Team Reba Real Estate

Our very own Tim Burkart (a frequent contributor to Team Reba’s Blog) was selected by his peers for inclusion in the 2008 edition of The Best Lawyers in America. 

According to information provided by the annual letter from Garvey Schubert Barer, the firm where Tim works and who represents Team Reba’s business, “The Best Lawyers list is compiled through an exhuastive peer-review survey in which thousands of top U.S. attorneys confidentially evaluate their professional peers. The 2008 edition is based on more than 2.1 million detailed evaluations of lawyers by other lawyers.”

As an associate member of RHA, I get a chance to meet a lot of really great local professionals. One of them is Chris Benis, a local attorney who I have much regard and respect for in the Seattle area.  He is teaching an upcoming class for RHA that anyone who is a landlord should consider attending to bone up on issues that could impact them down the road.  You never know when a difficult tenant situation could arise, and the best plan is to have tools and information on your side when it happens.  Info on the upcoming class is noted below.   If you are considering getting into the landlord arena, this and many other RHA classes are items you should check out!

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This is a composite account of many cases we have worked on over the years.  The names and events have been changed to avoid disclosing confidential client information.

Frank Sinatra says that love is wonderful the second time around, but the couples’ estate planning can be complicated.  Often, each person has an established career and/or significant assets.  While each of them may be ready for the emotional ties of marriage, the economic ties give some pause for thought.  The good thing is that people entering into second marriages often have “both feet on the ground” and are able to talk openly and objectively about how they want to manage their finances during their marriage, and the provisions they want to make for each other and their heirs at death.

Premarital agreements are common in remarriages – a couple can clarify what each has, how they want to handle living expenses, how they may acquire assets together, and what happens to each of their assets at death or divorce.  Frankly, whether a couple signs a premarital agreement or not, it is critically important for them to discuss the financial side of their marriage.  The community property laws can complicate things for remarriages.  Often it makes sense for couples to agree to keep not only their assets separate, but also their income.  For example, without a premarital agreement, a person’s salary is community property.  Thus, post-marriage employee benefits and contributions to retirement accounts and the growth of those contributions would be community property, while the account balance on the date of marriage plus growth would be separate.  This can create an accounting problem in the event of death or divorce.  Another problem is making sure the survivor of a married couple has sufficient assets to live comfortably, while also taking care of your children and grandchildren or other heirs.

When kids have to wait for their step-parent to die to get their inheritance, it can be awkward for the step-parent and the kids.  Our experience is less that the kids’ begrudge the step-parent the use of the assets, but rather they fear those assets will end up with the step-parent’s family.  Yet, often your spouse needs access to your assets to live comfortably, and this is when good planning can minimize suspicion and/or hard feelings between your spouse and your heirs.  An example of a bad plan would be for dad’s Will to give everything outright to step-mom, as dad’s children will have little assurance of receiving their inheritance and they may be tempted to challenge dad’s Will.  A better plan is to use a properly drafted trust for the step-parent administered by an independent trustee.  Such a trust can allay a lot of suspicion and fulfill the dual goals of providing for your spouse and your children.

These are many important issues to consider the second (or third . . ) time you fall, but consulting with competent counsel will help assure that you’ll be glad you met “the second time around.”

A loan officer I know at HomeStreet Bank recently sent out a message regarding an FHA loan program that is for WA residents who may have children going to school at one of the universities/colleges in our state.  I’ll paste in below the parameters he provided that are required to meet to qualify.

I’m not sure if this is a program that is available outside of WA State so if you’re reading this blog from another area of the country you’ll want to check with your local lending resources.

Parents can help their children enrolled in college to buy a home with an

FHA 3 % down loan.    Here are the details:

1.  The child must be enrolled in college, and use the property as his/her residence.

2.  The property must be within a reasonable distance to the college.

3.  The child does not need to have income or a credit score.

4.  The parent(s) must qualify for the payment, plus their own debts, and go on title.

5.  It doesn’t have to be a condo; single family houses are eligible too.

6.  The new FHA loan limit of $567,500 applies!

My guess is that since it is an FHA loan that it can be available through a number of lenders, so you’ll want to ask your contact if they have access to this loan.  I haven’t checked to see how competitive the rates are to other programs, but with only a 3% downpayment opportunity - and most lenders are requiring more down payment right now - it’s a way for many people to still buy in some of our higher priced markets without having to break the bank for a down payment and college costs at the same time.

Since the parent and child are on the title together you should check into any estate and financial planning issues that this may bring up.

This is a composite account of many cases we have worked on over the years.  The names and events have been changed to avoid disclosing confidential client information.

The out of state vacation home can be a wonderful family retreat – generating years of happy memories for your family.  Dennis and Margaret adore their waterfront home on Maui and own it in both their names.  Sam and Betty love the desert and own a home in Tucson through their limited liability company (LLC).  Robert and Alice are looking to buy a vacation home in British Columbia - close to Robert’s family.

