Succeeding as a New Agent | Real Success Episode 2

Real Estate Essentials: The Basics You Need to Know

Real Estate Essentials: The Basics You Need to Know By John F Sase  

Welcome! What we will learn today includes the concept of real estate as well as titles and their attributes; types of tenancy and types of properties; and definition by measurement using the township as the standard; possession of property; Deeds and their conveyance from giver to receiver; restrictions use imposed both privately and publicly; and mortgages; how they are transferred and how they affect the larger financial markets.

Traditional Definition

First, we will start with the concept of real estate. How can we define it? The elemental concept of real estate--the American tradition of property rights--is derived largely from the Anglo-Saxon tradition.
This concept of real estate begins with Nordic cosmology, early informal English tradition, Saxon common law, and the English Magna Carta.
Starting along a shoreline, we can visualize property by looking at a point on the horizon. To the right, we view the Sea; to the left, the Earth; above we view the Air; and by focusing downward beneath the surface, the Core.

Next, we face inland and draw a horizon line. Above the horizon we view the Sky that helps us to determine air rights, the height of buildings, etc. Then, we view the Ground as the surface of all the Earth, whereas, the Core below helps to define mineral rights.
As we face away from land out to Sea, we can mark a horizon line with the Sky above and the Sea below. Generally speaking, we can see about twelve to fifteen miles out to Sea on a clear day because the curvature of the earth. This application of line of sight helps to define the delineation between sovereign states and international waters.

Titles

Next, let's talk about Titles and the various attributes of these documents. We start with the Title known as a "Fee Simple." This Title is the most common one. Generally, ownership of residential property is by Fee Simple.
This Title reflects a bundle of rights, the right to: 1) dispose of the property, to use sell or give it away; 2) the use of the property; 3) possession of that property, which is what the Title's about and; 4) the ability and right to exclude others from using the property.

The Differences between Real Estate and Real Property

Real Estate plus the Title equals what we call Real Property and Freehold Tenancy. This tenancy has an indefinite duration of time.
Freehold-Estate Tenancy can extend perpetually and can be passed from one party--one generation--to another. The Freehold may be Fee Simple.
Alternately, the tenancy could be a Life Estate for which someone has the right to remain on a property (in a house) until s/he passes away. Then, it is turned turned over to another party, by prearranged agreement. This party is referred to as the Remainder Man (a traditional term).
Title is equal to the Estate minus the tenancy. Therefore, we can define Real Estate as a Bundle of Rights that includes the rights of Disposition, Use, Possession, and Exclusion. We can abbreviate these rights with the acronym D. U. P. E.
A Non-Freehold extends for a limited duration of time, the length of time that a person may hold it. Therefore, it is Non-Freehold. Generally, this Estate is referred to as a Leasehold that requires a lease contract, which specifies a duration of time.
This lease is similar to the Title except there is one of the four property rights in Bundle of Rights which is excluded. This excluded right is the right to Dispose of the property, to sell or give it away. However, the rights to Use, Possess, and Exclude others from using it still apply under this lease.
Below, we have a comparison chart. The key feature is that a Freehold has an indefinite duration.
The Non-Freehold enjoys only a limited duration of time because the lease, the Leasehold, excludes the right of Disposition. In contrast, a Freehold Bundle of Rights includes all four: Disposition, Use, Possession, and Exclusion. Therefore, the Estate is equal to the Title is equal to this bundle of our rights to the property.
Let's talk about the types of tenancy along with the types of properties. This tenancy in Severalty involves a number people. In common, it is often with the married couple and specified heirs for that tenancy. In Joint Estate, there is a Right of Survivors. Anyone with this tenancy who survives has the right to continue the tenancy and to have that Fee Simple with its four-fold Rights of Property. By Entireties, the Right of Survivors are the same.

Properties

The types of property include business property--service sector, industrial (generally manufacturing), commercial property (both wholesale and retail), residential property, and agricultural property.
Residential properties are defined as properties of four or less units or vacant land that is zoned for residential use. Also, it includes ten or less acres of agricultural land (commonly, acreage that small lacks the natural conditions to provide a sustainable working farm.

