Why homeowners always need liability insurance

DEAR BOB: Why did you recently say homeowners need insurancein case our tree falls on our neighbor’s property? This happened to us. Ourinsurer advised that we had no liability. The neighbor’s own insurance policywill have to pay for our tree’s damage to their fence –Harold W.

DEAR HAROLD: You always need homeowner’s insurance. Inaddition to providing hazard (fire) insurance, a homeowner’s insurance policyincludes negligence liability coverage.

Purchase Bob Bruss reports online.

Liability for your tree that fell on the neighbor’s propertydepends on the cause. If it was a windstorm (an act of God), then you have noliability to your neighbor because you were not negligent.

However, if the tree was diseased or was leaning toward theneighbor’s house when it fell and damaged the neighbor’s property, you would beliable for negligence, and your homeowner’s insurer would pay for the damage.Please ask your insurance agent to explain further.

HOW CAN SALE OF SECOND RESIDENCE ESCAPE CAPITAL GAIN TAX?

DEAR BOB: How can a second residence qualify for the$250,000 single or $500,000 married capital gains tax exemption, or thetax-deferred exchange benefit? –Patty C.

DEAR PATTY: To qualify for the Internal Revenue Code 121principal residence sale tax exemption up to $250,000 (up to $500,000 for amarried couple filing a joint tax return), you must own and occupy the home asyour primary residence at least 24 of the last 60 months before its sale.

To qualify for the Internal Revenue Code 1031 tax-deferredexchange benefits, the property must be a rental and must be traded for another”like kind” rental property of equal or greater cost and equity. Forfull details, please consult your tax adviser.

IF YOU HAVE A LIVING TRUST, DO YOU NEED A WILL?

DEAR BOB: If I already have a revocable living trust, do Ialso need a will? –Joe S.

DEAR JOE: Yes. It is called a “pour-over will.”The reason you also need a will is you probably have some assets that are notincluded in your revocable living trust, which includes your major assets suchas your house, bank account, stocks and bonds, etc.

But your automobile, furniture and other personal assetsprobably are not held in your living trust. When you pass on, your will canspecify who you want to inherit real and personal assets not included in yourliving trust. That is why it is called a “pour-over will.” Fordetails, please consult the attorney who created your living trust.

The new Robert Bruss special report, “How to BuyFixer-Upper Houses with Little or No Cash for Fun and Fortune,” is nowavailable for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or bycredit card at 1-800-736-1736 or instant 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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