However, things that can be so wonderful during life can cause some real headaches at death, unless you plan ahead.  When Dennis or Margaret dies, it will be necessary to open a probate in Hawaii to transfer title to the survivor of them and if the survivor does not take corrective action, another probate in Hawaii will be needed at his or her death.  A Probate in Hawaii often costs eight to ten times more than one in Washington.  Those extra fees can be avoided by transferring title to a revocable trust.

Sam and Betty’s interests in their LLC will not be subject to Arizona probate, but may be subject to the Washington estate tax.  Depending on the value of their estate, their heirs may unnecessarily pay state estate tax on the property.  At present, Arizona does not have an estate tax so if Sam and Betty transferred title from their LLC to a revocable trust, they would still avoid the Arizona probate system and would also avoid the Washington state estate tax.

Robert and Alice need to be cautious of the Canadian tax system.  Canada does not have an estate tax, but its income tax applies to many transfers that are tax-free in the U.S.  For example, transfers at death are subject to income tax in Canada.  Moreover, the Canadian real estate excise tax applies to a transfer by gift, which is not the case in Washington.  A combination of a Canadian revocable trust and a Washington LLC will allow Robert and Alice to avoid the Canadian probate and income tax systems at their deaths.

Consult with your attorney before buying real estate outside of Washington – do not tarnish years of happy memories for your family by failing to plan properly for your vacation property.

We believe estate planning is about people; let us know if we can be
of service to you or those you care about.

For assistance, questions, comments or to be added to our mailing list, please contact Timothy C. Burkart, Garvey Schubert Barer, 1191 2nd Avenue, Suite 1800, Seattle, WA 98101-2939, tburkart@gsblaw.com, (206) 816-1467

The amended Washington Domestic Partnership Law (RCW 26.60) becomes effective June 12, 2008.  If you would like more information go to http://www.secstate.wa.gov/corps/domesticpartnerships/ At the website, you will find a summary of the 2008 changes, access to the 196 page statute and answers to frequently asked questions such as “Who can register as domestic partners?” and “How do we register a domestic partnership?”

Per the Washington State website, “the amended laws generally involve dissolutions, community property, estate planning, taxes, court process, service to indigent veterans and other public assistance, conflicts of interest for public officials, and guardianships.” For more information about the differences in the 2007 - 2008 laws go to ttp://www.secstate.wa.gov/corps/domesticpartnerships/laws_and_regulations.aspx.

 If you have questions or concerns regarding these changes to the laws, please consult licensed professional advice from an attorney.

2110 square foot, 1-story house with daylight basement (unusual but desirable and different split level entry layout) and 2 car garage in the centrally located neighborhood of Bridle Trails in Bellevue. If you’ve been looking for a “value property” in this area, this is it! 

A broker’s open house will be held on Thursday from 11am - 1pm and a public open house is being held Saturday from 12pm-2pm.  Come on by and take a look!  The kitchen will need a complete remodel to get to today’s standards but wouldn’t you rather choose your own kitchen design than have the administrators of the estate pick your options? 

Pricing has been selected to allow for a quick sale of this estate – it’s a home with “good bones” but in need of updates.  Basement could use better finishes and is currently a bit dated.  Most items that need addressed by a new owner are cosmetic.  Two of the bathrooms need some finish work, but the master bath does have a Jacuzzi brand shower pan installed and greenboard is in the home for help in moving along the project.  Choose tile or a fiberglass surround - it’s up to you! 

Home is exempt from seller disclosure forms per RCW 64.06.010 because it is an estate – all offers require attorney review.  Deed transfer to occur with a Personal Representative Deed versus a Statutory Warranty Deed.  On market price is $550,000.  Neighboring home with same square footage and current style renovations sold in August for $720,000.

Below are some photos of the home and a link to the slideshow that will give you all the photos taken at our photo shoot with Scott of Chytil Photo.  Additional services provided were professional interior cleaning, window washing, and a locksmith.  A 1-year home warranty from American Home Shield purchased for the buyer when the property sale closes.

Here is the slideshow for all photos - a few of the outside and inside are below:

Some outstanding ideas have been thrown around for how this home could be made to shine again. Consider removing the walls between the kitchen and dining areas to make a wonderful open space and make the territorial views open up to the rest of the home. Expand the wrap-around deck for more entertaining space or perhaps alter the access point out to it.  Warm up the basement level for family and rec space by adding carpeting or a wood style floor and put a more glamorous finish on this fireplace and the one in the living room.  Adding drywall and recessed lighting in the basement will lighten it up and create a more appealing environment as well.  Updating carpets throughout the house will lift it’s style factor.  Or, perhaps install hardwoods?

