Homeowner scoffs at value of living trust

DEAR BOB: I am a longtime reader and value your real estateknowledge. But I don’t understand why you constantly recommend revocable livingtrusts to hold title to real estate. Both of my parents died within a few yearsof each other. When my mother died, her will left everything to my father. Ourattorney handled everything promptly with no delays or large costs. When myfather died a few years later, his will left his house and everything else tomy brother and me. We were named co-executors of his will. Again, the sameattorney handled all the paperwork promptly. We paid his fee and someadditional expenses, which were not excessive. There was no federal estate taxor state inheritance tax. My will leaves everything to my wife (or to ourchildren if we both die together). I don’t see any reason justifying the costof a living trust. Isn’t a living trust just a tax avoidance scheme for thevery rich? –Dan VanA.

DEAR DAN: No. Revocable living trusts are for everyone whoowns assets exceeding his or her state’s probate court exemption amount,usually $50,000 to $100,000. Living trusts are not a tax avoidance scheme.

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You and your brother were very fortunate there were nocomplications with your parents’ estates. There could have been long delays orother problems that a revocable living trust can eliminate.

For example, if a living trust principal or trustor becomesincapacitated and unable to manage his/her assets, perhaps with Alzheimer’sdisease, severe stroke, or a coma, then the successor trustee can manage theliving-trust assets without probate court interference or the need to have a conservatoror guardian appointed.

Presuming you and your wife own your home together, supposeyou become incapacitated with Alzheimer’s disease. Your wife decides the bestthing to do is sell the home to pay for your care in a convalescent home.

However, because you are incapacitated, she can’t sell thehome alone without a court-appointed conservator or guardian to represent you.Such court action would not be needed with a living trust.

HOMEOWNER’S INSURANCE USUALLY DOESN’T COVER SEWER BACKUP

DEAR BOB: The city sewer backed up into our home, causingextensive damages of about $15,000 to replace the carpets, flooring, and othercomponents. Our homeowner’s insurance company refuses to pay, pointing to anexclusion in the policy. The city says they are not liable. Do we have anyrecourse? –Nathan R.

DEAR NATHAN: Most homeowner’s insurance policies no longerinclude coverage for sewer backups. Cities routinely reject sewer backup damageclaims. However, you might want to consult a local attorney about suing thecity if fault can be proven.

Where I live, the city recently enacted an ordinancerequiring homeowners to install backflow valves to prevent sewer backups intohomes. I am told a far cheaper remedy is to leave the cap on your sewercleanout loose so any backup won’t go into your home.

DID HOME SELLER HAVE A DUTY TO DISCLOSE LACK OF SEWERCONNECTION?

DEAR BOB: About four months ago, we bought our first home.It is in an older community of very nice homes. Last month, when our toiletswouldn’t flush properly, we called Roto-Rooter. The man informed us we have aseptic tank system and our home is not connected to the city sewer, which, welearned, was installed on our street about 15 years ago. Do we have anyrecourse against our home seller and the realty agent to pay the estimated$8,500 total cost to connect to the city sewer? –Bryan R.

DEAR BRYAN: Especially in an established neighborhood, mosthome buyers and real estate agents presume the homes are connected to the citysewer. But that is not always the case, especially where homes were built withseptic systems and the city sewer was installed later.

Unless the seller’s disclosure statement falsely failed toreveal the home was not connected to the city sewer, the seller and the listingagent probably have no liability to you unless you specifically asked, “Isthis house connected to the city sewer?” For more details, pleas consult alocal real estate attorney.

The new Robert Bruss special report, “How to Obtain theBest Appraisal of Your House or Condo,” is now available for $5 fromRobert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this columnare welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

Copyright 2006 Inman News

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