intervention nor medical documentation from your physician. You sign a written document, which is witnessed and notarized. The document identifies the triggering event, your child and/or children and the Standby Guardian who must also consent in writing to serve in the role.

COVID-19 has made all of us painfully aware of the need to have a solid estate plan in place. If you are a parent to minor children, Standby Guardianship is another component to consider to ensure that your children will be cared for should you be quarantined or incapacitated by COVID-19.

At Phelan, Frantz, Ohlig and Wegbreit, LLC, we will always be responsive and intuitive in handling the difficult questions that you have regarding guardianship or your estate planning. We are here to expeditiously and empathetically guide you through the process and ensure that your loved ones will be protected…in the face of Coronavirus and in other situations, no matter what.

Please call us at 908.232.2244 to safeguard your family’s future.

ESTATE PLANNING DURING COVID-19: ADAPTING TO THE TIMES

More People Get Onboard With Estate Planning During COVID-19

The corona virus (COVID-19) has changed lives in ways we’ve never experienced or even imagined before. In short order, we’ve been required to stay home, practice social distancing and take diligent safety and health precautions as recommended by the Centers for Disease Control and Prevention to flatten the curve and prevent the spread of this highly contagious disease.

Heightened awareness regarding the importance of estate planning during this time is one silver lining that may result from the dark cloud of this devastating pandemic. In response to the critical need for conversations about existing estate plans or the creation of a concrete plan, trust and estate attorneys have been forced to recreate the way in which they consult with clients. Attorneys have been finding creative and safe ways to confront the logistical obstacles posed by the legal formality that accompanies the execution of estate planning documents.

An abundance of calls and inquiries

We have been struck by an increase in calls from individuals inquiring about estate planning. Understandably, these calls are taking on a much different tone. In the past, when people came to the office to discuss their estate plan, it was clear the conversations were theoretical—a talk about something hopefully very far off. Now, whether a caller is young, old or middle-aged, the tone is heavier. Rather than checking another item off their to-do lists, the indiscriminate nature of COVID-19 has forced us all to focus more on our own mortality. Offering a safe and open space for clients to have these conversations and provide some peace of mind is important to the lawyers at Phelan, Frantz, Ohlig & Wegbreit.

Business, but not as usual: Technology is key

In most instances, the key estate planning documents are the Will, which controls the proper disposition of assets at death, and the Durable Power of Attorney and Advance Directive/Health Care Proxy, both of which enable others to make financial and medical decisions for us if we are not able to do so. Technology has become a powerful force in how attorneys and clients get the planning process under way and, sometimes, in facilitating the execution of final documents.

For the planning piece, most lawyers are using video conferencing technology to facilitate conversations between clients and counsel so that the appropriate documents may be crafted. More ingenuity is required when it comes to signing the documents. This is so because under New Jersey law, Wills are only valid if executed in the presence of two witnesses. Further, they are only “self-proving” if a notary (third-party) notarizes the signatures of the person making the Will and the witnesses. POAs and Health Care Proxies similarly must be witnessed (only one) and notarized.

New places to execute documents

Under normal circumstances, witnesses preferably are not “interested parties” – beneficiaries or fiduciaries – of the estate for which a document is being executed. Conditions caused by the pandemic, however, may limit the options available to those signing documents.

Face-to-face signings may still occur – most typically in law office parking lots with gloves and masks intact, each participant using separate pens and exercising proper distancing but within sight and sound range of the person (the testator) signing their Will and for whom it is being prepared. Once signed, documents can be witnessed, notarized and collated by staff who have remained at a safe distance. Porches or window-separated settings provide alternate and acceptable locations.

Earlier this month, Governor Phil Murphy signed into law a bill that permits remote notarization effective immediately. This provision eases the need for face-to-face meetings for document execution and allows estate planning attorneys a greater degree of flexibility to accommodate the health and safety concerns of their clients.

It’s fair to say that both clients and attorneys are finding that these alternate ways of doing things are cumbersome, if only because they are so different and, right now, feel unnatural. But it’s the best clients and attorneys can do to avoid delays at this time.

Not easy but necessary

Important as it is, estate planning is always a delicate subject. These days the discomfort associated with the topic is ten-fold. The anxiety being experienced by everyone is legitimate and as professionals, spouses, parents, and sons and daughters, we have these same worries.

Regardless of whether legal interactions by Zoom or in parking lots becomes the new norm, we will continue, as always, to make our clients’ needs a priority. We remain focused on our clients’ safety during this difficult time and are committed to being a partner who will listen and assist.