So, while I’ve been writing on our own Team Reba blog for about a year now, I was writing on a site called Rain City Guide much earlier.  In a post back in February of 2007 I covered the topic of agents versus attorneys but with a focus on why it makes sense and covers the best interests (typically) for clients to have the capabilities of both of these professions at their disposal in a real estate transaction.

The article was in response to Russ Cofano’s comments on a post on RCG, but I can’t link it here because he no longer writes for the blog now that he works for a real estate company as their legal counsel and RCG has deleted all of his posts.  I’m guessing said competing firm made this a requirement of his employment.

Anyhow, a different attorney at RCG has been pretty clear about his feelings on the subject of agents versus attorneys in his own version of a slam on my own industry.  He’s been doing it for some time with yet another post here that discusses how buyers can negotiate commission fees from sellers, although there is little discussion that commission agreements are between agents and sellers - not the public.  The selling office commission (SOC) that is noted on every NWMLS listing for agents is not a public fee but a fee advertised among cooperating brokerages via the membership within the MLS.  But, he keeps on hitting the same topic over and over again.  Guess it’s time to get out the boxing gloves….

I wonder sometimes if he’s just hard up for business or if he can’t think of more interesting information to write about.  My guess is that for every time he writes an article on not using an agent to buy a home he gets 5 new clients.  Maybe with all the link backs to the RCG site he’ll come by and comment.

I don’t mind a guy running his own business because I do the same thing.  To me it doesn’t seem necessary to make it an “us vs. them” mentality.  What I find a little sad is that rather than developing a good rapport with agents to perhaps build a relationship like I have with my real estate attorney he ends up alienating an entire industry.  With regard to building a business plan, I could imagine where agent relationships could be developed into excellent repeat business that could sustain his practice more easily or as a secondary income stream to his direct business.  But, alas, such is not the case currently.  I’ll stick with my sources over at Garvey Schubert Barer (Rick Baroway, Lori Salzarulo, Tim Burkart and others), Chris Benis of Harrison, Benis & Spence, and Doug Tingvall - the people I use most frequently for client needs.

This is a composite account of many cases we have worked on over the years.  The names and events have been changed to avoid disclosing confidential client information.

Parents usually pass their property equally to their children at their deaths, but sometimes “equal” is not “fair” and may cause serious rifts in the family.  Consider that Hank and Marilyn’s business owes much of its success to the efforts of their daughter, Mary; or that Fred and Evelyn’s family vacation home would not exist were it not for the efforts of their son, Bill; or Dick and Agnes who face the difficult task of providing for their autistic son after they pass away.

Co-owning real estate or a family business can be difficult, even in the best of families.  Using a limited liability company or, to a lesser extent, a tenancy in common agreement may help, but problems can persist.  There is often tension between shareholders who work in the family business and those that do not.  Moreover, a child may have earned a share of an asset through “sweat equity.”  Parents need to balance the needs of their special needs child against the needs of their other children.

We work with clients to develop a plan to deal with these situations.  We strongly advise them to discuss the plan with all their children so the children can understand why they are making an unusual disposition of their assets.  Otherwise, the children who receive less may feel their parents were unduly influenced or that their parents loved them less than their sibling.

Besides rewarding “sweat equity,” the parents’ Wills could also give a child the right to buy out his or her siblings’ shares of an asset.  Thought must be given to the method for determining the buyout price and the ability of the child receiving the asset to fund a buyout.  An otherwise great plan can founder if the parties cannot agree on price or the child who is buying cannot afford to do so.

The bottom line is that a well thought out plan that is fully disclosed can allow parents to manage their children’s expectations and avoid disputes down the line.

A prospective client of mine, whose husband works for the US Government in an overseas capacity, contacted me many months ago to begin sorting out if they’d move to the Seattle area or the Portland, OR area.  While I think both are great cities with their own features and benefits there is a distinct difference between the two when it comes to considerations of a financial nature. 

One is that WA doesn’t have a state income tax - Oregon does. 

Oregon doesn’t have sales tax - but WA does.

Portland’s prices on houses are also still behind those in Seattle and while that makes them more affordable it may also reflect on the more cyclical nature of the economy of Portland.  Puget Sound has a more diverse set of manufacturing, trading, and white collar industry.  But, with all that said, my client wants to know about a lot of stuff that, to be quite frank, is outside the expertise of a real estate agent - no matter how *fabulous and smart* I may think I am. 

So, I directed her to the following websites.  These are useful in that they help to do comparisons of all the United States in a number of categories so that you can narrow down what is important to you and choose the place that will best fit your situation.  For some people going into retirement it will be a tax issue, or a combination of taxes and estate planning. 

http://www.drs.wa.gov/default.htm

http://www.retirementliving.com/RLtaxes.html

The links above will take you to these sites and I’m sure there will be many more that can be found.  If you have a site you’d like to tell me about, please post it here in the comments section.  The nice thing about these sites is that they can be useful for investors as well, especially for anyone considering purchasing property outside their own state of residence.