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Definition and Example Elder Law

Elder law is the specialized field of law that addresses the diverse legal needs of aging populations. It focuses on the legal issues affecting senior citizens and their elderly parents. Lawyers who are versed in these issues are known as “elder law attorneys.”

Suppose that your health is wanting, or you expect it as you approach your senior years. You can work with an elder law attorney who specializes in disability planning to complete an advance medical directive with a durable power of attorney for healthcare. That is a document that allows you to name a healthcare proxy to make medical decisions on your behalf when you can no longer do so. That kind of legal planning can avoid putting you in a situation where your healthcare providers have to choose treatments or make other decisions about your health that you might not agree with.

How Elder Law Works

Legal issues that impact seniors are governed by complex regulations and laws that vary by state. They often require a unique understanding of the personal impacts of aging, which can make you or your loved ones more physically, financially, and socially vulnerable. Elder law addresses the various decisions and circumstances that come up later in life. It also deals with how your estate plan will be executed after your death.

Elder law attorneys who focus their legal practices on these issues take a holistic approach when working with seniors and their family members. These attorneys help you navigate legal matters while also working with a network of care professionals, such as your health team and social workers and psychologists.

Many people think elder law is only a concern if you have complex life situations, such as a disability or special needs, a second marriage, a high-value estate, or financially reckless adult children. Elder law is important for people with these concerns, but it’s also vital for all seniors to become familiar with elder law. You should be ready to hire an attorney in order to protect yourself and your assets in your golden years and beyond.

Alternatives to an Elder Law Attorney

Not all issues relating to aging require the expertise of an elder law attorney. Hiring one when you don’t need one can come with unnecessary and high costs. For example, interpersonal or health issues may call for a social worker, psychologist, or doctor instead.

When in doubt, consult a family member, friend, or clergy member, or your primary care doctor. They can help you determine the scope of the concern and decide whether you need a lawyer. If you are caring for an elderly relative in an assisted living facility, the staff there may be able to recommend resources or experts who can help you find the right kind of help for your situation.

Types of Elder Law

Most elder law attorneys don’t specialize in all areas of the law. It’s important to seek out the right expert when you or your family members need legal assistance. Major areas of elder law include:

• Disability and special needs planning
• Long-term care planning
• Estate planning and settlement
• Guardianship or conservatorship
• Elder abuse

Disability and Special Needs Planning

This area of ​​elder law focuses on the support systems that the aging put in place to protect themselves in the event that they become physically or mentally incapacitated. There are some key legal documents that you may want to prepare in advance of such a scenario. These include:

• A durable power of attorney appoints someone as a legal agent to make certain financial decisions for you when you can’t.
• An advance medical directive outlines your healthcare wishes in case you become incapacitated, including a durable power of attorney for healthcare.
• A living will sets out which treatments you do and don’t want.

Without these documents, the court may leave these decisions up to a guardian (discussed below) who may not be of your choice.

In many cases, individuals with disabilities or special needs and their family members will be eligible to receive government benefits (Social Security disability benefits, for example). You’ll still need to do some planning to ensure that the individual qualifies for, and will receive, adequate assistance for their needs, though.

Long-Term Care Planning

This type of elder law focuses on the services that seniors often use to live safely when they cannot take care of themselves. They include nursing homes or assisted living facilities and long-term health insurance, along with the means by which they obtain these benefits (Medicaid or the Department of Veterans Affairs, for example).

Medicaid planning involves repositioning and transferring assets to qualify for Medicaid nursing home benefits. Veterans’ benefits concerning elder law encompass providing for the long-term healthcare needs of veterans of the US military.

Estate Planning and Settlement

Estate planning is the process of deciding who will receive your property after you die and who will be in charge of making sure your final wishes are carried out. It includes disability planning, as discussed above, as well as planning to:

A comprehensive estate plan might include the last will, a durable power of attorney, an advance medical directive, and, if needed, a revocable living trust. Also known as a “living trust,” a revocable living trust allows you to appoint someone else to make decisions about assets held in a trust.

Probate is the court-supervised process for settling a deceased person’s estate. It may or may not be necessary, depending on how your assets are titled at the time of your death. If you have a revocable living trust, the estate may be settled without the supervision of a probate court.

Guardianship or Conservatorship

If a person becomes incapacitated and did not put in place a durable power of attorney or advance medical directive, then a family member, a friend, or, in some cases, a stranger will have to go to court and petition for a guardian or conservator to be appointed on behalf of them. Guardianship, also referred to as “conservatorship” in some states, is sometimes referred to as “living probate” as it is the court-supervised process of administering an incapacitated person’s estate.

By contrast, if the person took the time to create a disability plan with the help of an estate lawyer who is versed in guardianship, then he or she would have the right legal documents in place to dictate who will make financial and healthcare decisions on their on behalf.