Definition by Measurement

For definition by measurement, we use the Township as our basic standard of measurement. The Township is six miles by six miles square (36 square-miles encompassing 23,040 acres).
To measure a Township, let's use an example of an uncharted island of irregular form. We start by drawing a Baseline and Meridian line upon it, striving to center it as well as possible (for simplicity's sake, whatever is practical).
Let's use an island for our example. We use the full Township plan, carrying it over onto the water around this island. We measure the island down to measurement of quarter miles.
As we measure the entire island, we can determine how many square miles are contained on the island or irregular shape. We are not concerned with the water area at this time.
If we use square quarter miles in order to do the estimation of area and determine that the island is 368.75 square miles. For a symmetrical island, it may measure 23.5 miles long by 23.5 miles laterally.

Let's continue to use the Township as our standard unit of measurement. We recall that it is which is 6 miles by 6 miles (36 square miles) and contains 23,040 acres. We are going to consider how we can further subdivide this Township. If we subdivide a township, we have 36 square-mile Sections.
Therefore, each Section is one-square mile and includes 640 acres. If we subdivide this square mile into quarter sections, each section must be a quarter of a square mile containing 160 acres. The boundaries of these quarter-sections are one-half mile by one-half mile.
If we subdivide further, we have acreage that is one-quarter mile by one-quarter mile. This is a sixteenth of a Section, a sixteenth of a square mile and 40 acres in size. Traditionally, this has been considered as the size of a workable family farm. These forty acres can be divided further as subdivisions for residential and business property.

Possession of Property

Let's discuss Voluntary Alienation, the giving up of the right to possess land voluntarily through an instrument of conveyance (transfer) of these rights through a Deed or Will.
Involuntary Alienation occurs when a person dies without a Will. In this case, the property goes to probate and the court decides. Also, if a person dies without a Will and without heirs, this case is called Escheat. As a result, the property is deeded over to the state government.
Involuntary Alienation can include situations such as Eminent Domain and Condemnation by Eminent Domain, in which a government can take over a property if it pays a fair value for the property. The government may do this regardless of whether or not the present owner wants to keep the property. Usually, this action is taken for some larger public good, such as the construction of an expressway.
Adverse Possession may be hostile or simply can be Open Possession without permission. It may also include taxation. If taxes are not paid on the property, the municipality or the county can take over the property for the lack of back taxes being paid.
Clear Adverse Possession may occur if there is a legitimate claim on the Title. Flagrant Possession can occur by a party moving in and occupying the land. However, it could be that if there is property to which there is no apparent claim and a person resides on that property for seven years (common-law), then that person can claim ownership to what would otherwise be abandoned property.
Voluntary Alienation requires an Instrument of Conveyance, a transfer, usually a Deed, but often times a conveyance of a Title. On this chart here (and when it's complete you may want to pause the video and take a look at it, what we have is the instruments which may be transferred from the giver to the receiver.
The giver (many different names for them, but they are all represent the origin and so their names end with an "OR").
The receiver is the end-recipient. Therefore, that name ends with an "EE" (an easy way to remember this). The instrument of a Title or Deed is given by a grantor to a receiver known as the grantee.

Deeds and Their Conveyance

The Deed is an Instrument of Conveyance for transfer between two parties. One party is the giver, the other the receiver.
The giver (who is the Grantor [most likely the seller]), gives the Deed to the Grantee (who is the buyer). For example, the transaction may involve a Sale-by-Owner property. In such a case, that For-Sale-by-Owner gives the Deed or Title (or both) to the borrower who is the receiver.
In different states, there is application of one of two distinct theories as to who has the predominant right over the property--Lien Theory or Title Theory.
In a Lien Theory state, the Grantee (the mortgagor or buyer of the property) maintains legal control. In a Title Theory state, the mortgagee (the lender) maintains that control.
The Deed is a recorded Constructive Notice. As a result, a Constructive Notice is a written document that is filed as a public record.
An Actual Notice is more traditional. A person would stand in the middle the town, all the neighbors would gather about, and s/he would say "I now own this piece a property" and describe it to the town folk. This kind of notice is neither written nor filed. Therefore, an Actual Notice is an informal notice.
A number of different types of Deeds exist. The following are some that we consider and that we see most often:

1. Bargain and Sale Deed, or a Quit claim deed that clarifies what the nature of the property.
2. Special Warranty Deeds and General Warranty deeds, Free and Clear, or Free of All Encumbrance Deeds.

