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LONICH PATTON EHRLICH POLICASTRI
1871 The Alameda, Suite 400, San Jose, CA 95126
Phone: (408) 553-0801 | Fax: (408) 553-0807 | Email: contact@lpeplaw.com
LONICH PATTON EHRLICH POLICASTRI
Phone: (408) 553-0801
Fax: (408) 553-0807
Email: contact@lpeplaw.com
1871 The Alameda, Suite 400
San Jose, CA 95126
Located in San Jose, Lonich Patton Ehrlich Policastri handles matters for clients in northern California, specifically San Jose and Silicon Valley. Our services are available to anyone within the following counties: Santa Clara, San Mateo, Contra Costa, Santa Cruz, Monterey, San Benito, and San Francisco. For a full listing of areas where we practice, please click here.
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Reverse Mortgages: How it Works
/in Estate Planning /by Michael LonichWhat is a reverse mortgage and why would I want it?
A reverse mortgage is a type of home loan which can be used for any purpose. Unlike a standard home loan where you make monthly payments, with a reverse mortgage, the lender makes payments to you.
A reverse mortgage provides a way to use the equity accumulated in your house without losing ownership of your house or increasing your monthly payments.
When Can I get a Reverse Mortgage?
To obtain a Reverse Mortgage, you must be at least 62 years of age and the house must be your primary home, where you live at least six months out of the year.
The amount of the Reverse Mortgage is affected by many factors, however generally the value of the Reverse Mortgage increase with your age and the value of your house.
How does a Reverse Mortgage Work?
There are two types of reverse mortgages available, Home Equity Conversion Mortgages (HECM) and proprietary reverse mortgage.
HECM are federally-insured, widely available and have no income requirements. Proprietary reverse mortgages are not federally-insured as they are borrowed through private lenders, however they allow for higher loan amounts. The choice of reverse mortgage that is best for you will depend on your circumstances and needs.
You as the homeowner get to choose how the reverse mortgage is received. The payments may be received monthly, lump sum, or as a credit line. Interest is only charged on the amount received and the interest is added to the loan balance. This means that you do not have to pay the interest up front. Additionally, as the payment from the reverse mortgage is a loan, it is not considered income and is not taxable.
Once you have received the payments, there are no restrictions on how the money may be used. The money can be used to supplement your income, pay debts, or even to buy a new home.
A reverse mortgage will continue until all borrowers permanently move out of the house, sell the house, or the last surviving borrower passes away. Once the reverse mortgage ends, the loan becomes due, which can be paid by the sale or refinance of the house.
Is There Any Cause for Concern with a Reverse Mortgage?
A reverse mortgage can provide invaluable assistance in retirement and is the one of the few ways to access the equity you have built up in your home without increasing your monthly payments. However, there are several things to be aware of and consider before you make the decision to get a reverse mortgage.
The first thing to be aware of is that reverse mortgages often have higher fees than standard mortgages. These fees are rolled into the reverse mortgage and will further reduce the amount of equity you have accumulated in your house.
Second, the loan amount becomes due when the house is sold. As the sale of a house may happen unexpectedly it is important to consider the likely hood of this happening and the impact the reverse mortgage will have on the sale.
A final consideration is the effect the reverse mortgage will have on your estate. As you continue to receive payments, the equity in your house is reduced which will affect the amount received by your heirs.
Is a Reverse Mortgage right for me?
A reverse mortgage is a financial tool available to those who understand how the loan works. When considering a reverse mortgage, it is important to understand as much as you can about the reverse mortgage process, and balance that with your needs.
If you are thinking about a reverse mortgage loan, please contact one of the experienced attorneys at Lonich Patton Ehrlich Policastri. We offer free half-hour consultations.
Please remember that each individual situation is unique, and results discussed in this post are not a guarantee of future results. While this post may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.
California Divorce: What is a Moore Marsden Analysis?
/1 Comment/in Family Law /by Michael LonichWho or What are Moore and Marsden?
Moore and Marsden are two cases decided by the California Supreme Court and the California Appellate Court in 1980 and 1982 respectively. These cases dealt with the issue of how to determine the community property interest in a house.
Generally, a house purchased before marriage will be treated as the purchaser’s separate property. However, during marriage if the mortgage is paid with community funds a portion of the value of the house may become community property. Because California is a community property state, this means all community property is divided equally in a divorce.
When do I Use a Moore Marsden analysis?