At Phelan, Frantz, Ohlig & Weqbreit, LLC, we will carefully listen to your unique family circumstances and, as always be responsive, and intuitive in handling the difficult questions that you have regarding your estate planning during COVID-19 or anytime. Please call us at 908.232.2244 to learn how we can assist you in crafting your Will and important accompanying documents that best fit your wishes and needs.

THE DEVIL IS IN THE DETAILS OF YOUR REAL ESTATE DEAL

GET AHEAD OF THE SNAGS EVEN IN DIFFICULT TIMES

You’d think with house sales reaching almost six million in the United States over the last few years, the process of buying and selling a home would be commonplace. Perhaps. But real estate contract details are so numerous that they can prove tricky, triggering the well-known adage about best laid plans going awry.

From the moment your real estate attorneys go to work creating and reviewing the contract, you should make sure to understand what you’re signing. A contract is still a contract even in these difficult times— especially if you’re in the middle of a sale. Whether it’s during “normal” times or during our new normal: Ask the right questions. Fully understand your responsibilities. And know your deadlines during the various stages of the buy/sell process. Anything less could throw a monkey wrench into the sales process and delay—even worse, scuttle—your deal.

An important laundry list of real estate contract details

Many state realtor associations have developed a boilerplate contract that features a laundry list of details. These include:

While our attorney review systems—even closings—may be virtual during this pandemic crisis, the contract requirements will not change.

The big three: common real estate contract contingencies

Typically, real estate contracts include contingencies, actions the parties must perform and complete for the deal to close. Contingencies reduce risks for buyers and sellers and give either party a chance to legally back out of the purchase under certain circumstances that will make it difficult for them to complete the sale.

The three most common contingencies require buyers to initiate certain actions:

During the pandemic, the practices around contingencies may require virtual rather than face-to-face handling. But the resolutions around each contingency remain the same. Following the home inspection, financing and appraisal contingency reports buyers and sellers may have to renegotiate terms. For example, following the home inspection, the buyers may request repairs that sellers refuse to make; the buyers’ loan application may be rejected following the underwriting evaluation; or in the case of the appraisal, the market value of the home may fall below the amount needed to support the buyer’s loan application. If the parties cannot compromise, they may legally walk away from the deal.

As for the title contingency, a title search can reveal unknown situations which make transfer of title to the buyer difficult—and sometimes irresolvable. Overall, according to Homelight, 11 percent of closing delays come from title issues. More startling, they may come as a surprise.

In a typical situation, the title company will review the title on the purchase property and resolve any issues. But there can be worst case scenarios. Say the title reveals that an easement falls on the property line right where a buyer wants to build a fence or put in a pool. Liens or debts can also cloud a title. The title contingency gives buyers a way out of the contract.

A buyer’s favorite

One additional contingency, the home sale contingency, is a favorite among buyers. This contingency allows buyers a specified period to find a buyer for their current home. If they can’t find a buyer within that time, they have the freedom to walk away from the sale.

Unfortunately for buyers, this contingency isn’t loved by sellers who risk taking their home off the market for little-to-no assurance that the buyer will ultimately be able to complete the purchase.

As a buyer, you can still choose to include it but recognize that it can weaken an offer, especially in a hot market.

Meet deadlines and don’t get cold feet

Contract contingencies and the outs they provide are one element to the contract. But buyers—and sellers—can’t simply get cold feet and bail. What’s more, buyers’ feet are held to the fire to meet all target dates. In addition to a timeframe for scheduling the home inspection (typically 14 days from contract signing), this includes deadlines such as:

In worst case scenarios, failure to perform on the contract can result in breach which occasionally can turn into a battle over any earnest money deposit.  A seller may seek to retain the deposit to cover any damages, although likely will have to initiate a breach of contract claim to receive any money.   Both parties should seek to avoid this result.

Final walk-through surprises

It’s incumbent on sellers to leave their homes in the condition specified in the contract. Buyers verify the sellers’ compliance during the final walk-through. Truly the time when the rubber meets the road, this inspection is an important part of the sales process. It is also one of the most common causes of a delayed closing.

Anything from the home not being empty, to it being damaged from the move or dirty, to property that’s missing but specified in the contract (e.g., a seller promises to leave the washer and dryer but inadvertently takes it), to negotiated repairs left undone…these are among the things that can wreak havoc near the end of the sales process.

Not over till it’s over

In fact, sometimes even closings go awry and, believe it or not, many of them do. For example, the closing can’t go through unless a closing disclosure form is signed by the buyer. If this form is to be signed on time, the title company or mortgage lender must send the document to the buyer no later than three days before closing so that the buyers can review it thoroughly and understand what they’re signing. If your closing is scheduled for Friday, the buyer must have the CD in hand by Tuesday or you’ll have to reschedule the final paperwork.

