Tuesday, March 29, 2011

Estate planning

A couple years ago when we purchased life insurance, our financial advisor recommended that we also get wills. We agreed that we needed them but never quite got around to getting them. However, there's nothing like impending parenthood to jump start one's plans for the future, so now we're researching the estate-planning process. 

We met with a lawyer last week to discuss the four components of an estate plan, and here's what we learned.

Wills
A will determines how one's assets are distributed in the event of one's passing.

When you're married, your will is straightforward: everything goes to your partner. It's nice to take into account what might happen if you both die together, but if you're gone, do you really care? Probably not, which is why we have avoided creating wills until now.

However, when children enter the picture, you have to care. If you both die together and leave your child or children behind, you can set up a living trust. More about that later.

You need to name an executor for your will. That person is in charge of filing the will at probate and collecting assets. Your spouse is typically the executor of your will, but you should come up with at least one backup. The law firm that creates your will can appoint a family member if the named executor is no longer around.

Living trust
A living trust, also known as a family trust or revocable trust (because it can be changed at any time) is used for the health, education, support, and maintenance of a child (or children) that you leave behind.

You have lots of options for setting up a trust, including imposing restrictions (such as no distributions for x years after marriage, or higher-education requirements, or specific amounts set aside for education). However, restrictions can be risky because you never know what might happen after you're gone.

Rather than imposing restrictions, most people write letters of intent so that others know their wishes for the distribution of the trust. The letter is not legally binding, however.

You can also specify when distributions happen. For many trusts, distributions are available in chunks at ages 25, 30, and 35. When the child reaches one of those ages, he can request distributions, and the person overseeing the trust is not allowed to say no.

You have to designate an overseer for the trust and several backups. You can appoint multiple overseers, but they have to reach agreement in order to pay out from the trust, and that can be risky. Typically, the overseer is in charge of managing the investments of the trust, but this task can also be handled by investment professionals.

You also have to designate a guardian of your children, in the event that something happens to both of you (not sure if this info is part of the will or the trust, but I'm guessing the former).

Medical proxy
This document allows someone to make health care decisions for you. The document is invoked only when a doctor says you cannot act on and communicate decisions.

You can create a personal wishes attachment for this document. The personal wishes are not legally binding, but they address situations with no hope of recovery. I expect that giving the plug-pulling order would be much easier when you have a document signed by the person telling you to do just that.

Your spouse is your medical proxy, but you should also come up with 2 backups.

Durable power of attorney
This document allows someone to sign for you and essentially be you with regard to financial and contractual matters. This document is invoked when you're alive but cannot make decisions, either because you're medically incapacitated or are for some reason unreachable (for instance, hiking the Appalachian mountains when something important comes up).

You can make the power of attorney a "springing" document, which means that it can be used only when you have legal proof that the person is unable to make decisions. This adds an unnecessary complication when you are giving these rights to your spouse, though.

You need 2 backups for this document, as well.

What you have to do to get all these documents
First of all, you have to set up an appointment with a lawyer, preferably one who specializes in estate law. They'll probably send you a questionnaire in which you list all your assets, debts, dependents, and other personal information.

Next, you have to prepare to say good-bye to some of your assets. These documents aren't cheap. However, I'm a proponent in investing in one's peace of mind, which these documents bring.

Our lawyer is going to draw up a proposal, and then we'll send her 1/3 of her fee and the information for our documents. Then she'll create the documents, collect the remaining fee, give us paper and electronic copies, and store the originals in the law firm's vault. The originals belong to us, and we can access them at any time and put them in a safety deposit box, if we prefer (I like the sound of the vault, though).

Our lawyer recommended revisiting the documents every 3 to 5 years, a great plan, assuming we remember. I'm writing it here now to ensure that I do...

If you don't have these documents, I highly recommend considering getting them. Even if you think a will and trust are unnecessary, a medical proxy is relevant to everyone over the age of 18.

Facing your mortality isn't easy or fun, but making life easier for those who remain behind is a worthwhile activity.

Tuesday, March 22, 2011

Coming into the home stretch

My belly button continues to teeter on the edge of being an outtie. Heartburn strikes several nights per week at bedtime. Strangers freely ask me about my pregnancy--even when I'm wearing a jacket and think that maybe, just maybe, no one can tell.

Welcome to the home stretch of my pregnancy.

I now have to seriously consider whether squatting down is necessary, and if it is, who is going to help me stand up again. My toes have become particularly agile at picking things up. Dropping the razor in the shower? No problem. Dropping the razor in the shower and having the blade come off? Time to call it quits on shaving for the day.

I can no longer see the lower half of my belly unless I sit down and really stretch forward, or if I look in the mirror. For now, I am working under the assumption that all is well down there.

