Why should I buy a homeowner’s insurance policy?
Purchasing homeowner’s insurance is not required by law, but if you are taking out a mortgage, the lender will likely require you to insure your home in order to protect their investment.
Even if you’re buying all cash, and aren’t required to purchase homeowner’s insurance, it is still highly recommended you purchase a policy to protect YOUR investment. Homeowner’s insurance can cover damage to your home, yard and other structures in the event of a severe storm or fire. Many policies will also cover personal belongings that are destroyed in a fire, or stolen from your home.
Homeowner’s insurance can also cover personal liability issues in the event anyone is ever hurt on your property – i.e. someone falls, breaks a leg and sues you.
Different policies provide varying degrees of coverage. It is important to understand what is and is not covered before you purchase. For more information, feel free to give us a call.
What is a living trust?
A living trust (sometimes called an “inter vivos” or “revocable” trust) is a written legal document through which your assets are placed into a trust for your benefit during your lifetime and then transferred to designated beneficiaries at your death by your chosen representative, called a “successor trustee.”/
On the other hand, a will is a written legal document with a plan of distribution of your assets upon your death. Your executor, as named in the will, oversees this process, and notably, nothing in your will takes effect until after you die.
A living trust allows you to avoid probate proceedings, and affords a greater level of privacy to your family than a will, which is made public.
What are Prop 60 and Prop 90, and how do they benefit senior citizen home buyers?
In most cases, these constitutional tax initiatives allow senior citizens to transfer the trended base value from their current home to a replacement property if certain requirements are met. This may result in substantial tax savings.
Who Qualifies? If you or your spouse that resides with you are age 55 or older, you may buy or construct a new home of equal or lesser value than your existing home and transfer the trended base value to your new property. This is a one-time only benefit. You must buy or complete construction of your replacement home within two years of the sale of the original property. Both the original home and the new home must be your principal place of residence. A claim must be filed within three years of purchasing or completing new construction of the replacement property. If a claim is filed after the three-year period, relief will be granted beginning with the calendar year in which the claim was filed. Once you have filed and received this tax relief, neither you nor your spouse who resides with you can ever file again.
1. The replacement property must be your principal residence and must be eligible for the Homeowners’ Exemption or Disabled Veterans’ Exemption.
2. The replacement property must be of equal or lesser “current market value” than the original property. The “equal or lesser” test is applied to the entire replacement residence, even if the owner of the original property acquires only a partial interest in the replacement residence. Owners of two qualifying original residences may not combine the values of those properties in order to qualify for a Proposition 60 base-year transfer to a replacement residence of greater value than the more valuable of the two original residences.
3. The replacement property must be purchased or built within two years (before or after) of the sale of the original property.
4. Your original property must have been eligible for the Homeowners’ or Disabled Veterans’ Exemption.
5. You, or a spouse residing with you, must have been at least 55 years of age when the original property was sold.
When are Property Taxes Due?
Your property taxes are paid in two installments, on the same dates each year.
The first installment of your property tax bill is due on November 1 and becomes delinquent after 5:00 p.m. on December 10. The second installment of your tax bill is due February 1 and becomes delinquent after 5:00 p.m. on April 10. Each installment is subject to penalties if not received by the Treasurer and Tax Collector by the aforementioned dates and the second installment is also subject to costs in addition to penalties if not paid timely.
What are the Different Ways to Take Title?
Title to real property in California may be held by individuals, either Ownership or Co-ownership. Co-Ownership of real property occurs when title is held by two or more persons. There are several variations as to how title may be held in each type of ownership. The following brief summaries reference some of the more common examples of Sole Ownership and
A Single Man/Woman – A man or woman who is not legally married.
-Example: John Doe, a single man
An Unmarried Man/Woman – A man or woman, who having been married is legally divorced.
-Example: Joe Doe, an unmarried man.
A Married Man/Woman, as His/Her Sole and Separate Property – When a married man or woman wishes to acquire title in his or her name alone, the spouse must consent, by quit claim deed or otherwise, to transfer thereby relinquishing all right, title and interest in the property.
-Example: John Doe, a married man, as his sole and separate property.
Community Property – The California Civil Code defines community property as property acquired by husband and wife, or by either. Real property conveyed to a married man or woman is presumed to be community property, unless otherwise stated. Under community property, both spouses have the right to dispose of one half of the community property. If a spouse does not exercise his/her right to dispose of onehalf to someone other than his/her spouse, then the one-half will go to the surviving spouse without administration. If a spouse exercises his/her right to dispose of one-half, that half is subject to administration in the estate.
-Example: John Doe and Mary Doe, husband and wife, as community property.
Joint Tenancy – A joint tenancy estate is defined in the Civil Cod e as follows: “A joint interest is one owned by two or more persons in equal shares, by a title created by a single will or transfer, when expressly declared in the will or transfer, to be a joint tenancy.” A chief characteristic of joint tenancy property is the right of survivor ship. When a joint tenant dies, title to the property immediately vests in the surviving joint tenants). As a consequence,joint tenancy property is not subject to disposition by will.
-Example: John Doe and Mary Doe, husband and wife, as joint tenants.
Tenancy in Common – Under tenancy in common, the co-owners own undivided interests, but unlike joint tenancy, these interests need not be equal in quantity or duration, and may arise at different times, there is no right of survivorship times. There is no right of survivorship; each tenant owns an interest which, on his or her death, vests in his or her heirs or devisers.
-Example: John Doe, a single man, as to an undivided 3/4the interest, and George Smith, a single man, as to an undivided ¼ the interest; as tenants in common.
Trust – Title to real property in California may be held in a title holding trust. The trust holds legal and equitable title to the real estate. The trustee holds title for the trustor/beneficiary who retains all of the management rights and responsibilities.
Community Property with Right of Survivorship – Community Property of a husband and wife, when expressly declared in the transfer document to be community property with the right of survivorship, and which may be accepted in writing on the face of the document by a statement signed or initialed by the grantees, shall, upon the death of one of the spouses, pass to the survivor, without administration, subject to the same procedures as property held in joint tenancy.
The preceding summaries are a few of the more common ways to take title to real property in California and are provided for informational purposes only. for a more comprehensive understanding of the legal and tax consequences, appropriate consultation is recommended. There are significant tax and legal consequences on how you hold title. We strongly suggest contacting an attorney and /or CPA for specific advice on how you should actually vest your title.