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| "Thanks, But No Thanks!"
Inheriting Real Estate In A Down Market
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As the old saying goes, "You can't take it with you." And of course, we all assume our parents or spouse will plan properly to bequeath their assets to us, their devoted next of kin.
What many fail to realize, especially in our present economy, is that it is not only assets that remain behind when a loved one passes away. Debts and liabilities do not follow one to the grave either and an "inheritance" can sometimes be more of a headache than a gift. With the current state of the housing market, when it comes to real estate, many heirs find themselves dealing with a lot more than they bargained for.
Of late, individuals and families have been turning to us to advise them regarding inherited properties that have mortgage balances higher than the values of the properties. The first reality we make them aware of is that if the deceased (mortgagor) had no mortgage life insurance, the debt stays with the property, unless appropriate actions are taken. Once title is taken, the mortgage debt, as well as other obligations such as monthly HOA fees, taxes etc., become the beneficiary's.
What does one do in this situation?
Some of the options are:
- Disclaiming the property (within proper timeframe)- No one is under any legal obligation to accept property, but a disclaimer must be executed within a limited time frame to renounce the inherited property.
- Negotiating with lender before taking title - A lender may be willing to take a loss on a refinance, allowing the beneficiary to keep the property. Any potential liens on the property will have to be resolved before a refinance can take place, meaning the beneficiary may have to come up with additional funds in order to close on a home refinance.
- Short sale - Again, the lender may be willing to come to a settlement agreement with the beneficiary to complete a short sale.
Keep in mind, dealing with an inherited "upside-down" property is a complex challenge with serious tax/financial ramifications and legal deadlines that must be followed in order to successfully accomplish your goals. Additionally, it must be kept in mind that inheritance laws and taxes vary from state to state. Input from real estate, tax and or financial planning experts is highly advisable.
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If You Don't Ask, Don't Expect To Receive
o  After a loved one assiduously pays life insurance premiums over many years, motivated by a strong desire to ensure his or her family is taken care of, the possibility exists that the family will never see the proceeds. Apparently death benefits totaling many millions of dollars go unclaimed every year in this country and insurers are increasingly facing scrutiny from state regulators over these unpaid claims. We know from experience that this scenario of unpaid claims is part of a larger problem of individual family members failing to organize and keep adequate records of accounts and policies so their estates can be administered effectively after they pass away. Too often, individuals put off this task and only after their incapacitation or death does the family realize their loved one's finances are in a state of utter disarray. In helping our clients sort through the records of aged parents or deceased loved ones we have come across accounts and old life insurance policies that family members never knew existed. Making sure your own financial records as well as those of your aging parents are well organized, is a key to not only simplifying the lives of all involved but to ensuring you and your family receive all you are entitled to as well.
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Florida Top Advisors Council Meets To Discuss Key Client Issues
Austin Frye recently attended the 4th quarter meeting in Celebration, Florida of The Florida Top Advisors Council, an invitation only group of LPL Financial advisors. Market volatility was addressed as the key client concern of 2011.
A presentation on Global Diversification utilizing a variety of alternative investment products was made by representatives from Blackrock. They discussed the importance of employing investment tools that perform independent of the normal ups and downs of the markets as hedging vehicles in volatile markets, a strategy utilized at Frye Financial in our portfolio allocations. They also focused on safety valves utilized to reduce risk in portfolios.
A representative from Lincoln Financial Group presented a Long Term Care solution designed to return principal payments made on long term care policies if the coverage is not used.
Representatives from LPL Financial discussed the advantages of using LPL Financial's cutting edge technology in analyzing investment portfolios.
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Alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investor's portfolio. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses. __________________________________________________
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Frye Financial Team Bragging Rights
Chris Knight completes overnight long-distance race.
After 28 grueling hours of running in the dark, crossing bridges and harsh terrain, Chris Knight along with his 11 teammates (The Glade-iators) completed the overnight Ragnar Relay Race.
The 199 miles running event put athletes through a grueling course from Miami to Key West. Chris ran an impressive 21 miles and his team placed 20 out of 246 teams in their category.
Go Chris!
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