These instruments are what the names suggest. Deed requirements state that there must be a premise. In other words, there must be a Grantor and a Grantee and there must be some interchange between them.
In addition, there exists what we know as the Habendum Clause or Seisin Clause (which goes back to the Middle Ages). This clause means to have and to hold the property.
With this clause, there must be consideration given: money or other valuables, or something as simple as love and affection. (This concept goes back many centuries when wives were considered chattel property.)
In essence, a valid Deed is one that is signed by the Grantor along with two witnesses and must be offered voluntarily by the Grantor, and accepted voluntarily by the Grantee.

Encumbrance or Lack Thereof

If no Encumbrances exist, then the property--the Deed--is free and clear. This means that there are no Liens upon it. In other words, no financial obligation remains when the property is sold. As a result, no one can claim a portion of the sales price in order to pay off a Lien.
As we have seen, a Deed is an Instrument of Conveyance between two parties and the two parties are the giver and the receiver.
Now, let us look at the transaction that occurs between giver and receiver. The giver is a Grantor and also the seller. Contrastingly, the receiver is the Grantee and buyer of the property.
Therefore, the giver tenders a note to the receiver who is the mortgagor--the borrower. By doing this, there is recognition of Entitlement for those basic rights that include Disposition, Use, Possession, and Exclusion.
In addition, there are conditions of a Title that need to be considered. The first condition is referred to as the Chain of the Title, which sometimes traces back to an original Land Grant.
An uninterrupted chain must be established for the Title that is being passed from one party to the next. This assurance is accomplished through a Title Search, summarized in a document known as the Abstract of Title, and accompanied by an Opinion as to the quality of the search in respect to the cleanliness of the Deed and the passage of Title.
In addition, Title Insurance plays an important role in all of this business because it protects both parties. For owners, the insurance protects them for the amount of the purchase price that they are paying. For lenders, it protects them in terms of the loan amount.
Furthermore, Title Insurance protects both parties in cases of forgeries that may have occurred in the present or even the distant past in respect to both the Deed and the Title.
Restrictions of Use for a property can be either private or public. The private restriction may be a Deed Restriction that is written into the Deed or some Restrictive Covenant that is added to it. For example, there may be a restriction listed in a lease in respect to how many people may reside at a property or whether or not pets can be kept on the property.
Liens constitute an obligation that cannot be collected immediately. However, we are looking for Deeds that that essentially are as free and as clear as possible.
Government restrictions may involve something as simple as zoning laws that determine how a property may be used. In addition, government actions can include the use of Eminent Domain in order to acquire property as well as the ability to tax property. These actions put restrictions on a property. If a person does not pay the property taxes, s/he forfeits the property to the government.