As crazy as it sounds, sometimes the seller and buyer get their signals crossed about move-in day timing. Realtors have reported that they’ve had moving vans in the driveway and the buyers crying because the sellers have not yet moved out.

And among the worst of situations that can disrupt closing: buyer financing issues. Over a third of closing delays may put your sale at a stalemate. With the business shutdowns of the current pandemic, your buyers could lose their sole source of income abruptly and unexpectedly. Or, in more stable times, the buyers could simply go on a shopping spree to furnish their new home. Either of these scenarios could cause the lender to question the buyer’s ability to keep up with mortgage payments.

ATTORNEYS HELP NAVIGATE CONTRACT DETAILS

From offer to final signature, a home sale requires a million little details to come together without a hitch. By working with your agent and your real estate attorney you will not only come to understand the contract but also anticipate snags. Whether it’s during “normal” times or during our new normal, understanding the contract details will enable you to be proactive rather than reactive, expect the unexpected, over-communicate, and act quickly to address problems. There’s no better path to a no-glitch closing

At Phelan, Frantz, Ohlig & Weqbreit, LLC, we’ll help to provide the education, insight and perspective about your real estate contract and your transaction. Please call us at 908.232.2244 to learn how we can assist you to effectively, efficiently and successfully navigate from offer to closing.

PFO&W OFFICE UPDATE

CORONAVIRUS UPDATE

PFO&W is scheduling in-person appointments at our Orchard Street office. Our staff is fully vaccinated and we are not requiring face masks be worn by clients and visitors that have also been fully vaccinated. Anyone entering our office that is NOT fully vaccinated will be required to wear a face mask. Thank you for your patience and understanding.

OPEN HOUSE POSTPONED

Given the current coronavirus outbreak, we’ve decided to postpone our welcome party for Joyce Wegbreit. We look forward to celebrating at a later date. More details to come.

Your Real Estate Contract: Let Reason Be Your Guide for a Successful Transaction

There’s more than meets the eye when it comes to your real estate contract. Its well-laid out terms may seem concrete, but, in reality, they can lend themselves to differences that make for a potentially tumultuous deal.

The contract that governs the transaction assumes a standard of objective reasonableness. Objectivity is hard to define when you are buying your first home or selling the home where you raised your kids. Accordingly, the success of a deal relies heavily on the buyers’ and sellers’ ability to appreciate and understand the other side’s point of view. Ridiculous demands or senseless obstinacy will get in the way of your sale or purchase. Buyers and sellers should approach the transaction with a view towards reasonable negotiations to achieve a successful closing.

A lot of human nature

The contract protects buyers and sellers by laying out the parameters of the transaction. It earmarks the timelines, conditions, and action items that must be met and performed by both parties prior to closing. Still, there’s a lot of movement underneath, around and in the middle of these three categories. With a whole lot of human nature in the mix, plus the involvement of lenders with their independent timeframes, the combination can be deadly.

Learning about the process before entering into a transaction can prevent you from being blindsided by any unexpected pitfalls. Increased awareness also gives you the time to prep and plan some strategic responses if and when the going gets tough.

Your real estate broker and attorney are the perfect partners to help educate you and to guide you as you navigate the process. Seek out professionals who put your interests first. Ideally, they’ve already represented both buyers and sellers. Because they’ve viewed real estate deals from both sides, they bring a broad perspective to your transaction and can share helpful insights from both sides.

They can also prepare you for some unexpected pitfalls you may encounter along the way. Of the three primary contract contingencies—the home inspection, financing, and title—the inspection and financing are the areas in which emotions run high and people can get stuck in the weeds.

Potential Snag 1: Inspections bruhahas – the negotiation within the negotiation

Purchase agreements are typically contingent on the buyer’s satisfaction with a third-party home inspection, which is requested and paid for by the buyer. Following the inspection report’s findings, buyers and their attorneys may request remedies from their seller. Sellers must respond to the buyer requests and can agree to make the repairs, legally refuse to make them, or agree to make some and not others. If the seller refuses some or all of the repairs, the buyer can withdraw from the sale. Alternately, they can compromise.

The dance between the buyer and seller in this regard centers around the question of whether the repair being requested constitutes a “material defect” under the contract. Typically, material defects involve issues with a system or component of a residential property—think furnace, HVAC system or roof—that may have a significant, adverse impact on the value of the property. It may also pose an unreasonable safety risk to residents. Faulty plumbing, a leaky roof, mold, the presence of radon or insect infestation are among the items that are considered material. Paint colors, bathtub drains or unappealing light fixtures, for example, are not.

