Understanding Living Trusts

Posted on by Emi Tsuji

Living Trust(Click here to download a pdf version suitable for forwarding to your clients)

Estate planners often recommend “Living Trusts” as a viable option when contemplating the manner in which to hold title to real property. When a property is held in a Living Trust, title companies have particular requirements to facilitate the transaction. While not comprehensive, following are answers to many commonly asked questions. If you have questions that are not answered below, your title company representative may be able to assist you, however, one may wish to seek legal counsel.

Who are the parties to a Trust?

A typical trust is the Family Trust in which the Husband and Wife are the Trustees and, with their children, the Beneficiaries. Those who establish the trust and transfer their property into it are known as Trustors or Settlors. The settlor’s usually appoint themselves as Trustees and they are the primary beneficiaries during their lifetime. After their passing, their children and grandchildren usually become the primary beneficiaries if the trust is to survive, or the beneficiaries receive distributions directly from the trust if it is to close out.

What is a Living Trust?

Sometimes called an Inter-vivos Trust, the Living Trust is created during the lifetime of the Settlors (as opposed to being created by their Wills after death) and usually terminates after they die and the body of the Trust is distributed to their beneficiaries.

Can a Trust hold title to Real Property?

No. The Trustee holds the property on behalf of the Trust.

Is a Trust the best way to hold my property?

Only your attorney or accountant can answer the question; some common reasons for holding property in a Trust are to minimize or postpone death taxes, to avoid a time consuming probate, and to shield property from attack by certain unsecured creditors.

What taxes can I avoid by putting my property in a Trust?

Married persons can usually exempt a significant part of their assets from taxation and may postpone taxes after the first of them to die passes. You should check with your attorney or accountant before taking any action.

Can I homestead property which is held in a Trust?

Yes, if the property otherwise qualifies.

Can a Trustee borrow money against the property?

A Trustee can take any action permitted by the terms of the Trust, and the typical Trust Agreement does give the Trustee the authority to borrow and encumber real property. However, not all lenders will lend on a property held in trust, so check with your lender first.

Can someone else hold title for me “in trust?”

Some people who do not wish their names to show as titleholders make private arrangements with a third party Trustee; however, such an arrangement may be illegal, and is always inadvisable because the Trustee of record is the only one who is empowered to convey, or borrow against, the property, and a Title Insurer cannot protect you from a Trustee who is not acting in accordance with your wishes despite the existence of a private agreement you have with the Trustee.

Tips for Successful Farming

Posted on by Emi Tsuji

IPadSuccessful farming should be the cornerstone of every agent’s marketing efforts.Top producers say this is the key to acquiring new leads. Here at Fidelity we have compiled many tips over the years. Here are the best of the best:

Set Up a Database for Your Farm Areas – Create a profile of each home in the farm. Whether on your computer or just in a rolodex or card file, this should include any pertinent information including: birthdays, names, # of kids, pets, etc. Record dates visited, topics discussed—anything that will help you identify this household.

Know Your Competition – Find out what your competitors are doing in your area. Timing can affect the impact of your newsletters and other distributions. If you know what your competition is doing, you will be better able to plan your strategy.

Think Creatively – Use your imagination. You want to get the envelope opened and your letter read! Keep your eye out for clever or unique ideas and try to apply them to your marketing effort. Adapt ideas to each specific area.

Walk Your Farm – Learn the best times to call on people within your farm. Avoid calling too early or too late. Carry a ‘walking farm’ package with you so you know specific property information. Be empathetic with people and sensitive to their individual problems and routines.

Learn to Handle Rejection – It may take a lot of no’s before you get a yes. Your attitude will play an important part, so think positively and don’t get discouraged.

Don’t Forget Your Biggest Source of Referrals – Your friends, family and past clients can be a goldmine!

Target Farm – Your farm database should consist of 300-500 homes. Know your area including churches, schools, markets, etc. Focus on these clients instead of sending out thousands and thousands of letters in a ‘shotgun’ marketing attempt.

Label Your Farm – You should categorize your farms to target in on specific future clients. The following are some categories you can use to name your farms:

Non Owner Occupied – Send newsletters, brochures, pictures of the property to the owner. In a lot of these cases, the owner lives out of state and doesn’t see the property very often. Keep them in touch with their investment.

New Owner – Set up a “Welcome Wagon.” Provide community information and introduce them to their new neighbors.

Equity Owner – If the owners have lived in their home for at least 2 years, they are more likely to make a change. If they are happy to remain in their home, suggest they take advantage of their equity by refinancing and purchasing other property.

Homeowner’s Exemption – Make up note cards informing owner’s that they haven’t taken advantage of the homeowner’s exemption available to them. Attach your business card and distribute to all whom this applies to in your farm.

Real Estate Agent  – Identify all real estate agents within your farm…Get to know the competition. Your local Board of Realtors can help you with this information.

Why Do You Need Title Insurance?

Posted on by Emi Tsuji

TitleAndKeys

(Click here to download a pdf version of this post suitable for forwarding to your clients.)

Title Insurance. It’s a term we hear and see frequently — we see reference to it in the Sunday real estate section, in advertisements and in conversations with real estate brokers. If you’ve purchased a home before, you’re probably familiar with the benefits and procedures of title insurance. But if this is your first home, you may wonder, “Why do I need another insurance policy? It’s just one more bill to pay.”

The answer is simple: The purchase of a home is most likely one of the most expensive and important purchases you will ever make. You, and your mortgage lender, want to make sure that the property is indeed yours —lock, stock and barrel —and that no individual or government entity has any right, lien, claim to your property.

Title insurance companies are in business to make sure your rights and interests to the property are clear, that transfer of title takes place efficiently and correctly and that your interests as a homebuyer are protected to the maximum degree.

Fidelity National Title provides services to buyers, sellers, real estate developers, builders, mortgage lenders and others who have an interest in a real estate transfer. Fidelity routinely issue two types of policies — “owner’s,” which cover you, the homebuyer; and “lender’s,” which covers the bank, savings and loan or other lending institution over the life of the loan. Both are issued at the time of purchase for a modest, one-time premium.

Before issuing a policy, however, Fidelity National Title performs an extensive search of relevant public records to determine if anyone other than you has an interest in the property. The search may be performed by title company personnel using either public records or more likely, information gathered, reorganized and indexed in the company’s title “plant.”

With such a thorough examination of records, any title problems usually can be found and cleared up prior to your purchase of the property. Once a title policy is issued, if for some reason any claim which is covered under your title policy is ever filed against your property, the title company will pay the legal fee involved in defense of your rights, as well as any covered loss arising from a valid claim. That protection, which is in effect as long as you or your heirs own the property, is yours for a one-time premium paid at the time of purchase.

The fact that Fidelity National Title works to eliminate risks before they develop makes title insurance decidedly different from other types of insurance you may have purchased. Most forms of insurance assume risks by providing financial protection through a pooling of risks for losses arising from an unforeseen event, say a fire, theft or accident. The purpose of title insurance, on the other hand, is to eliminate risks and prevent losses caused by defects in title that happened in the past. Risks are examined and mitigated before property changes hands.

This risk elimination has benefits to both you, the home buyer, and the title company: it minimizes the chances adverse claims might be raised, and by so doing reduces the number of claims that have to be defended or satisfied. This keeps costs down for the title company and your title premiums low.

Buying a home is a big step emotionally and financially. With title insurance you are assured that any valid claim against your property will be borne by the title company, and that the odds of a claim being filed are slim indeed. Isn’t sleeping well at night, knowing your home is yours, reason enough for title insurance?