Encroachment and Easement

Encroachment and easement involve adjacent property and the rights of adjacent property owners. Encroachment occurs when one person uses a property belonging to someone else, such as moving a fence on to that property without permission of the owner.
An Easement is just the opposite. A simple example would involve a person who opens a car door and gets out onto a strip of lawn that belongs to their neighbor. Generally, a one-foot easement is allowed in such cases.
Now, let us look at Mortgages in a little more depth. A Mortgage tells us that the Mortgagor is the Grantee who is giving the Mortgage to the borrower who is the buyer.
For the two parties involved in such transactions, we again have a giver and a receiver. One party gives a Promissory Note and Mortgage to the Mortgagee, the lender that often is a bank. This second party is the note holder who gives loan money to the note giver, the party that is the buyer.
If we look at the monthly payment for a piece of property, it usually is a fixed amount. Of this amount, part of the payment is Principle and part of it is Interest. At the beginning of a Mortgage, most of that monthly payment is Interest. Very little of the payment reduces the Principle and pays down the balance of the loan on the property.
As time goes on and we get to the years near the end of the mortgage, most of that fixed payment becomes Principle paid and very little of it is Interest.
A mortgage is made up of different payments. Together, the Principle and the Interest are referred to as to as Debt Service. However, in most mortgages, there are taxes, which are paid along with insurance which is paid.
Both of these are paid into an Impounded Fund called an Escrow Account and they're included as part of the monthly payment. They're held in Escrow and then dispersed.
Therefore, we have Debt Service and we have Escrow Impounds. Together, these two items make up the total amount which is paid monthly. Commonly, this total is called P. I. T. I (pity). It includes Principal, Interest, Taxes, and Insurance.
A Promissory Note (an obligation to pay) is signed by the mortgagor who borrows money with the promise of paying it back. The mortgage is recorded and becomes a security instrument in respect to the property.
The Mortgage is a Voluntary Lien that the lender will get paid. It's signed by the mortgagor. As a document, it facilitates the act of foreclosure. When mortgages enter the financial market in clusters, they often get bundled into other financial instruments.
What we have found in the first decade of the 21st century is that lenders were turning (to a very large degree) to the issuance of Sub-Prime mortgages--very high-risk mortgages with very little security. Potentially, because of the risk, they can earn a higher amount of interest.
However, most of these securities collapsed and caused a downfall of Lehman Brothers and vast problems for other Wall Street firms in September 2008.
Also, there are Prime mortgages. This is the standard low-risk mortgage that is liked by lenders because of the low risk. However, it doesn't carry the highest rate of interest. Therefore, in terms of the gamble involved, it's not necessarily the best for the lender. In addition, there are Alt-A mortgages which form a kind of in between mortgage.
What began to rise in the middle of the first decade of the 21st century were option Adjustable-Rate Mortgages (ARMs) for which the mortgage interest rate goes up or down with the prevailing baseline interest rates set by the London Inter-bank Offer Rate (LIBOR).
These ARMs have that potential put borrowers and their properties below water (where the value the property is decreased to below what is owed on the property as the interest rate increases because it's tied to (pegged to) the general interest rates.
In these circumstances, there is a greater tendency for buyers to walk away and abandon their properties.
This episode has carried us into the second decade of the 21st century. In recent decades, the issuing and servicing of mortgages have moved away from a single bank that issues a mortgage and then services it for its lifetime.
The trend for banks has been to issue mortgages, earn a fee, and then step away by selling them very quickly to some other institutions that will service them. In large, this has been due to pressures in the financial markets to use mortgages as ingredients for other securities, like hedge funds.
The first one that we see on the left, RMBS, is a Real Estate Mortgage-Backed security that is a fairly good one.
Most of the mortgages in this security have Triple-A ratings. These are Prime mortgages. However, what began to happen in the first decade of the 21st century is that these Collateralized Debt Obligations (collateralized by the real property) began to be filled with Sub-prime mortgages. Hence, they became very risky.
However, the bond-rating services (Moody's in particular) rated these mortgages as very good mortgages in very good securities, even though they were filled with highly toxic assets. In part, this led to the collapse of the mortgage-backed securities market in 2008.

Wrapping Up

So, what have we covered? We've covered the concept of Real Estate and what it is; We've looked at Titles and the attributes of these documents and the types of Tenancy and types of Properties; We defined and measured property in terms of the unit of the Township; We discussed possession of property by different means and looked at Deeds and their conveyance from giver to receiver; We discussed the Restrictions of Use of property; and, finally, we addressed mortgages and the role that mortgages play in the wider financial market.

Article Source: http://EzineArticles.com/8997365
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Real Estate Investing 101 What Every Investor Must Know

To Complete Estate Planning To Protect You, Your Family, Your Kids,and play dominoes

Play Dominoes To Complete Estate Planning To Protect You, Your Family, Your Kids By Scott F Barnett J.D., LL.M 

HOW TO COMPLETE ESTATE PLANNING LIKE PLAYING WITH DOMINOES

Who thought Dominoes could help us understand how to complete Estate Planning? Remember when we were kids? Dominoes was one of my favorite games. Families could play this together. Kids could play it without the parents around. It is a perennial game that is still popular today. And can help us understand why we need Wills, Powers of Attorney and other legal documents.

Here is my RETIREMENT & ESTATE PLANNING DOMINO THEORY. Think how if you complete Estate Planning it is like those amazingly long strings of Dominoes that people set up.

When you push the first Domino.

