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October 2013 Archives

Unintended beneficiaries

Life insurance and other death benefit policies are incredibly important, particularly if you have dependent children or other dependent family members. Unfortunately, although many parents name their children as direct or contingent beneficiaries, what they don’t realize is that death benefits often cannot be distributed directly to an individual under the age of 18. If something were to happen to the parent (or both parents) while the child is still a minor, a Court may need to step in and appoint a conservator to manage the funds. And, when the child does turn 18, those assets may be given directly to the child without any supervision whatsoever.Proper estate planning prevents unintended distributions to minors or other incapacitated individuals. A contingent trust in your Will can act as a fill-in beneficiary on your death benefit policies. The assets are then handled by a trustee that you nominate until your children are in a better place to do so themselves. As an added benefit, this type of plan allows you to direct your assets without costly Court intervention.Review your death benefit designations on life insurance policies, retirement plans, or other accounts. If you find you need advice in setting up an estate plan to help address these or other issues, stop in or call us at (320) 763-3141.

Contracts For Deed Defaults

In a previous column Contracts for Deed (C4D), in the residential real estate setting, were discussed as an alternate method of financing the sale of real estate when traditional financing is not available. As was noted, the seller carries the financing pursuant to the terms of the C4D, and if the buyer complies with the payment terms, the seller gives the buyer a Warranty Deed for the property.However, when considering a C4D, a buyer should be aware of the consequences of a default. If the buyer is unable to pay the monthly payments due on the C4D or the payment in full no the maturity, or fails to pay, the real estate taxes or insurance, the buyer will be in default.Upon such a default, the seller is entitled to proceed with a cancellation of the C4D, and can do so immediately, without providing any "pre-cancellation" or other default notice.In the cancellation process, a notice of cancellation is prepared and served on the buyer, itemizing the defaults then in existence. The buyer then normally has 60 days from the date the notice of cancellation was served to bring the C4D current. To do so the buyer must pay a) the defaults listed in the cancellation notice, b) any payments that come due between the date the cancellation notice was served and when the default is cured by the buyer, c) costs of service of the cancellation notice, and d) in most cases, a portion of the attorney's fees incurred by the seller in proceeding with the cancellation.If the buyer does not cure the defaults within the 60 day period the C4D is terminated. Upon such termination, the buyer no longer has ownership or other interest in the property, is required to vacate the property, and the seller is entitled to keep all of the money that the buyer had previously paid. Stop in or call us at (320) 763-3141.

Contracts For Deed An Alternative Financing Tool

A Contract for Deed (C4D) is a way to sell and purchase real estate on an installment basis. It is perhaps most often used in residential real estate where the buyer cannot otherwise obtain traditional bank financing, and the seller is willing and able to in effect act as the buyer's "banker" for the transaction.A C4D is really a contract for the delivery of a Warranty Deed for the property. In a C4D the seller retains fee ownership, subject to the interest of the C4D buyer. The buyer is entitled to possession, and is required by the terms of the C4D to pay monthly payments to the seller, which will normally include interest at some agreed upon rate. In addition, the buyer is required to pay insurance and real estate taxes.Typically, the C4D will have a maturity date of three to seven years, at which time the buyer will hopefully be able to obtain financing to pay off the C4D, or obtain an extension of the C4D, from the seller. Upon payment in full, the seller is required to give the buyer a Warranty Deed and the buyer is then the full and complete owner.When C4D are used in the right situation, they provide a valuable alternative to traditional financing. However, buyers also need to be aware of the consequences of default on the C4D more on that next time.At the Swenson Lervick Syverson Trosvig Jacobson Schultz, P.A. Law Office we stand ready to assist with your real estate questions and concerns. Stop in or call us at (320) 763-3141.

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