My dad died recently. He was a good man and a great father. Just three months after he retired (after spending more than 40 years as a salesman for an oil company), he was diagnosed with stage-four colon cancer. Throughout my life, my father tried to give my brothers and me a good financial education. For instance:

-We were solidly middle class, but I always thought we were sort of poor. Often, there wasn’t money for this or that. But Dad taught me to be comfortable living below my means.

-If I needed money, Dad told me to get a job. My brothers and I all had jobs since we were about twelve. I packed rice into take-out containers at a Chinese restaurant when I was in seventh and eighth grade.

-He taught me that charity matters. We sponsored kids our age in poor countries as a way to give back and underscore how fortunate we were.

But the most unexpected financial lesson my father taught me came after he passed away. I am the executor of his estate. My dad was always a planner, but the things he did to make this processes easier are amazing. I feel compelled to share them with just about everyone I know.

Continue reading at Get Rich Slowly or Forbes.

(Some snippets from the rest of the article: Building a team – attorney, insurance rep, banker; Negotiating fees – estate fees; Planning ahead – bank accounts, obituary; Preparing for the worst – funeral expenses; Settling affairs – what it takes to be an executor; A gift from the grave – “I honestly consider my father’s financial planning to be a selfless act of love.”).

1. Invest in your career. (My note – if you are a writer or an artist you can use estate planning to invest in your “career” or legacy. Mark Twain is the most recent writer to publish a book 100 years from the date of his death (NYT). See also this link (Blog post). And philanthropists have long utilized trusts of various kinds to further their interests after death (Lapham’s Quarterly).
2. Gear up with a new computer.
3. Support a candidate or cause. (My note – causes and parties can be supported as a part of your estate plan, whether by charitable donations during your life or by making bequests in your will to charities, causes and pretty much anything you like. See also 1 above.).
4. Invest in a low-risk mutual fund. (My note – a good estate plan will also touch upon retirement planning).
5. Train your inner Olympic athlete.
6. Make a feel-good investment. (See also 3 and 4 above).
7. Prepare for Mother Nature.
8. Help your community. (See also 1 and 3 above).
9. Support the arts. (See also 1 and 3 above).
10. Get bookish for relaxation and profit.
11. Fund date nights for a year.
12. Prepare for the end. - ”Even if you chuckle at the Mayan prophesy that the end of the world or some other calamity will occur in late 2012, let it be a reminder to take some steps to prepare for your own eventual passing. Long before retirement, everyone should have an estate plan with a will, beneficiaries for all accounts, a durable power of attorney, a health-care proxy or living will, and possibly trusts for any minor children. And those over age 65 should also discuss long-term strategies with an adviser, while they’re still able. An investment of $1,200 toward an estate plan can go a long way toward protecting your estate and minimizing potential expenses and hassles for your heirs.” (My note – depending on what you wish to accomplish with your estate plan, $1,200 can either be more than enough money or not enough to start the job).

After taking my notes into account, it looks like you can get 7 of these things done with an estate plan. Pretty good.

Happy New Year!

 

The year is 1989. A New York City resident, like so many other hustled and haggard urban dwellers, sought a nice place in the north country to rest and sooth his bones. Our city slicker found a riverfront Victorian in the village of Nyack, sitting on the western shore of the Hudson River’s widest point. And as it turns out, three miles to the east, as the crow flies, lies the village of Sleepy Hollow. That’s right, the house at the heart of this story is just a few miles from where the galloping headless horseman stalked Ichabod Crane. Now, it could be that the dense woods of Weschester and Rockland Counties so stirred the imagination of the early Dutch inhabitants that they dreamt up all these phantoms turned folk tales. Or maybe the vast expanse of the Hudson at this very point in the river’s course was what scared the towns to the east and west. Who knows what spirits lurk in the trees hugging the Hudson or drift across the deep waters beneath the creaking Tappan Zee Bridge? One thing was for sure, our hopeful purchaser was in the dark.

The folklore of the village of Nyack tells of a haunted house on the riverfront where spectral apparitions and encounters with spirits were commonplace. The local and national media even reported on the haunted Victorian’s paranormal bona fides in 1977 and 1982. No other than the owner of the house for sale had promoted the idea that her house was possessed and had it included in a tour of the haunted houses of Nyack. Our purchaser knew none of this and signed a Contract of Purchase and Sale.

Now, when you look to purchase a house or an apartment, you should have your lawyer review the contract presented by the seller — before you sign. You will also need to conduct due diligence on the property you are purchasing. And your due diligence should include a review of the quality of the title of the property in question and thorough inspection of the property, all to be sure that you know what you are getting.

So did our city slicker’s lawyer find the skeletons in the closet of the Victorian on the Hudson? And having signed a contract while putting down $32,500 in escrow, did he go through with the deal after discovering, to his horror, that the house was widely reputed to be possessed by poltergeists?