The decisions of the Moore and Marsden cases are the basis for what is called the Moore Marsden analysis. The Moore Marsden analysis applies a formula to determine what portion of a house is community property due to mortgage payments made during marriage with community funds.
To apply the Moore Marsden analysis, you need to have two key factors. First, any mortgage payments made must be made with community funds. Second, these payments must include payment of the loan principal and not only interest.
How do I Apply a Moore Marsden Calculation?
If you meet the above two factors, you must compare the market value of your home at the time of your marriage and the market value at them time of your divorce proceedings to calculate the amount the house has increased in value during the marriage.
You then compare the amount principal paid during the marriage to the total purchase price of the house to calculate what percentage of the purchase price was paid during the marriage.
Next you take the percentage of the purchase price that was paid by the community and compare that to the amount your house has increased in value during marriage and add to it the amount of the principal paid by the community to calculate the total amount of the house that the community is entitled to.
Finally, in a divorce this amount is divided between the spouses because it is community property.
For example, if your house was worth $100,000 at the time of marriage and $200.000 at the time of divorce, then the house has increased in value by $100,000.
If you purchased the house for $50.000 and during your marriage paid off $10,000 of principal with community funds, then 20% was paid by the community.
Using the above examples, you take the percentage paid by the community, 20%, of the amount your house increased in value, $100,000, and add the amount of principal paid during the marriage, $10,000, which equals $30,000. This means that the community would be entitled to $30,000 of the $200,000 house.
This would mean that in the above example, each spouse would be entitled to $15,000 as community property is divided equally. The remainder of the house value and the balance due on the loan is kept by the spouse that purchased the house with separate funds before the marriage.
Is There Anything Else I Should be Aware of?
In a typical divorce, there are many additional factors that may be involved in the calculation. Refinancing and home improvements made with community funds both influence the calculation. Further, it may simply be difficult to agree on the required values of the home with your spouse.
Because of the complex nature of the Moore Marsden analysis, it is important to discuss your circumstances with a knowledgeable expert. If you own a home and are considering divorce, please contact one of the experienced attorneys at Lonich Patton Ehrlich Policastri.
Please remember that each individual situation is unique, and results discussed in this post are not a guarantee of future results. While this post may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.
Aretha Franklin Did Not Have a Will
/in Estate Planning /by Michael LonichBut Did Aretha Franklin Need a Will?
Tragically, Aretha Franklin passed away on August 16, 2018 from pancreatic cancer. She left behind four sons but no will or estate plan. Because she did not have a will, during the court process all her assets will be made public. Aretha Franklin’s estate is estimated to be around $80 million and includes financial accounts, personal and real property, and music copyrights. The law of Michigan, where Aretha Franklin died, requires that her assets be divided equally between her four sons. While this may seem simple, it is very common when there is no will for the estate to be contested.
For example, Prince’s estate has been highly contested by the executor of his estate, Comerica Bank and Trust, and his heirs – his six siblings – over the value of his estate and how it should be divided. Prince passed away in 2016 and his $200 million estate has paid lawyers and consultants over $5.9 million while his heirs have yet to receive anything. Lawyers for three of Prince’s heirs claim that it is a “legitimate concern” whether Prince’s heirs will receive anything at all.
If Aretha Franklin had created a trust, her estate would remain private, fees would be reduced, and her heirs would receive their portion of the estate much faster.
Do I Need a Will?
Over half of Americans do not have a will. Most claim they have simply not gotten around to it and many believe that they do not own enough property to pass down.
While most Americans will not leave behind an estate as large as Aretha Franklin or Prince, a will or trust is still extremely valuable.
It is important to remember that your debts as well as your assets are included in your estate. With a will, you can dictate which debts are paid first, this could allow specific property to not be used to pay debts.
Another crucial element is guardianship of children. When there is no will, the court will appoint a guardian. The court will generally appoint the surviving spouse as guardian. However, if the spouse is unavailable the court will appoint a grandparent, and failing that, the next closest relative. With a will, you may nominate a specific guardian who you feel will be best equipped to care for your children.
One more significant factor to consider is who you want, or who you don’t want to execute your wishes. In California if you do not leave a will, your family members may petition to be the administrator of your estate. The court will appoint the petitioner as an administrator if all family members with higher priority decline to serve as an administrator. With a will, you can appoint an executor who you feel is most capable. Alternatively, you may spell out in your will who you do not want to execute your will.
There are many tangible benefits of a will, however the process of drafting a will can be complex. If you are considering a will or another form of estate planning, please contact one of the experienced attorneys at Lonich Patton Ehrlich Policastri. We offer free half-hour consultations.
