DEAR BOB: After much research, my husband, who is now 74,decided to get a senior citizen reverse mortgage on our home. Since I was only60 at the time, I quitclaimed my interest in the house to him because I was tooyoung. We chose the reverse-mortgage line of credit and have withdrawn only asmuch as our savings would cover if my husband dies. I know I could get areverse mortgage, as I am now 62, but our question is whether our house willhave to go into probate court when my husband dies since I am no longer on thedeed. How can we avoid this because our home is our biggest asset? –Sheila P.
DEAR SHEILA: That’s easy. I was expecting a tough question.Your husband can transfer title from himself to his revocable living trust,which, presumably, will name you as the successor trustee and the futurebeneficiary if he dies first.
Purchase Bob Bruss reports online.
Reverse-mortgage lenders have no objection to borrowersplacing title to their homes into their living trusts after the reversemortgage is recorded. By placing the home title into your husband’s livingtrust, probate costs and delays will be avoided if he dies first.
Equally important, if your husband should becomeincapacitated, such as with Alzheimer’s disease or a severe stroke, as thesuccessor trustee you can then manage the living-trust assets, includingselling or refinancing of refinancing the house. Details are in my specialreport, “24 Key Questions Answered: Living Trust Secrets Reveal How toAvoid Probate Costs and Delays,” available for $5 from Robert Bruss, 251Park Road, Burlingame, CA 94010, or by credit card at 1-800-736-1736 or instantInternet delivery at www.BobBruss.com.
UMBRELLA INSURANCE SAVES MONEY AND INCREASES PROTECTION
DEAR BOB: Thank you for writing about umbrella insurancepolicies some time ago. Until I read that, I had been carrying $1 millionliability coverage on my house, three rental properties and $5 million on myautomobile policies. My insurance agent advised the high liability coveragebecause of my high net worth. When I clipped your article and faxed it to myinsurance agent, he said I could reduce the liability coverage on each propertyand my automobiles to $300,000 each, and obtain a $5 million liability umbrellapolicy for slightly lower total premiums as I was paying. Your great advice forbetter coverage more than paid for a lifetime subscription to the newspaper.–Dr. Carl W.
DEAR DR. CARL: Thanks for your compliments. For readers whohave no clue what an umbrella liability policy is, it is an insurance policythat takes over coverage on large liability losses exceeding the basicinsurance policy coverage. It is best to have all your property liabilitypolicies with the same insurer so there is no conflict between insurancecompanies.
To illustrate, suppose you are at fault in a bad automobileaccident that injures or kills several people. Your basic auto policy will paythe first $300,000 of liability coverage. Then your umbrella policy will takeover and pay any additional liability losses up to $5 million total.
If you think you need additional liability coverage above $5million, the additional premium for a few more million dollars will be onlyseveral hundred dollars (because of the small probability the insurance companywill ever have to pay such a large loss).
RENTER’S INSURANCE COVERS MORE THAN PERSONAL PROPERTY
DEAR BOB: You recently said a tenant should have renter’sinsurance to pay for damage to his/her apartment. The individual reader left adinner on the stove and the fire did about $15,000 damage to her apartment. Ithas always been my understanding that renter’s insurance simply covers thetenant’s personal belongings, such as clothing and furniture. But the owner isresponsible for the apartment house or detached rented house. Am I wrong?–Beverly B.
DEAR BEVERLY: If a tenant has a renter’s insurance policy,it covers loss due to theft and fire affecting the tenant’s personal property.But it also provides liability coverage for the tenant’s negligence.
For example, if I visit a friend’s apartment, trip over aloose rug, and am injured, the tenant’s rental insurance policy will pay for myinjuries due to the tenant’s negligence. The same renter’s policy also providesliability coverage if the tenant’s negligence causes damage to the landlord’spremises, up to the policy limit.
Similar insurance policies are available to condominium ownerswho should always carry condo owner’s insurance even though the condohomeowner’s association insures the condo complex’s common areas, including thebuilding structure for fire and liability coverage. For details, please consultyour insurance agent.
The new Robert Bruss special report, “2007 Realty TaxTips: Eight Chapters of Tax Savings for Homeowners and Realty Investors,”is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010,or by credit card at 1-800-736-1736 or instant Internet delivery at
(For more information on Bob Bruss publications, visit his
Real Estate Center).
Copyright 2007 Inman News