We find the answers to these questions in a case called Stambovsky v. Ackley, decided on July 18, 1991, by five Appellate Judges of the State of New York. The Judges decided that the house in our story was haunted as a matter of law, based upon the owner’s statements and the house’s reputation in the community. After all, ex facto jus oritur (common law arises out of facts). The Judges also held that the purchaser would lose his down payment. However, the Judges concluded that the purchaser would not be forced to purchase the haunted Victorian. The contract was not “fair and open”, the Judges reasoned, as the presence of ghosts so impaired the value of the property and its potential for resale that principles of equity prevented enforcement of the contract.

No doubt you are confused and perhaps just felt a chill in the air. Let us unravel what was decided in this most unusual case.

The Judges noted that with respect to transactions in real estate, New York adheres to the doctrine of caveat emptor. Caveat emptor means “buyer beware” and imposes no duty upon the seller to disclose any information concerning the premises. Instead, caveat emptor requires that a buyer act prudently and promptly to assess the fitness and value of his purchase. However, as a very narrow exception to the rule, caveat emptor will not prevent a buyer from backing out of a deal where there was concealment, by the seller, of a material (i.e. very important) fact. And so the Judges tried to figure out if purchaser did his diligence to the standards of the doctrine of “buyer beware.”

Indeed, purchaser and his lawyer did their diligence. They inspected the premises, without the help of Ghostbusters, and searched available public records with respect to title. But the Judges resolved that even the most meticulous inspection and search would not reveal the presence of poltergeists. They then decided, as a matter of law, that the purchaser would lose his down payment on the haunted house; yet as a matter of equity, the buyer would not be required to go through with the deal.

And so our ghost story ends with three chilling lessons. For the first lesson, let it be known that, as a matter of law, there are indeed haunted houses in the State of New York! For the second lesson, let a buyer and her lawyer beware that the gory details of a property being purchased must be discovered through their own due diligence. And for a third and final lesson, know that if you discover a skeleton in the closet of the house or apartment you wish to purchase, unless you have negotiated a no-hauntings clause in the contract, you can always get out of the deal, so long as you are willing to part with your down payment. Now that is scary.

Happy Halloween!

[Disclaimer: The above might be described as historical law fiction. The case of Stambovsky v. Ackley is real and the discussion of real estate law is sound, but no bit of this ghost story should be relied upon as legal advice. Ergo, caveat lector, or reader beware! Consult with a real estate attorney to address your specific situation].

A: In real estate, a short sale is a transaction in which a homeowner sells their property for less than they owe against the property. For example, if a homeowner has a $500,000 mortgage on their home and they sell the home for $400,000, the amount “short” is $100,000.

In a short sale scenario, the mortgage lender is taking a loss by accepting the short payoff amount — i.e. the $400,000 instead of $500,000 above. Because the homeowner’s mortgage lender will receive less money than they are owed, a short sale contract must be approved by the lender before the deal can close. Homeowners who wish to sell their home via a short sale should consult with an attorney as significant legal rights are involved in negotiations.

Q: Who should consider a short sale?

A: Homeowners who are experiencing economic hardship may benefit from a short sale. Economic hardship includes, but is not limited to:

• Unemployment, underemployment, mounting debts
• Falling behind on mortgage payments as a result of economic difficulty
• Defaulting on your mortgage
• Being underwater — owing more than your house is worth
• Suffering from some other form of financial hardship that prevents you from making ends meet
• Facing a higher payment due to a mortgage rate adjustment
• Being sued in foreclosure

Q: Why would a Homeowner sell their house in a short sale?

A: In each of these scenarios listed above, and many others, a short sale is a way for the homeowner to avoid foreclosure, eliminate mortgage debt, protect credit (to a certain degree), alleviate stress related to costs of homeownership (costs in addition to mortgage and real estate tax payments) and maintain dignity while moving on.

Q: How can I do a short sale?

A: Once you have decided to sell your home you should shop for professionals. You will need a real estate broker and an attorney to represent you. The sooner you secure a competent attorney, the better. In a short sale scenario you are negotiating to settle a debt which immediately involves New York Mortgage Law, Contract Law and in the event you have defaulted and are in foreclosure, Litigation. Your lawyer will help you assess your position and understand your rights before you embark on setting up a short sale.

Your real estate broker is also very important. You should seek out a broker who is experienced with short sales. Your broker will need to locate buyers who can handle the difficulty inherent in a short sale such as waiting for lender approval and either bringing all cash to the table or demonstrating an ability to get a mortgage.

Q: What will happen to my credit score?

A: In general, a short sale is less damaging to your credit score than a foreclosure. The less the damage to your credit, the quicker you can begin rebuilding credit. Your credit score is influenced by many factors, so you cannot predict exactly what the effect of a short sale versus a foreclosure will be. However, one thing is certain — you will not have “foreclosure” reported on your credit report. And in our experience, short sales are less damaging to credit scores than foreclosures.

Q: What are the tax implications of a short sale? 

As per the IRS, if you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable. In a short sale scenario, your mortgage lender may file a 1099-C, or Cancellation of Debt form. Normally, homeowners who sell short would be taxed on the income reported on the 1099-C. However, the Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. More information is available from the IRS website. You should consult your accountant regarding tax questions in connection with your transaction.