Please remember that each individual situation is unique, and results discussed in this post are not a guarantee of future results. While this post may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.
Roses, Chocolates, and Prenups
/in Family Law /by Michael LonichAbout forty percent of all marriage proposals occur during the proposal season – the time between Thanksgiving and Valentine’s day – with Valentine’s day as one of the most popular days of the year. While Valentine’s day brings a romantic feeling full of roses and chocolates, February is also the beginning of another season: divorce season. February has the highest rate of divorce filings out of the year, and there is a dramatic increase in referrals for divorce lawyers the day after Valentine’s day. Valentine’s day can elicit strong emotions and the statistics show that people follow their passions this month either by beginning or ending a marriage.
Staying married is not always easy or simple. In the United States, the divorce rate is around 50% and is even higher for second and third marriages. There are many complex issues that arise during marriage that a couple must navigate, particularly surrounding finances. Money is often the number one cause of conflict in a marriage, and as many as thirty percent of couples that fight about money end up divorced.
Typically, a premarital agreement is intended to create conditions that will encourage the growth and health of a marriage. The traditional agreement tends to focus on property owned before marriage by the couple as well as property that may be earned during the marriage. Although it seems like a premarital agreement would be counter-intuitive to romance, discussion of these important financial issues can help a couple grow. It can benefit the confidence in a relationship for couples to openly discuss their concerns and to plan together for the future.
Because of the cost, a premarital agreement may not be for everyone. The traditional factors a couple should consider include the total amount of wealth they possess, and whether there is an un-equal amount of wealth between the couple. Additionally, premarital agreements are gaining popularity with young people who have pursued careers that may lead to a lucrative profession. Protecting their personal efforts is an increasing concern amongst people who might rather not have the state determine their financial future.
If you are feeling swept up by Valentine’s day romance and are planning to propose, considering a premarital agreement may be a great benefit to your future. For more information and advice, please contact one of the experienced attorneys at Lonich Patton Ehrlich Policastri.
Please remember that each individual situation is unique, and results discussed in this post are not a guarantee of future results. While this post may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.
Who Dunnit: Playing the Blame Game in a Divorce
/in Family Law /by Gina PolicastriObtaining a divorce can be time consuming and expensive, especially when one spouse blames the other for the marriage’s end. Will the court take into consideration who behaved badly or caused the divorce? Although courts in England will be concerned with who is at “fault” before granting a divorce, California courts will not take “fault” into consideration.
In California, a couple may obtain a “no-fault” divorce – neither spouse must prove the other is at fault for the marriage’s breakdown. In the 1800s, however, England only allowed divorces where one spouse could prove the other was at “fault.” This rule remains in effect today, in part.
In England, courts will grant a divorce only if the party seeking the divorce can prove the marriage has irretrievably broken down by establishing one of the five following facts: (a) adultery, (b) unreasonable behavior, (c) desertion, (d) two years of separation with consent, or (e) five years of separation with or without consent. While the last two grounds for divorce do not require one spouse to prove that the other spouse was at fault, proving adultery and “unreasonable behavior” often requires spouses to play the blame game.
On July 25, 2018, the Supreme Court of the United Kingdom ruled Tini Owens, an English wife, must remain married to Hugh Owens, her husband of 40 years after she failed to prove her husband was at fault for the breakdown in their marriage. Tini contemplated divorce in 2012 and moved out of the couple’s home in February 2015. Tini argued her husband engaged in “unreasonable behavior” such that she could not reasonably be expected to continue their marriage. Hugh argued if the marriage had broken down, it must have been because Tini had an affair or was “bored.”
While many progressives and lawyers hoped for the court to grant the divorce, the court refused. One Supreme Court judge stated that Parliament had “decreed” that being in a “wretchedly unhappy marriage” was not a ground for divorce. Thus, the Supreme Court rejected the modern trend toward the “no-fault” divorce system in the United Kingdom and United States.
Fortunately, in California, grounds for divorce range from “irreconcilable differences” to “permanent legal incapacity to make decisions,” formerly known as “incurable insanity.” Moreover, evidence of specific acts of misconduct are not admissible in dissolution or separation proceedings, except for history of domestic abuse in cases involving child custody or restraining orders. If you are contemplating divorce, regardless of who is at “fault,” contact the experienced attorneys at Lonich Patton Erlich Policastri for a free half-hour consultation.
Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship