28 March 2007 -  Jacksonville, Florida USA                                        

Re: Durable Power of Attorney

I can’t think straight right now to write a more substantial post so I’ll just share with you an email I received from cousin Delphi (Delphi is DH’s first cousin in his mother side who lives in California) re: how the durable power of attorney comes in extremely handy during her mother’s life threatening situation.

"Delphi"  wrote:

Hola, Rhebs...just read your latest post. You’re right about durable power of attorney (dpoa) being a good thing to have set up. It doesn’t have to be just between spouses though. Mom had the foresight to give me her dpoa before she even got sick a couple years ago and it came in extremely handy. I had the right to make decisions regarding her medical care (and considering her first hospitalization for what became the liver transplant journey started with her being in a coma, I needed to start making those decisions at the outset).

You can also file the dpoa document with your hospital in your medical records so they have it from the get go just in case (because grabbing that document to prove you have dpoa isn’t something anyone is likely to think of as their loved one gets carried away by an ambulance...I know I didn’t...the doctors asked me if I had dpoa for Mom and I said “no,” because I had forgot that Mom did that...then I went home and went through my filed paperwork and found the copy of the dpoa Mom had given me a year or so before and brought it back to the hospital having to say, “oh...I guess I do have dpoa for her”...oy...wish I’d known I could have filed the dpoa earlier with them). Just sharing...good subject!

Delphi

So there folks.  If you haven't done yours yet, l hope you will get your act together and do it NOW! 

 

    09 March 2007 -  Jacksonville, Florida USA                                        

The Power Vested In Me

I had a chance to talk face to face with the estate lawyer when DH & I had our own estate plan done while at the same time I was doing an inclusive research on the very same topic assigned to me by my professor in financial planning last fall.

For this reason, I have been meaning to make a follow-up entry about my previous post to re-enforce and impart the very substance and importance of this notarized document as there are legal issues that we must know and address before things go off out of whack:

Durable Power of Attorney
The power of attorney is a legal document by which one person (called the grantor) appoints another person (called the attorney-in-fact) to make any personal and/or financial decisions and perform certain acts on behalf of the grantor.

This is a very powerful document that has the potential for being a very helpful if you have one in effect when the situation calls for it however this can also be very dangerous and can be abused for some selfish/evil reasons. 

Here are examples why we need to have this document in hand:

What was surprising to me at one point (this happened before I have this power vested in me by my DH ;-) when I called the bank to make a simple inquiry about the payment I made to my DH’s credit card; I was told by the rep that by law, she can’t discuss nor disclose any information to me about this case because I wasn’t in my husband’s credit card account even thought I am the legal wife and I knew his SSN, birthday and other personal information.

My ex-co-worker was in her 50’s at that time and her husband was 10 years younger than hers; they been married for about 6 years, she had 2 grown-up kids in previous marriage but over the years she put on a lot of weight while her husband stays hunky; lean and muscled that is. She used to tell me how her husband picked on her about her weight but she said she doesn’t give a damn. Next thing I know her husband had left her for another woman. To make the long story short, she was left alone to face their creditors and since she  can no longer afford to pay the bills altogether by herself; she couldn’t sell the house without her husband's signature either so she let the mortgage company foreclose the house for nothing.  She then filled a divorce but it was pending for a while because the husband flew out of the country. Bottom line is, had she’d gotten the durable power of attorney in hand before this sticky situation took place, there would have been no problem in selling the house even without her husband’s signature.

Another case is, say for instance your husband met an accident (God forbids) and became mentally and physically incapacitated for the time being thus he can’t do anything. You, as a wife, who has a durable power of attorney in hand can sign, execute, and or transact business legally in behalf of your husband.  You can sign any legal documents, process any insurance claims, benefits and or apply for a loan in his name without his signature. You can even sue someone in his behalf. Worse comes to worst, you can sell the house without his signature if it deemed necessary.  The durable power of attorney is the only legal document that gives you all the rights and power to make decision or do just about anything legal in behalf of your husband's name.

The danger on the other hand is, if for instance you gave a durable power of attorney to your spouse, and your spouse has been secretly  having a serious affair with another woman and is planning to screw you before the divorce; he can use the power of attorney to clean out your individual bank account and or apply for a loan/credit cards and racked up bills in your name.

Another wicked example is, the well-meaning older or aging parent gave a power of attorney to his son only to find out later that the son have squandered all her savings or sold her property behind her back.

Therefore, the most important thing to remember is that you (as a grantor) are going to be legally responsible for the acts of the person you give your durable power of attorney to. So you must exercise great care in picking the person you are going to trust your life with.