Rooster continues to be an active mover, roller, kicker, and hiccupper. When he's on the move, it looks like there's an alien moving around beneath my skin. He likes to push either his head or his bottom (tough to say) against the right side of my belly so that it sticks out. His kicks are increasingly aggressive. The other night, I was lying on my side in bed, and he was jumping on the bed and pushing his head up in the other direction. I tolerated this activity for as long as possible, and then I rolled over to my other side. Sorry, Rooster, but as long as you're inside me, I'm in charge.

His movement used to be gentle and somewhat soothing, but now it is mostly uncomfortable and wince-inducing. I feel a little like I'm being beat up from the inside. I know, I know...just wait till he wants to come out...

I'm avoiding thinking about that, for a few days more, at least until our all-day childbirth class this weekend. I know that it's a good idea to be prepared for childbirth, but part of me doesn't want to know what I'm in for. I am least looking forward to watching graphic videos of other women's birth experiences. I've seen those baby story TV shows on TLC, and they are graphic enough for me.

I'm trying to prepare for life with Rooster by reading books recommended by family and friends. I've read about hundreds of events for which a doctor is needed and twice as many events for which a doctor is not needed. How on earth can anyone keep all of this information straight? It doesn't help that every book offers different advice. Maybe figuring it out on our own would have been easier.

It seems that figuring it out on own own is how parenting goes, anyway. Of all the millions of books written on parenting and taking care of babies, not one is written about your very own human, so all you can do is keep trying until you figure out what works.

Friday, March 11, 2011

Lessons learned from a mortgage refinance

You might remember that we started the mortgage refinancing process back in August. I said that I would provide an update and share my lessons learned, and I never did, but only because I didn't have an update. The sad truth is that we just closed on our mortgage refinance this week.

That's right. August to March is a 7-month process. To put this in perspective, we started the process before I was pregnant (or at least before we knew I was pregnant), and I am about 8.5 weeks from my due date. It should not take the same amount of time to refinance a mortgage and grow a new human...but it did.

So, here we go. Lessons learned. Neglect and incompetence on the part of the bank were the general themes of the process. They asked for documents in November. We sent them a link and offered to mail the docs, and they never asked for paper copies or acknowledged receiving it. They never acknowledged anything we sent, so we assumed all was well. Then they asked for the same docs in February. We sent the same link with a friendly reminder that we sent them the docs four months ago, and here they were again. They said they couldn't access the docs online and we had 36 hours to mail or fax the docs or the mortgage refinance would be cancelled.

The docs were too big to email (a fact that we noted in both emails about them), neither of us was able to get to the post office in time, and we don't have a fax machine. However, I came up with a solution that allowed us to make the deadline and had the potential to be very annoying to our incompetent mortgage processor, a double win. I split the documents into 1-page PDFs and emailed them individually.

Yes, this process took a long time and was annoying, as I had to create about 85 documents and then send 85 emails. But the thought of leaving our mortgage processor with a full mailbox and maybe even a paralyzed computer as all the emails arrived was enough motivation to keep me going.

When he first made his demand, I might have sent an email response that was more heated than what one would expect from me. I almost certainly used my go-to phrase in times of duress, "This is unacceptable!" I might have thrown out words such as "incompetent" and "unreasonable" in an accusatory kind of way. Such tactics are not the best way to win people over, and in hindsight, perhaps I ought to have tempered myself.

Or not! Because we actually had forward progress on our refinance after they received the docs. Sure, they tried to put up another roadblock, demanding additional docs, but B was able to track down the PDF copies of them from our town's website (thank goodness for modern technology).

Several more weeks passed, and then early this week, I received a call from the guy who locked our rate. He explained that (despite all evidence to the contrary) the bank really wanted to close the mortgage. However, all the delays meant that they owed money to Freddie Mac because they weren't able to close the deal in the time allotted. They very generously (sniff) offered to pay half the fee, but they expected us to cough up the other half, about $700.

This put us in a very difficult situation. First of all, our amazing rate is long gone and will probably never return in my lifetime. Secondly, if we were to start the refinancing process over again, we'd have to pay over $300 to lock a new and higher rate and pay for a credit check, plus we'd be paying our current high mortgage interest each month while we waited for the loan to close.

I asked whether there was an appeal process, as we had responded to all requests in a timely way, so therefore, the delay was not our fault. He said we could appeal, but we'd be taken out of the queue that we were in and put in another queue. The appeal could take 30 days, and there were 3 possible results: the bank could cancel the loan entirely, they could deny the appeal (and then we'd owe about twice as much for the extra delay), or they could approve the appeal.

What could we do? I agreed to pay the fee. I am contemplating using the small-claims courts as my own personal appeal, but first I will have to do further research to determine if I have a case.

While I had him on the phone, I asked for the closing costs, which he gave me. Incidentally, they didn't match the actual costs on the docs we signed. Details, details.

I asked if we could bring a check to cover the closing costs. He said that any modifications would only delay the process. Again, all I could do was say ok and go along with it.