The debate about the materiality of a defect in the gray area in between these examples is where the dance is most intense. Sometimes buyers don’t understand they are buying a used home and not a new one that’s free of flaws. In turn, sellers view the buyers as unreasonable with too-high expectations. But no matter how mad they get about the buyers’ demands, they need to weigh the cost and hassle of making the repairs against the ultimate outcome of selling their current home. Experienced brokers and attorneys can help the parties navigate these conversations and offer perspective that can save a transaction.

Potential Snag 2: issues with your lender

Many buyers submit a pre-approval with their purchase offer, leading some sellers to believe the proposed purchasers are rock solid financially. It is critical, however, for both parties to recognize that a mortgage pre-approval, typically issued after a cursory review of finances by a lender, is not a commitment to lend money and never guarantees the buyer’s ability to obtain financing.

Banks tend to move at their own pace in the commitment process rather than focusing on the on or about dates detailed in the contract. The wait time can cause buyers and sellers to be on pins and needles. The deafening silence can make sellers think the worst and lose trust, because they wonder if something is going on that is either troublesome or less than transparent—or both.

Part of the process also includes a determination by the lender of the value of the sale property. The appraisal’s failure to equal or exceed the listed value of the home can create an additional obstacle to closing. The buyers can make up the difference by ponying up more money. Or, they can try to negotiate a lower purchase price with the sellers. While this may be a more appealing option than having to relist the property, incur additional carrying costs, and look for new buyers, sellers often have their hearts set on a dollar amount they want or need to take out of the sale. They also can get hung up on the emotions attached to their home.

As a protection for buyers, most contracts include a financing contingency which allows buyers to back out of the deal if they cannot obtain necessary funding. Contract clauses such as these are designed to protect buyers and sellers. Though they do indeed offer protections, backing out because of an inability to compromise could be considered a needlessly self-destructive reaction to a problem. In the end, nobody wins.

So a lot can go wrong

A lot can go wrong if buyers and sellers fail to act with reason.

There are no guarantees that your experience on the road to closing will be hassle free. Still education, preparation and alliance with trustworthy experts along with a strong dose of self-discipline can keep you thinking on your feet. At the end of the day, if you approach your deal with reason, you’ll stay on course to closing and the exciting passage beyond.

At Phelan, Frantz, Ohlig & Weqbreit, LLC, we’ll help to provide education, insight and perspective in your real estate transaction.  Please call us at 908.232.2244 to learn how we can assist you to effectively, efficiently and successfully navigate to closing.

 

BUYING OR SELLING A HOME: CURB YOUR EMOTIONS

Use These 6 Tips to Sail Smoothly to the American Dream

Homeownership is often dubbed as the symbol of the American Dream. Those words pack a whole lot of emotion into the act of buying or selling a home …whether it’s your first house, a bigger house, or the house to which you right-size when you want to pare down the logistics of your life.

There’s no denying that a real estate transaction is one of the biggest financial transactions you’ll make in your life. Keeping your emotions in check is important. Clear-headedness pays off. And part of that clear-headedness is partnering with the right professionals, to help you set sail, navigate effectively and finish the race with as little stress as possible.

Choose the right real estate broker or go solo

Real estate brokers and real estate attorneys are knowledgeable about the ins-and-outs of real estate transactions. To say the least, it’s helpful to have these professionals in your corner.

Choosing the right realtor, for example, can make a big difference in the outcome of your purchase or sale. You want to work with a realtor who’s experienced and knowledgeable of the area in which you’re buying or selling. You want to partner with a realtor who actively listens to you and focuses on your needs first, not their commission.

While the majority of residential real estate deals are done with the help of a realtor, some transactions, termed FSBOs (for sale by owner), are executed without realtors, leaving buyers and sellers to negotiate the terms of the sale first, on their own, and then, with the assistance of a real estate attorney who can put the agreement into a binding contract.

Select an experienced real estate attorney

Almost all real estate transactions begin with signing a real estate contract. This legal document is the most important document in the entire transaction, because it establishes the rights and obligations of the buyer and the seller.  Once the contract is finalized, the buyer and seller are bound by its terms. Surely, either party will regret if they did not understand all the terms of the contract or if the language in the contract describes something other than what you intended.

That’s why it’s always important to have an attorney experienced in real estate transactions review your contract and the terms of your purchase or sale. It’s also advisable to choose a legal professional who works in the town or immediate area in which you are buying or selling a home. Knowledge of local issues can protect against issues that could affect the sale price or create problems down the road.

Although real estate brokers use a “standard” contract, one “size” does not always fit all situations. A given provision in a contract may be appropriate for one transaction, but not for another. An experienced real estate attorney can identify any potential problems and ensure that your interests are adequately protected.