> it starts the others on a path falling on to each other, often in a complicated way, 

> causing different events to happen,
> until that last Domino falls and rings a bell; causes some water to spill;, or, crashes a house made of Dominoes. Rather surprising and fun things happen.

Making sure your own complete Estate Planning is in order sort of works the same way. You may not know the Dominoes are already in place; the way your State Legislature and "Common Law" (the rules created by Courts as "precedent" when deciding cases) set them up. Most people are unaware they are even there.

More important for you to know is this. Usually when that last Domino falls, it will not be where you expected it would land. Worse than that, it is not where you want it to fall. People usually DO NOT want the results that come from NOT setting up the Dominoes how they would rather they fall.

CELEBRITIES DON'T SET UP THEIR DOMINOES WELL EITHER

Even celebrities leave bad results for their families by not setting up the Dominoes so the last one falls where they would want it to.

Marilyn Monroe - Perhaps One of the Most Famous Actresses ever.

Marilyn Monroe took her life sadly, at age 36. In her will, she left $100,000 in trust to support her mother. She left most of the rest of her estate to her acting teacher, the famous Lee Strasbourg. That is OK, since she made the choice. However, not too long after, the much older Strasbourg also passed away; leaving everything to his third wife. Marilyn Monroe hardly knew her; yet, Strasbourg's widow has made millions off the rights to her pictures and other property rights. Might Marilyn Monroe not have preferred people she knew and cared about would benefit from her estate? Arrangements to assure that were possible if the Dominoes of her assets were set up differently.

Steve McNair - Super Bowl quarterback, 3-time Pro Bowl selection

McNair was killed at the age of 36. McNair, with nearly $20 million in his estate, had not done any estate planning, leaving his heirs with estate taxes and court fees consuming a large portion of his estate. The worse tragedy was this. When alive, McNair purchased a wonderful house for his mother to live in. After his death, his widow kicked her out. Do you think McNair would have wanted that horrible, and avoidable, result?

Diana, Princess of Wales - Affectionately known to us as "Princess Di".

Diana left a proper will that went into effect after her tragic death in an automobile crash. However, she left a separate "Letter of Wishes" asking her Executors to divide certain property between her sons and 17 godchildren; in their discretion. Unfortunately, the Executors only gave those people trinkets, instead of what would have been around 100,000 English pounds each. Directions in her will would have assured Diana's wishes were carried out. Again, a simple change in one Domino could make a tremendous difference to people Princess Di cared about.

In each of those cases; and many others, perhaps in most families, paying attention to how the Dominoes of the property in their lives fall could have better consequences.

WHAT ARE THE DOMINOES I NEED TO PAY ATTENTION TO?

Our property is often held in different accounts. There are bank accounts, stock brokerage accounts, IRA's, 401k plans, Life Insurance policies and others. Each of these might be set up very differently. And how they are set up controls who gets the property when we are gone.

Your Will does not control who gets that property. That's right, even though your Will has language about how all your property is to be distributed, it does not control accounts that say something different. And as happened in Marilyn Monroe's case, even the Will may cause results we would not want.

So, each of these items needs attention to make sure what you want to happen is what will happen.

Let's look at some of the Dominoes that need your attention.

Bank Accounts and Stocks and Bonds Accounts: Is it only yours? Then it is governed by your Last Will. If it is in a Joint Account with "rights of survivorship", or an I/T/F account (in trust for) the joint tenants or beneficiary get it no matter what your Last Will says. These are "contractual" terms that are not changed by your Last Will.

Often well intentioned account managers or the people in a bank that help you set up accounts suggest you create an "I/T/F" account. They tell you it avoids probate. It would be a nice way to let your grandchildren know you remembered them by leaving a gift.

All that is true. But they are not aware of the downside. If minor children get a gift, it usually becomes necessary to go through the expense of setting up a Guardianship of their property for them. While they are underage the money cannot be used for their welfare; because the parents have the obligation to support them. The Court will not give the parents' access to their minor children's money to pay for schools and other items that are part of that obligation of support. So, this "gift" to the grandchild cannot be used to benefit them.

If a child with "Special Needs" receives this money, that child may lose rights to Government benefits that help the parents support the child.