Elder Abuse

Unfortunately, as people age, they become more prone to personal or financial abuse. This misconduct can range from Social Security fraud (for example, a non-spouse family member continues to receive benefits after the person has died) to the outright theft of assets.

Financial elder abuse can also occur through the use of a durable power of attorney or by undue influence. For example, someone may wrongfully coerce an older adult to give away their assets or to change their will or revocable living trust. Such abuse has led to this specialized area of ​​litigation aimed at preserving, and, if needed, recovering, an older person’s assets.

How To Get a Lawyer Who Specializes in Elder Law

One way to find a lawyer is through the National Academy of Elder Law Attorneys (NAELA). This non-profit association was founded in 1987. Its lawyers are trained and experienced in the nuances of elder law and adhere to a set of what it calls “aspirational standards” that hold them to a high standard of professional conduct. The “Find a Lawyer” page on its website allows you to search for an attorney by name, location, area of ​​practice, or other criteria.

You can’t get a power of attorney to act for someone after they have died, and an existing power of attorney becomes invalid upon the death of the principal—the individual who gave you the right to take certain actions on their behalf.

Someone is still going to have to take care of their affairs after their death, but it won’t necessarily be the agent appointed in a power of attorney during their lifetime.

Does Power of Attorney Last After Death?

Perhaps your parent recently passed and you were named as their agent in a power of attorney (POA). You’re the individual they wanted to take care of certain personal business matters for them. The POA gave you the authority to act on their behalf in a number of financial situations, such as buying or selling a property for them or maybe just paying their bills.

You might think that you should continue paying those bills and settling their accounts after their death, but you should not and you can’t—at least not unless you’ve also been named as the executor of their estate in their will, or the court appoints you as the administrator of their estate if they didn’t leave a will.

Who Has Power of Attorney When There’s a Will?

People can no longer legally own property after they’re deceased, so probate is required to transfer their property to living heirs. Your parent’s will must, therefore, be filed with the probate court shortly after their death if they held a bank account or any other property in their sole name.

This begins the probate process to legally distribute their property to their living beneficiaries. The executor named in their will is responsible for doing so and guiding the estate through the probate process.

Who Has Power of Attorney When There’s No Will?

The deceased’s property must still pass through probate to accomplish the transfer of ownership, even if they did not leave a will. The major difference is that their property will pass according to state law rather than according to their wishes as explained in a will.

The court will appoint an administrator to settle the estate if the deceased did not leave a will. You can apply to the court to be appointed as administrator, and the court is likely to agree if the deceased left no surviving spouse, or if their surviving spouse and their other children agree that you should do the job.

Estate Executor vs. Power of Attorney Agent

In either case, with or without a will, the probate court will grant the authority to act on a deceased person’s estate to an individual who might or might not also be the agent under the power of attorney. The two roles are divided by the event of the death. In some cases, however, the agent in the POA might also be named as executor or administrator of the estate.

What Does Someone With Power of Attorney Do After a Death?

The POA you hold for your parents is useless and serves no purpose after their death. The deceased person no longer owns anything for you to handle for them because they can’t legally hold money or property.

The POA might authorize you to make financial transactions for them, but they technically no longer own the property or the money over which the POA placed you in charge. Their estate owns it, so only the executor or the administrator of their estate can deal with it during the probate process.

Some very small estates don’t require probate, or your parent might have used a living trust as an estate-planning method rather than a last will and testament so probate would not be required. A successor trustee would take over after the deceased’s death if they left a revocable living trust, but these exceptions are limited.

The POA becomes invalid in both cases anyway.

Power of Attorney and Rights of Survivorship

It can also change things if your parent’s bank account or other property is not included in their probate estate for some reason. Probate is only necessary for assets that your parent owns in their sole name. These assets require a legal process to transfer to living beneficiaries.

But if your parent lists you as co-owner of their bank account or even on the deed to their home, giving you “rights of survivorship,” the account or the property passes automatically and directly to you at their death. Probate of these assets would not be necessary.

You would retain control over these assets, but you would no longer be responsible for paying your parent’s debts from that money because probate also handles their final bills. You would be responsible for paying debts on which you co-signed with the deceased, just as you were during their lifetime.

Frequently Asked Questions (FAQs)

Definition and Example of a Fungible Investment

Fungibility is the ability to substitute one unit of a financial instrument for another unit of the same financial instrument. This works with paper money when you swap your dollar for someone else’s. It doesn’t work if you try to trade a US dollar for a Canadian dollar—they don’t share the same value.

In trading, fungibility implies the ability to buy or sell the same financial instrument in two or more different markets. A financial instrument (such as a stock, bond, or futures contract) is considered fungible if it can be bought or sold on one market or exchange, and then sold or bought on another market or exchange.

There are many fungible financial instruments, with the most popular being stocks listed on multiple exchanges, commodities (such as gold and silver), and currencies.

For example, if you can buy 100 shares of a stock on the Nasdaq in the US and sell the same 100 shares of that stock on the London Stock Exchange in the UK, with the net result being zero shares (100 bought and 100 sold) , then the stock is fungible.