Understand the attorney review process

New Jersey is unique in that each standard broker’s contract contains a provision to allow for an attorney review of the contract. This three-day attorney review period is the time when both the buyer and seller have the right to consult with an attorney, to review the terms of the form contract, and make changes to protect each side of the distinctive transaction. Part of this process is making sure that the parties preserve the right to terminate the contract under certain circumstances and walk away without any further obligation to each other.

Granted, the thought of cancelling a transaction you have your heart set on may seem disturbing. But getting involved in a purchase or sale in which your best interests are not protected is even more troubling, because that contract could have financial or other ramifications down the road.

Take charge

Turning to the professionals, however, does not free you of responsibility in the process.

Be proactive. Even if your agent is scouting out homes for you, scan the listings and attend open houses on your own—even listings that are FSBOs. These activities will help you clarify your thinking and communicate your wants and needs more clearly to your broker.

You may or may not start out knowing exactly where you want to live. There are many factors that will influence your decision. Proximity to work, quality of schools, access to transportation and the amenities of a community if you’re in a downsizing mode. Ask around among friends and colleagues and search the internet. Drive around to get familiar with places that interest you. Eat lunch in local restaurants and shop in the supermarkets to get a sense of the environment.

Learning as much as you can about the home-buying process is also important. Turn to the internet to become familiar with the market values of area homes that meet your requirements. Acquaint yourself with real estate documents as well as the various steps in the process such as attorney review, home inspections, title search and closing.

Get real

Sometimes what you wish for can exceed the money you have to comfortably spend for a new home. It can also prevent you from establishing a realistic sale price. If you’re a buyer, get real by establishing a budget and sticking to that budget by looking at homes you can afford when you begin your search.

Typically, you’ll have to apply for a mortgage to buy a home. Your credit score will be a prime factor in determining how much money a bank or mortgage lender will let you borrow—even more, if they will provide you with a mortgage approval. There are many sites that will allow you to review your credit score for free without lowering your score. Do your homework beforehand. Engage in the mortgage application process knowing your score.

Plus, watch your debt. Pay off as much as you can before you apply for a mortgage. Above all, avoid making huge or outlandish purchases before or during the mortgage approval process. Finally, engage with a mortgage professional before you’ve made an offer on a home – having a mortgage commitment (as opposed to just a pre-approval) makes you a much more attractive buyer in a competitive market.

Your perspective will, of course, be different as a seller. You love your home and the memories and stories it holds for you. Again check your emotions. Your memories and stories do not have a dollar value. You must price to sell. Establish a sale price that compares with homes in your market that are similar to yours and have recently sold. Your realtor can provide these comps (prices of comparable homes) and use them to advise you on a realistic sale price that will attract buyers.

Prep and communicate to manage the nerve-wracking moments

Knowing what to expect and the potential pitfalls will prevent you from being blindsided. A buyer is contentious, a seller is intractable. The home inspection may leave a seller with too many changes or a buyer dissatisfied with the response of a seller to desired fixes. An even worse nightmare: things could go wrong at the 11th hour and interfere with your closing. If and when glitches arise, be measured in your reactions. Communicate your opinions and wishes thoughtfully and intentionally to your broker and lawyer and end every conversation with the certainty that they totally understand your viewpoint.

While there are no guarantees that you will experience a totally stress-free transaction, following the above guidelines will help to make for smoother sailing. Partner with experts and stay on top of the details of the transaction so that monies are exchanged, and the ink is totally dry on your designated closing date.

That way, post-closing when you turn the key in the lock of you new home or say good-bye to the house where you’ve lived and set off on a new adventure, you can take a huge sigh of relief, finally get emotional and luxuriate in the American dream.

At Phelan, Frantz, Ohlig & Weqbreit, LLC, we take our responsibility to be your advocate when you’re buying or selling a home seriously.  Please contact us if we can be of assistance in helping you effectively and efficiently navigate your real estate transaction.

 

YOU’RE THE CEO OF YOUR ESTATE PLAN

5 important questions to help you choose Fiduciaries who are right for the job

Developing and managing your estate plan is much like being the CEO of a company. To have your plan run smoothly, you need to make spot-on decisions when selecting the individuals to fill the requirements of the plan’s important Fiduciary roles. Fiduciaries are granted certain rights and powers to be exercised on your behalf and without your supervision if you are incapacitated, unable to handle your own affairs or deceased.

You can have all the right documents in place, leave instructions as to where your important papers are located and update your investment accounts and beneficiary designations. But, if you choose the wrong people to manage your affairs, your plan may not operate as you had envisioned.