The last thing to remember is this. When the child turns the age of majority in that state, they get the money. If that age is 18, would you want that young a person to get that amount of money without any restrictions.

Good planning would be to reset these Dominoes. Either allow the property to go through probate and leave it to a trust for the child's benefit; or, create a trust now so the property is already in place under the terms and conditions you want for the child. There are many flexible provisions possible to make that properly set up account operate better to benefit the child. Those details are for another day.

So, AVOID leaving property in accounts in a way that is not consistent with your Last Will. Alternatives exist so the last Domino lands where you want it to.

Life Insurance Policy Death Benefits: You probably made a Designation of Beneficiary at the time you applied for life insurance or later. It might have been one or two lines in a lengthy paper with lots of choices. That governs who gets the Death Benefits no matter what your Last Will says. [NOTE: There are some exceptions for particular circumstances. But, you should rely on the general rule just mentioned.] Many people often do not remember what they put in those Life Insurance applications. Do you? The policy is a contract and the Life Insurance company must pay out the Death Benefits according to that contract; even if your Last Will directs differently.

So, again the life insurance death benefits are not governed by what you say in your Last Will. If the beneficiary is not who you want it to be, you have to reset that Domino.

Often things change making it important to review the life insurance policy death benefit beneficiary. There may be a divorce from that person; the named beneficiary may have passed; or the beneficiary may have begun bad habits where leaving them the death benefit is not wise after all.

Other Accounts with "Beneficiary Designations" - Many of us have other accounts with "Beneficiary Designations". Our IRA's and 401(k)'s work this way too. So, it is important to review everything we own or have a right to. There are often surprises about how those Dominoes are set up that you want to change.

Real Estate: What is the exact way the deed reads that you were given when you bought real estate? Sometimes we are surprised by what we find. For example, I have had clients who, because of some confusion, find one spouse is on the deed, but the other isn't. At the same time, the spouse NOT on the deed is ON the mortgage. Or even vice versa. Making sure this Domino is set like you want it often requires a title search. Your real estate lawyer or title company can usually take care of this pretty easily.

Real Estate needs specific attention. Even if the "title" (the name of the person or entity that owns the property) is correct; other problems might exist that should be cleaned up. Someone may have filed a "lien" (a paper put on the public records that says there is money owed; and, before the real estate can be sold or a new mortgage given on it that old debt needs to be paid).

Often unpaid Real Estate property taxes owed show up. The Internal Revenue Service may have filed a lien for back income taxes.

All sorts of rights to file a lien exist. It can't be done unless there is a real reason. If a "lien" is filed when there is not right to do it, the person that did it would become responsible for a "Slander of Title". Then they would pay damages like if they slandered an individual's good name.

In all events, ownership of Real Estate properties should be reviewed to make sure those Dominoes are set up as you expect and want them to be.

Business Interests: Stock of closely held corporations or professional associations, interests in closely held limited liability companies and partnerships are often set up wrong; if there is even any identification at all of who the owners are. Things may be fine on bank accounts or other things needed to do business; but, if the proper identification of a stock or interest owner is not made, there can be confusion if there is a death or incapacity; or even a sale of the company or its assets. Also, many of these interests are subject to agreements like Stock Holder and Buy-Sell Agreements; which govern what happens if the stock or interest owner dies. That may cause a surprise at a very sensitive time. So, care is needed to make sure that kind of paperwork reads the way you want it to.

This is all not as hard as it looks or seems. If you keep good records, it will be very easy. Most everything else is fairly easy to find; or repair if it is done wrong.

TAKING CARE OF YOU!

We have been talking about taking care of others. But Dominoes need to be put in place so those you want to take care of you have the legal authority they need to do that. Circumstances can happen if the Dominoes fall on you in a way that you need that help.

While you may be very efficient to make sure you have the proper "title" to everything you own; if you cannot deal with the property for some reason, that is a real problem. It is not unusual for folks to be unexpectedly hurt in a car accident; have a heart attack; or a stroke. Any condition that makes us unconscious creates this problem.