Q: Can I speak with an attorney about whether a short sale is right for me? 

A: Yes!

*Fill Out Our Short Sale Intake Form*

and return it to our office via fax, email or mail and we will respond to you promptly.

=== SOURCE follows text ===

Transcript of Declaration of Independence (1776)

IN CONGRESS, July 4, 1776.

The unanimous Declaration of the thirteen united States of America,

When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed. That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shown, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.–Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

He has refused his Assent to Laws, the most wholesome and necessary for the public good.

• He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.
• He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.
• He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public Records, for the sole purpose of fatiguing them into compliance with his measures.
• He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.
• He has refused for a long time, after such dissolutions, to cause others to be elected; whereby the Legislative powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.
• He has endeavored to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.
• He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.
• He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.
• He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance.
• He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.
• He has affected to render the Military independent of and superior to the Civil power.
• He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:
• For Quartering large bodies of armed troops among us:
• For protecting them, by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States:
• For cutting off our Trade with all parts of the world:
• For imposing Taxes on us without our Consent:
• For depriving us in many cases, of the benefits of Trial by Jury:
• For transporting us beyond Seas to be tried for pretended offenses
• For abolishing the free System of English Laws in a neighboring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies:
• For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments:
• For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.
• He has abdicated Government here, by declaring us out of his Protection and waging War against us.
• He has plundered our seas, ravaged our Coasts, burnt our towns, and destroyed the lives of our people.
• He is at this time transporting large Armies of foreign Mercenaries to complete the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.
• He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.
• He has excited domestic insurrections amongst us, and has endeavored to bring on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.

In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.

Nor have We been wanting in attentions to our British brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which, would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.

We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That these United Colonies are, and of Right ought to be Free and Independent States; that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.

By:

Georgia: Button Gwinnett, Lyman Hall, George Walton

North Carolina: William Hooper, Joseph Hewes, John Penn

South Carolina: Edward Rutledge, Thomas Heyward, Jr., Thomas Lynch, Jr., Arthur Middleton

Massachusetts: John Hancock

Maryland: Samuel Chase, William Paca, Thomas Stone, Charles Carroll of Carrollton

Virginia: George Wythe, Richard Henry Lee, Thomas Jefferson, Benjamin Harrison, Thomas Nelson, Jr., Francis Lightfoot Lee, Carter Braxton

Pennsylvania: Robert Morris, Benjamin Rush, Benjamin Franklin, John Morton, George Clymer, James Smith, George Taylor, James Wilson, George Ross

Delaware: Caesar Rodney, George Read, Thomas McKean

New York: William Floyd, Philip Livingston, Francis Lewis, Lewis Morris,

New Jersey: Richard Stockton, John Witherspoon, Francis Hopkinson, John Hart, Abraham Clark

New Hampshire: Josiah Bartlett, William Whipple,

Massachusetts: Samuel Adams, John Adams, Robert Treat Paine, Elbridge Gerry

Rhode Island: Stephen Hopkins, William Ellery

Connecticut: Roger Sherman, Samuel Huntington, William Williams, Oliver Wolcott

New Hampshire: Matthew Thornton

=== SOURCE ===

For sons and daughters who help their mothers with estate planning matters, now is a good time to think about where your mother’s estate planning documents are located. If you are a nominated executor or trustee, you really should know where the will and related documents are. If you don’t know where your mom’s will is, consider raising the issue over the weekend. But don’t be a drag about it! Let your mother enjoy the holiday. If she doesn’t want to talk, don’t push it; but don’t forget to bring it up again another time, either.

Happy Mother’s Day, Mom!

People often leave the vast majority, if not all, of their assets to their spouse in their will. The same is true with most beneficiary designations … But if you are getting divorced, is this really what you want to do? In most cases, I think it might be a safe assumption that you probably don’t want your soon-to-be ex-husband to inherit all of your property. However, that is exactly what will happen if you haven’t prepared a new will or revised your current one and you die before your divorce is finalized.

Ideally you should consider changing your will and all your other estate planning documents before filing for divorce. This includes updating your living will (medical directives) and financial power of attorney so that someone other than your soon-to-be ex-husband has the ability to make financial and/or medical decisions on your behalf should you become incapacitated. You may also want to name new beneficiaries on your life insurance policies, retirement accounts, annuities and other investments where applicable.

There is a lot to discuss when it comes to divorce and estate planning. Start with the Forbes piece and consult your estate planning attorney to address your specific situation. Note that you may want to go to a different attorney than the one who represented you and your spouse in preparing your estate documents.

For the sake of this post, assume you die with $100,000 of student loan debt. Your Federal loans total $30,000 and your Private loans total $70,000. What happens?

In short, your Federal student loans will be discharged and your estate will be liable for the Private loans. As with most other debts, Private student loans must be repaid no matter what happens to you. Executors and Administrators of estates with Private student loan claims against them should ask the lender if they will grant a discharge due to death. The living should consider a life insurance policy that will cover all debts (and then some).

As always, consult your estate planning attorney to discuss your specific situation.