No Honorariums. Conscientious decision-making

Like any important decision made by a CEO, choosing the right Fiduciaries requires careful forethought, consideration and evaluation. In reality, you are choosing individuals to do a job. There’s no other way to look at these selections. In some roles, Fiduciaries also get paid for their work.

Fiduciary roles are not honorary positions and need not be assigned to immediate family members.  These selections should be made thoughtfully and wisely. And, as CEO, you should choose the individual with the best qualifications, skill set and temperament for the job.

Across the board, Fiduciary roles require expertise, the right skill set, propriety and the characteristics of utmost loyalty to your wishes and values, along with responsibility and trustworthiness.

Here are five important questions to consider when you put on your CEO hat to make these designations:

1.  What are these Fiduciary positions?Fiduciaries

POWER OF ATTORNEY/ATTORNEY-IN-FACT

Role – Assists in the management and control of your financial and life affairs in the event you become incapacitated

Duties – Assumes the right to pay your bills, sign documents and conduct financial transactions on your behalf, may also make decisions about your living situation in cases of ongoing incapacity

Skill set – Someone who’s responsible about managing money and has the good sense to know what he/she doesn’t know and seeks guidance from a professional such as your financial advisor or estate attorney; has the ability to handle challenges to his/her authority when others (including family members) challenge decisions being made on your behalf

EXECUTOR

Role – Individual charged with wrapping up your final affairs.  This individual is appointed in the Will and charged by the court to oversee the administration of your estate by collecting assets, paying final debts, and making distributions under the terms of your Will; an Executor is entitled to compensation from your estate

Duties – Finds all your important documents, takes charge of your property, pays creditor claims, files tax returns, distributes the assets of the estate to beneficiaries and files the final accounting with the court.  Unless you have appointed a Funeral Agent, your Executor also is tasked with making arrangements for your burial or cremation.

Skill set – Again, an individual who’s responsible about managing money; someone with good discretion who communicates clearly and is good at conflict resolution because sensitive relationships among heirs sometimes exist; is quick to reach out for assistance from professionals if and when needed

TRUSTEE

Role – Appointed pursuant to a Will or standalone Trust, this individual will manage and invest trust assets as well as administer the trust agreement using the terms you created; position is entitled to compensation

Duties – This can be a long-term responsibility, because Trusts are often established to handle funds for many years after you die, typically for the benefit of minor/young beneficiaries or for those who have special needs. If you have a business, he/she will manage it until it is sold or transferred to the next generation.

Skill set – A financial or legal background is helpful; also, someone who does not have any conflicts with beneficiaries

MEDICAL/HEALTHCARE PROXY

Role – This appointee makes healthcare decisions for you if you are unable to make them yourself because you are incapacitated

Duties – Communicates with medical professionals overseeing your care and makes certain the protocols they are using align with your wishes regarding methods, extent and scope of care

Skill set – Understands complicated medical terminology, protocols and outcomes; knows how you would make healthcare decisions regarding your care and is stalwart in carrying out your wishes; is able to remain calm under pressure

GUARDIAN

Role – A guardian is appointed when you have minor children (children under 18 years of age) or adult family members with special needs

Duties – A guardian of a minor is a person who has the powers and responsibilities of a parent concerning the child’s support, care, education, health, and welfare.

Skill set – An individual who will parent with your parenting style, who will make the well-being of your children a priority and who will love your children as you do.

2.  Are two individuals (co-Fiduciaries) better than one?

Appointing co-Fiduciaries to serve together is a good idea, especially if at least one of your appointees lives out of your geographic area. It also provides an opportunity to allow family members to share responsibilities, and, in some cases, check and balance each other. Make sure that the two people you choose will get along and act in concert. Don’t select two just because you want both to feel honored or to avoid an argument between the two of them.

3.  How about backups?

Always have backups. Life changes, the unexpected happens and a Trustee, for example, may serve for years which makes backups critical. Also, if you’re a parent appointing a guardian, a backup ensures that your wishes will dictate, influence and inform a decision should something happen to the first guardian as opposed to a decision made through the guardian’s choice.

4.  And what about professional Trustees?

This is a circumstantial decision. A professional Trustee is more objective, so this makes sense if there’s a pattern of family discord. But it costs money. Think carefully and make sure your situation commands this alternative.

5.  Can a Fiduciary be a Beneficiary, too?

Yes, and usually is. And this works in most circumstances, unless you anticipate conflict. In that case, choosing an objective person is preferable. Indeed, there’s much to consider when filling Fiduciary roles. Ensuring you choose the right individuals can make or break your estate plan—even more so because Fiduciary responsibilities must be carried out during a challenging and grief-filled family time.