Assume, for discussions sake (No one likes to think about these possibilities; but we have to) one of these situations happens. You are unconscious and it is time to roll over a Certificate of Deposit to get a new higher rate. But, you cannot get to the bank to do it and it is titled only in your name (even if it is I/T/F for someone if we lose you). Who will be able to do the rollover? The bank will only deal with you. There is no one else with authority. So, the Certificate of Deposit stays at the same lower rate.

Think about your stocks and bonds and mutual funds. You are in this condition and there is a "Sell" recommendation. Only you can order the sale. If the stock is not sold, you lose money on the expected drop in value. Or there is a "Buy" on something you cannot take advantage of; so that is a real opportunity cost.

The frustrating thing for lawyers is that these problems can be avoided by one pretty simple document; a Durable Power of Attorney. A Durable Power of Attorney lets you choose someone you prefer to manage your accounts if you cannot. Why a "Durable" Power of Attorney. Well, powers of attorney have been around for hundreds of years. They name someone as a mere "agent". That means they can show up for you; but, if there are any questions, you can be called to give directions. If you are unconscious and are not able to give the direction; then the "agency" fails. It is not "durable". So, in modern times, legislatures came up with the "Durable Power of Attorney"; which means the agency still works even if you were, in fact, unconscious. Of course, the agent is only allowed to do things in your best interest. (Some do not, so be careful who you name.) This is a very valuable and critical Domino everyone should have in place.

What About Instructions to the Doctors? - Financial matters are not the only thing that needs attention when this kind of emergency happens.

If you are unconscious, giving doctors informed consent to medical procedures cannot happen. Here we mean those medical procedures to keep you alive and are designed to get you well. You need to make a Health Care Surrogate Designation. That names ("designates") the person with the legal authority to give consent when needed. This is critical if you do not have a spouse the doctors will listen to.

The Living Will only deals with "letting you go" if there is no way you will or could recover from a terminal condition. If that is what you would want, but cannot give the doctors those instructions, you want someone you trust named who can. Most of us will remember the tragedy of Terry Schaivo; and the national crisis created because she did not have a written Living Will. He husband testified being let go in her condition was what she wanted and she told him that. But everyone from her parents to the Majority Leader of the U.S. Senate (a doctor diagnosing without ever having visited her as a patient) said he was lying. In the end, the Courts allowed her to pass and an autopsy proved she would never have recovered from her condition. If she only signed that one document; the Living Will, her last days would have been spent in dignity with the care she wanted.

What happens if these Dominoes are Not Set Up? - The law provides a stop gap set if Dominoes fall into disarray because we have NOT set them up like we want.

This is Guardianship. If the conditions described above happen and you have not "reset" the Dominoes in the ways suggested, the following happens. Someone has to file a Petition for Guardianship and to Appoint a Guardian in a proper Court. The Judge sends someone (often a committee) to examine you to see if you are in a condition where he should declare you "Incapacitated" under the law. That means your rights to take care of yourself are taken away from you. At the same time people can be asking for an appointment as your Legal Guardian. That person takes over your life and financial rights subject to the control of the Judge.

Guardianship proceedings are an avoidable horror that makes a bad situation worse; and can usually be avoided. They are costly. What the Court can authorize has nothing to do with modern society. It is demeaning. Worst of all; family disputes about if you should be declared "Incapacitated" and who should be your Guardian are among the most terrible that can occur. And it all happens while you are in another room with no way to say what you want for yourself.

The law creates the Guardianship alternative to protect the person who is the subject of the proceeding. That is a good thing. But most of us do not really need that protection; if we set up the Dominoes of our life and property to avoid it.

Single People; especially Young Ones Need to Set Up the Dominoes Correctly. With so much divorce, women outliving their husbands for many years, and young people attaining some means or waiting longer to marry; making proper arrangements for if we cannot take care of ourselves is critical in our society.

I recently asked a young, single, man what would happen if he became unconscious and the doctors needed instructions or his consent. "I guess my biological parents would be the ones who can tell them what do to?", he answered. Well, he is right. Under the law his parents would have that right. However, before that can happen, they have to file a Petition for Guardianship and to Appoint a Guardian to get clear legal authority from a Judge to do what everyone would expect they can do.

This is a situation where common sense does not prevail. Every one of us needs to have these simple documents completed so our care happens more easily. We can avoid the costs, administrative limitations and headaches, and indignities of a Guardianship proceeding with a few simple documents.

