Congratulations on the purchase of your new home. Whether this is your first home or an upgrade/downsize, the purchasing of a home is a big event in your life. When these major life changes occur, it is important that you are properly prepared. Below are a few things for you to consider now that you finally have the keys to your new home!
1. Create a Revocable Trust to Avoid Probate
Real estate in California is subject to probate – that means that your estate likely will have to pay a percentage of the value (not your equity) of the property to attorneys and executors. The best way to avoid this expensive, stressful and time consuming public court process is to create a revocable trust and transfer title to that trust.
2. Update Your Address
Now that you are in your new home, it is very important that you update your address with the appropriate entities. Your local United States Postal Office will have a form you can fill out. If you cannot make it into the post office, you can also update this information on their website. This will assist them in forwarding your mail to you. To ensure that you don’t miss any important tax notices or refunds, you will also want to update this information with the Internal Revenue Service, using Form 8822, and your local state tax agency.
3. Make Sure Your House Title is Correct
While it is still fresh in your mind, reference your new deed to see how the property is titled. Many people receive incorrect advice on how to take title to their home. Whether you took title as tenants in common, joint tenants or community property, you should know exactly what your title means, and what the tax implications are on your death.
Then, you will want to reference your estate planning documents to make sure that your property has been titled properly to achieve your estate planning goals.
4. Check Your Life Insurance Coverage and Beneficiary Designations
Unless you were fortunate enough to pay cash for your new home, chances are you now have a large monthly mortgage expense. In order to protect your loved ones, it is important that you check your life insurance coverage. Should you die before paying off the mortgage, it is a good idea that you have enough life insurance to meet that obligation should you have a surviving spouse or children that will likely continue to reside in the home. Even if they choose to not remain in the home, the life insurance can provide valuable assets during what is usually an emotionally difficult time.
This is also a great opportunity to double check your beneficiary designations. Life changes happen so quickly that sometimes this can be overlooked. If your designations do not match up with the rest of your estate plan, you may end up inadvertently disinheriting a family member or having the money fall directly into the hands of an individual without any guidance.
Lastly, now that you have a home and homeowner’s insurance, call your insurance agent to make sure that you are getting all of the discounts that you are entitled to. Many insurance companies will offer discounts when you bundle services. If you already have car insurance through a carrier and use the same company for your homeowner’s insurance, you may be entitled to a better rate than if you had both policies separately. In addition, homeowners often get discounts that renters don’t.