Your estate planning attorney: always on hand to help

Your estate planning attorney will help you evaluate your options based on the nature and extent of your assets, the personal qualities of the individuals you consider and the unique nature of your family dynamics. After all, like all capable leaders, as CEO of your estate plan, you will know when it’s time to reach out.

At Phelan, Frantz, Ohlig & Weqbreit, LLC, we take our responsibility to provide families with conscientious estate planning and guidance very seriously. Please contact us if we can be of assistance to you in developing and/or reviewing the appropriate estate plan for your family, including your designation of individuals to fill these important Fiduciary roles.

8 STEPS TO CREATING YOUR ESTATE PLAN IN THE NEW YEAR

Procrastination is often the biggest enemy of estate planning!

We’ve all heard stories like this: A couple is about to head out on a prolonged business/pleasure trip involving considerable air travel. Panic sets in five days before their departure when it dawns on them that they don’t have Wills. Though immediate outreach to their attorney may enable them to get documents drafted and executed before they leave, this scenario is hardly ideal.  Harried or rushed actions can result in improper or faulty planning, which in turn may lead to family misunderstandings and disputes, assets going into the wrong hands, court cases, and the corresponding expense in legal fees and/or taxes.

As the saying goes, there’s no time like the present, even when planning for events likely to occur in the distant future. The New Year is the perfect time to get started or review a plan you already have to make sure it is on track.

Wherever you are in your estate planning process, our eight-point New Year’s checklist will help you get off on the right foot.

1. Make an appointment with an experienced estate planning attorney

There’s no better way to get the wheels turning than to sit down with an attorney experienced in estate planning. In this initial visit, your attorney will familiarize you with all the issues you must consider.

Estate planning is serious business and far more than a last-minute scramble to execute a Will. Its goal is to ensure the seamless transfer of assets to your heirs. It also safeguards your assets and the care you receive during times of critical illness if and when you cannot advocate for yourself. Estate planning takes considerable thought, important family conversations and the painstaking development of a plan geared to your unique family situation.

2. Take inventory

Assimilating information on your assets, tangible and intangible, is critical. This means listing what they are and how they are held. Some of these assets will pass to your survivors under your Will, others will pass to beneficiaries outside of your Will.

Tangible Assets include Real Property, land and whatever is built on it, typically your house, and Personal Property, which includes your physical possessions: jewelry, art and antiques and other collectibles; television sets, computers and other electronics. These will be just some of the items on the list.

Intangible assets include the things you own on paper: bank accounts, stocks, bonds, insurance policies, and retirement accounts (IRA’s). Items like bank accounts and stocks and bonds in a brokerage account likely will pass through your Will or to a joint account holder. Items like your insurance policy, IRA or 401(k) already have named beneficiaries and will pass to your survivors outside of your Will regardless of what your Will dictates.  Reviewing these distinctions is a KEY piece of crafting an appropriate estate plan.

3. Get organized

Getting organized is another vital step. It requires that you create a spreadsheet that itemizes all of the above items, again both tangible and intangible. Make copies of deeds and mortgage documents related to real estate, make copies and place originals and copies in a safe place. Ideally, your estate attorney will retain the original and a trusted designee named in a legal document will securely retain the other.

All documents should be recorded on a spreadsheet which accurately identifies the institution or institutions in which an asset is held and account numbers and passwords to the accounts, and contact information for the representative in the institution who handles your account. It is imperative that your estate attorney and the designated fiduciaries have copies of these spreadsheets or knows where to find them.

If you have a safety deposit box that holds important documents or information, make certain your attorney and survivors know the box number and in which bank the box is located. It is advisable to provide your attorney and your designees an extra key.

Note: Once you and your attorney have actually developed a plan, you will have created a Will, Durable Power of Attorney, Living Will and Advanced (Healthcare) Directive, essential documents which may be held in your safety deposit box and/or with your attorney as well as with other fiduciaries and designees.

4. Designate Fiduciaries (Financial), Healthcare Proxy and Create the Necessary Documents

Fiduciary roles refer to any person or institution that has the power to act on your behalf in situations in which you are no longer capable of acting or advocating for yourself and following your death. Plus, any adult can serve as your Healthcare Proxy. Fiduciaries can assume many roles in your estate, and, depending on a particular fiduciary designation, can act either before or after your death…or in both situations.

The law stipulates that your fiduciaries be legally competent individuals over 18 years of age and capable of managing their own affairs. But that’s where the requirements stop and where your careful thought and good judgement come in. Because these positions require the utmost honesty, loyalty and trustworthiness, the individuals you choose must be able to set aside their own personal inclinations and motivations to act in a manner consistent with your financial and health goals. Plus, if you have children who are minors, it is wise to appoint a guardian who will parent in a manner consistent with your parenting style and love your children as you would.