WHAT ABOUT MY OWN KIDS?

Kids are also involved in the Dominoes of your planning -

Even if they don't know yet quite how to play the game well.

Nothing is more important for a parent than to know they assured the welfare of their children. That welfare may be needed if, God forbid, your minor are left alone in the world. What will happen to them? Who will take care of them; have authority to get them their shots and into school?

There are laws that deal with this. Ultimately, someone can step in also in this situation and Petition the Court to Name a Guardian for the child. Until the Court makes that appointment, the State child welfare people may step in and put your children into foster care until a decision is made. So, it is important that the Court can quickly name a Guardian.

But what if the Judge does not know who the Guardian of your children should be? What if more than one of your relatives wants to be the Guardian? The statutes created by the Legislature of your state list who has the priority right to be named. Of course, the Judge decides if that person could be a Guardian; but, not necessarily the best Guardian.

That means the Judge might not appoint who you think would be the best Guardian for your children. What can you do? Well, it's easy enough.

The Domino needed here is your Last Will. One of the purposes of having a Last Will is to "nominate" the people who you believe would be the Guardians of your children. This is the way the law makes available for you to tell the Judge (remember that you are no longer around to tell the Judge yourself) who you want as and believe is the best person or people to serve as Guardians of your children.

And the Judge will "listen" to your wishes. The law says the people you nominate in your Last Will (or other qualifying document) have the highest priority to be named as Guardians of your children.

Now, the Judge is not required to blindly pick the person you nominate in your Last Will. What is in the "best interests of the child" is always the overriding standard and rule in all this. That means if the person you nominated has since had a change of situation making them unsuitable, the Court could pass over them. If you wrote your Last Will long before your nominee developed a substance abuse problem; the Court can override your nomination. Then the statutory lists of preferences kick in again. However, a Court is hard pressed not to name who you nominate unless there is some very strong objection such that naming that person is clearly NOT in the "best interests of the child."

The result of all this? One of the most important Dominoes you want to make sure lands where you choose, is the Last Will with your nomination for who would be the Guardian of your children. In another blog post we will go through how to pick who you nominate for the Court to appoint. We will also, in another post, go over the best ways to leave money for your minor children. Most people would not want their kids to get a lot of money when they become the age of majority (when they are a legal adult in the eyes of the law; which is 18 years old in Florida). Watch for those posts in the coming weeks.

WHERE DO I GET THE DOCUMENTS I NEED TO SIGN WHEN I WANT TO DO THE RIGHT THING?

Going to a qualified lawyer is always the best choice. They know what questions to ask you and how to figure out solutions to complications that may come up. While there are some decent "do your own" alternatives, using them is too likely going to have you miss something. Or since it is complicated for you, although not so much for an experienced lawyer who deals with this all the time, you can too easily do something wrong; or get impatient and leave it undone. The expense of getting your Dominoes set up so the last one falls where you want is far less than the costs of not doing it when an emergency happens. If you do not have a complex situation with a lot of different accounts, business interests and real estate holdings I think $500 - $1,000 is a good guess of the probable legal bills. Of course, the more there is to do the more the lawyer charges.

Review all this at least every 2-3 years. Babies are born. People pass away. There are divorces which certainly changes what you now want. All sorts of changes happen over time that affect the results of how we set up our Dominoes in the past. What was a good arrangement before might not be what you want anymore.

I assure you, after having experienced, for more than 40 years as a lawyer, client emergencies when the Dominoes WERE set up right and those where the Dominoes WERE NOT set up right; it is a bargain for you and your family to have things prepared properly and correctly no matter what the cost. What is the price of avoiding worse heartbreak when your world is already falling around you?

The positive side is this. Given the complications that can happen, knowing that the Dominoes of your life are set up to avoid the horrors that can happen if they are not, can provide great Peace of Mind. You will know you have done all you can for yourself and your family. As important, you know the people you want and trust are in the wings to take care of your personal matters if you cannot.

In other words, you rest easy because you are in control and know everything and everyone will fall into place like you want.

Article Source: http://EzineArticles.com/?expert=Scott_F_Barnett_J.D.,_LL.M.

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