Although we weren't allowed to pay any closing costs, he said we were required to bring the $700 fee to the closing. He couldn't give me the exact amount and said we'd have to wait for a phone call on the day of the closing to get the number. Around 3 PM that day (after B had called and emailed everyone we knew at the bank trying to get the number), we received a phone call and email saying that we didn't have to bring any money to the closing and would in fact be receiving a check back from them. For what, we don't know.

For our closing, which took place at our house, a lawyer arrived with the docs. We signed them all, handed them back, and then it was over.

On the one hand, we feel as if we ought to celebrate. But the process was so long and horrible that we just want to feel grateful for our new rate and try to forget the drama that we went through to get it.

Now that we've got our mortgage finished, it's time to move on to other adulty tasks, including setting up a living trust, getting wills, and starting a 529 plan for the Rooster. Let the excitement begin.

Thursday, March 10, 2011

Sad but true: There is no nursery theme

Last weekend, B and I traveled the state in search of home decor items.

First, we purchased some steer horns and a coordinating skull, cast in resin but remarkably lifelike. This item is not for Rooster's nursery. It joins the vejigante (mask) from Puerto Rico and the eyeless Venetian mask in our Items That Will Likely Terrify a Child collection. We're hoping that Rooster will be a brave little boy who is able to handle our decorating choices.

Next, we purchased curtains for the nursery. Before this weekend, I thought of buying curtains as a straightforward task. I now know that nothing is straightforward at Pottery Barn Kids.

Because of their high prices, PB is not my go-to store for items, but I knew we needed blackout curtains for Rooster's room, and PBK has a lot of them. The prices at PBK are more reasonable than at PB, so I chose a set I liked and decided to try to buy them in a store to skip the shipping charges.

The store we visited was not big but was divided into lots of little rooms, so I felt like I was hitting a dead end every time I turned a corner. We eventually found the curtains area but couldn't find the curtains I wanted, so we had to get in line and ask for help.

I had been going back and forth between green and white curtains, and I decided that white might be best for versatility. Unfortunately, the woman who helped us told me that they didn't carry the white curtains in their store, either for display or sale. Bummer. She said she could order them for me, but it would be the same as if I ordered them myself (that is, I'd have to pay for shipping).

I asked if she could show me a similar curtain to the kind I picked out, and she did. I wasn't crazy about the look or feel of the fabric, but I reasoned that I could always exchange them. I decided to buy the curtain rings that we needed at the store and to buy the curtains from their website.

Curtain rings were not on the floor, so she disappeared into the back storage office to get them. While she was gone, we started looking at other curtains and I started warming up to the idea of green curtains once again.

She returned empty handed and explained that they didn't have the silver-colored curtain rings and I'd have to buy them online. I said ok and said we had reconsidered our curtain color, and would she mind showing us the options that they had in green. She said sure but first wanted to know the decor of the nursery.

You might need to look at the PBK website to understand her question. They sell bedding, wall decor, curtains, floor rugs, and probably many other items in coordinating themes, such as sports or elephants. All the colors match perfectly, and the end result is a bit of a Stepford nursery. It's a fine look but it's not what we're going for.

I told her that we have an animal theme. It's true, sort of. We have four framed prints from the ABC Canadian Rockies children's book we picked up in Banff, and a Noah's Ark-themed tapestry from Peru with (obviously) pairs of three-dimensional fabric animals. We've also picked out some sheets that feature animals, and we're going to get some animal wall decals for the wall that will feature pictures of family and friends. However, our goal is not to design a color-coordinated room, and how do you explain that to someone who believes that a nursery should be color coordinated?

My animal-theme answer was not good enough, so she wanted to know the color of the floor. I explained that it's pink wall-to-wall carpeting. She seemed to disapprove of this choice for a baby boy and tried to direct us to the rack containing their rugs. I pooh-poohed this suggestion; why invest in a rug that will only be destroyed in a baby's room?

She reluctantly returned to the curtain racks with us, probably wondering how on earth we passed up the Dr. Suess-themed room, and she pointed out a few options in green. We chose a set with white polka dots and built-in blackout panels. But of course these curtains were not available on the floor, so she had to return to the back room to find them.

By some small miracle, they had them in stock. After she returned, I remembered that I wanted to buy sheer curtains to go behind them. Sheer curtains provide privacy while allowing light to filter in. But, you guessed it: these curtains were not available on the floor, either. It was another five-minute disappearance.

Eventually, she returned and rang up our purchase, and we were able to return to the safety of the mall. B declared that he hated the store and all the people in it and never wanted to return. Even I, a lover of shopping, felt that my patience had been tried by the experience.

Our curtain hardware just arrived in the mail yesterday, so we haven't hung the curtains yet to see how they look. If the green polkas are too much for a room that already has some attention-grabbing decor, we'll buy the white ones online and return the green ones to the store. I am ok with B waiting outside the store for that adventure. He has already paid his PBK dues.