Each role requires a different skill set. To choose the most appropriate fiduciary, align the strengths and characteristics of the person you want to designate with the functions required for that position.  It is also advisable to have an alternate or backup in case logistically there is a problem with the primary person being available when it’s time to serve.

Keep in mind also that you must reach out to the individuals whom you want to serve in these roles and ask/confirm that they are willing to assume the associated responsibilities. While being selected may be considered an honor, these positions take time, require work and, in many cases, require a stalwart mindset.

5. Draft your Will

A Will is one of the main, if not the primary, components of every estate plan, even if you don’t have substantial assets. Wills ensure property is distributed according to your wishes and drafted according to state laws. In it, you state who you want to inherit your property, name the person (the Executor) who is in charge of distributing your assets as instructed in the Will, and address the contingency of the simultaneous death of you and your spouse, name a guardian to care for your young children.

Simply having a Will isn’t enough, though. The proper wording of the document is critically important, which is why it is highly recommended that you work with an estate attorney when executing this document. Sometimes, when individuals try to do this themselves with one of the Do It Yourself apps, they overlook important considerations or fail to comply with laws in their state. This can cause probate problems that may require your heirs to spend time and money attempting to rectify misstatements, omissions and other mistakes

6. Consider a Trust

A trust is legal entity that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when your assets pass to your heirs.

Trusts typically avoid probate, so your beneficiaries may gain access to these assets more quickly than they might to assets that are transferred through a Will. And, because assets that you’ve held in a trust may be able to pass outside of probate, this saves your heirs time, court fees, and potentially reduces estate taxes as well. An irrevocable trust, for example, may not be considered part of your taxable estate, so fewer taxes may be due upon your death.

You can specify the terms of a Trust down to the letter, controlling when and to whom distributions may be made. What’s more, if you set up a revocable trust, the Trust assets remain accessible to you during your lifetime; you designate to whom the remaining assets will pass, even when there are complex situations such as children from more than one marriage.

A properly constructed Trust can also help protect your estate from your heirs’ creditors, future ex-spouses, or from beneficiaries who may not be adept at managing money. Again, working with an experienced estate attorney will ensure you set up a Trust with the best governance for your unique situation.

7. Make a Living Will

A Living Will, also called an Advanced Directive, is a written statement that details the type of care you want or don’t want if you become incapacitated. A Living Will bears no relation to your conventional Will or Living Trust used to bequest property upon your death. It’s strictly a document that spells out your health care preferences and addresses a number of possible end- of-life care decisions and whether you want or do not want them. While you may indicate you do not want heroic measures, you must define heroic and answer questions regarding whether you want:

Creating your Living Will requires you to think about your values as well as your wishes: Questions like how important it is to you to be independent and self-sufficient? What circumstances might make you feel like your life is not worth living? Would you want treatment to extend your life in any or all situations, or only if a cure seems possible?

Also, beyond treatments during illness, you can specify your wishes to donate your organs and tissues or donating your body to scientific study.

8. Draft a Power of Attorney

A Power of Attorney (POA) is a very important estate planning tool which allows a person you appoint—your Attorney-in-Fact or Agent—to act in your stead in financial and legal matters.

A POA grants broad authority to your agent to sign documents, pay bills, and conduct financial transactions on your behalf.  In other words, your agent will be authorized to handle “the business” of your life.

The Bottom Line 

As is evident from the above considerations, there is more to estate planning than deciding how to divvy up your assets and provide for your loved ones and other beneficiaries when you die. Estate planning also ensures that the right individuals have access to your assets upon your temporary or permanent incapacity so that your affairs can be handled appropriately and the care you receive will ensure the dignity and quality of life you deserve and desire.

While estate planning may seem like a bleak and uncomfortable task for the start of a new year, it is a necessary one to address. You can adjust your mindset to think of your estate planning in a positive light. Just consider: Thorough preparation now will give your family peace and comfort and a stress-free probate process at some future time when your family will be dealing with emotions of loss and sadness.

When you think of estate planning in this way, you will likely come to realize that planning today is a gift you are giving your loved ones for some time in the future. And giving a meaningful gift to your loved ones…there’s no better way to start a new year!

At Phelan, Frantz, Ohlig & Wegbreit, LLC, we take our responsibility to provide families with conscientious estate planning very seriously…in the new year and beyond.  Please enjoy the year ahead and contact us if we can be of assistance to you in developing and/or reviewing the appropriate estate plan for your family.

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