Bear in mind also that the Durable power of Attorney becomes null and void the moment the grantor dies. That means this document is only valid and binding while the person (grantor) is still alive. Once the grantor dies, that’s the end of it because the said document is no longer legally recognized. Accordingly, this is the time where the Will comes in very handy.

To sum up, the Durable power of Attorney is useful when the grantor is still alive while the Will takes effect after the grantor' last breath.

Next post, I’ll go over the main points between a Will, Living Will and Living Trust.

 

 

    01 March 2007 -  Jacksonville, Florida USA                                        

Homebuyer Alert!

Have I known this law earlier, I would not have freak-out and screeched the first time I saw our 2007 mortgage payment stubs increased by $300+ a month. “How did this happen, Darling?!?!?!?!?! We do have a fixed mortgage don’t we?” DH confirmed that we indeed have a fixed mortgage but had no clue why the increase!

Boy, good thing it was Sunday then otherwise I would have blasted somebody from our mortgage company for printing what I initially thought was a wrong payment stubs. As an alternative, since I can’t get anybody to answer my question, I logged on to our mortgage account online and found out that the culprit for the increase was, our property tax jacked up by $1,368.00 and home hazard insurance  by $259.35. Bummer!

Now, here’s what I found out regarding property assessment that new homeowners or prospective homebuyers need to understand when buying a house previously owned and has been homesteaded for some time by the same owner.  You see, we didn't have this problem when we first bought a condo eight years ago because the condo was newly constructed; in fact, the construction was still on going when we closed the deal.  So there was no surprises at all because our mortgage payment stays the same year after year.

Peps, this increase is important to note as many of us pay our  property taxes through mortgage companies (by escrow). Just like me, if you are not aware of this law, you may be shocked by the sudden increases in your mortgage monthly payment the following year after you moved in to your new home.

In Florida, state law (Save our Homes) limits the annual increase in the assessed value (not market value) of homesteaded property to 3% or the national consumer price index (CPI) whichever is less. However, when homesteaded property is sold, that limitation, or cap, is removed and the property is reassessed. This results in a new assessed value which in turn increased your property tax by (depending on your new assessed value)

This is how it works. For example:

The first homeowner bought a newly constructed house for $200,000 and sold the house to you after few years for $265,000. The first year you closed and moved in to your newly bought house, you are still going to pay the property tax of $3,759.78 based on the original assessed value.

District Code	Taxing District	Taxable Value	Millage Rate	Property Taxes
USD2	Jax Beach	$200,000.00	18.7989	$3,759.78

The taxing district you choose is connected to a specific tax rate for that area. The tax rate is referred to as the millage. The millage varies by taxing district within the county. Each taxing district's total millage is comprised of individual millages determined by multiple taxing authorities operating within that district. Business owners & home owners are subject to the same millage rate within a given tax district, except where exempted by Florida Statute(s) or local ordinance(s).

However, in the second year, your house is going to get appraised based on the price you pay when you bought the house plus any improvement which in our example was $265,000. So your property tax jacked up to $4,981.71-- that's assuming there is no increase in millage rate from last year. Although there is a chance that the assessed value is going to be higher than what you originally paid for because of the real estate market and or improvement you made to the house.

District Code	Taxing District	Taxable Value	Millage Rate	Property Taxes
USD2	Jax Beach	$265,000.00	18.7989	$4,981.71

And this becomes a cycle which means that if you, as a second homeowner decided to sell the house after a few years for $300,000-- the third homeowner will then pay the same amount of property tax of $4,981.71  for the year the house was bought then the following year, the property tax is going to increase to $5,639.67

District Code	Taxing District	Taxable Value	Millage Rate	Property Taxes
USD2	Jax Beach	$300,000.00	18.7989	$5,639.67

Homestead Exemption

Take advantage of Homestead exemption! This is given to all qualified homeowners who use their home as primary residence but you as homeowner must file this yourself because the government won’t give it to you outright. Remember the Taxable value of your house is the assessed value minus any exemptions. Here in Florida, qualified property owners are given a $25,000 reduction off the assessed value of their primary home which based on our example would save you $469.97

District Code	Taxing District	Taxable Value	Millage Rate	Property Taxes
USD2	Jax Beach	$275,000.00	18.7989	$5,169.70

Taxable value is the assessed value minus any exemptions

Hey, this got me to snoop around to find out how much taxes are actually being paid by residents of different state in the US.   Here's what I found and I have meticulously compiled the data in Microsoft Excel to show you the detail: Which state gives you a lower tax rate? I told DH maybe when we retire we can relocate to either the state of Georgia or Alabama since the cost of living there are a lot more affordable compared to other states up north;-)

Sources: CNNMoney.com and MSN Money Central State Tax   MSN Money Central Property Tax