How a Fungible Investment Works

In simplest terms, fungible securities allow investors and speculators to buy low and sell high to make a profit. This works through a process known as “arbitrage.” A trader takes advantage of a price difference in two different markets, buying at a lower price in one market and selling at a higher price in the other market.

For example, consider a stock that’s listed on both the Austrian and German stock markets. One market has the shares trading at 6.23, and the other has them trading at 6.27 (both priced in euros). A trader can buy the shares at 6.23 on the one exchange and sell them at 6.27 on the other, netting 0.04 euro per share.

It becomes more complex when a stock or other asset is priced in different currencies on each exchange. For example, there can be more than 300 (the number fluctuates) listed on both the Canadian and US stock markets.

The stocks on the Canadian market are listed in Canadian dollars, while the same stocks will be priced in US dollars on the US exchanges. Since stock prices constantly fluctuate, and so do exchange rates, fungible stocks are more likely to have arbitrage opportunities. Because of the exchange rates, though, spotting good opportunities requires more effort.

What It Means for Individual Investors

Suppose you find a stock that trades on the US exchange, currently with an ask price of $10 and a US dollar (USD)/Canadian dollar (CAD) exchange rate of 1.30.

If the best deal you can get is a USD/CAD rate of 1.30, then it is expected that the stock would trade at about C$13 on the Canadian exchange. ($10 US stock times 1.30 equals C$13.)

From second to second, there may be small discrepancies, as the currency rate changes and the stock is subject to its own price changes from buying and selling pressures. If traders see a large enough arbitrage opportunity to make a quick profit, they will step in. This pushes the underpriced market up (by buying) and the overpriced market down (by selling), bringing the two markets back into equilibrium.

US gas prices reached a new record high Tuesday, erasing the modest relief seen in April.

Higher oil prices and increasing demand for gas pushed the average national price to $4.37 a gallon, according to data from AAA. As the chart below shows, the average has now surpassed the previous high of $4.33—fallout from Russia’s invasion of Ukraine.

The price of crude oil, which accounts for more than half the price at the gas pump, reached almost $110 a barrel last week after falling below $100 in late April. (As of Tuesday, it was back down around $100.) Those increases as well as rising demand and lower supplies of gas have been pressing pump prices higher, AAA said.

The national average for gas was $3.54 a gallon when Russia invaded Ukraine on Feb. 24. Sanctions against Russia proceeded to take as much as 3 million barrels of Russian oil off the market per day, increasing international oil demand and pushing prices higher. After the White House released oil saved in strategic reserves in late March, prices began to drop, but the downward trajectory was short-lived.

Have a question, comment, or story to share? You can reach Terry at tlane@thebalance.com.

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Definition and Examples of Bad Credit

Having bad credit means that negative factors appear in your credit history, indicating that you’re a risky borrower. Several factors can contribute to bad credit, including previous delinquencies, high debt balances, and recent bankruptcies.

Bad credit is usually indicated by a low credit score, the numerical summary of the information in your credit report. FICO scores are one of the most widely used credit scores. They range from 300 to 850, with higher scores being more desirable.

The FICO credit score range is broken up into five ratings:

• Exceptional: 800 and above
• Very Good: 740-799
• Good: 670-739
• Fair: 580-669
• Poor: Below 580

How Bad Credit Works

Your credit score is based on five factors. Each is weighted differently. All of them can contribute to bad credit.

• Payment history (35%): You’re likely to have a lower credit score if you have a history of delinquent debts and late payments, or credit cards that you haven’t paid off.
• Amounts owed (30%): A bad credit score is often due to owing large amounts of money. The more you already owe, the less likely it is that you’ll be able to pay off new debt.
• Length of credit history (15%): You’re a less risky borrower if you’ve been reliably paying off debts for many years. A shorter credit history will lead to a lower credit score. This is also influenced by how long your individual credit accounts have been open.
• Credit mix (10%): Having a variety of types of credit, such as a credit card, a retail card, a mortgage, a personal loan, and/or a car loan, improves your credit score. Having only one type of credit account will lower it.
• New credit (10%): People who open multiple new credit accounts in a short period of time are statistically riskier borrowers. They’re more likely to have bad credit.

Your credit score gives you and lenders a quick indication of your credit standing, but you don’t necessarily have to check your credit score to know if you probably have bad credit.

A few signs of damaged credit can include having your application for a loan, credit card, or apartment denied, or experiencing unexpected cuts to your credit limits. Your interest rates on existing accounts might rise, and you might receive communications from one or more debt collectors.

Your credit score has likely taken a hit if you’ve been more than 30 days late on a credit card or loan payment, or if you have multiple maxed-out credit cards.

Ordering your credit score from myFICO.com is one of the best ways to confirm your current credit standing. There are also a number of free credit score services you can use to check at least one of your scores from the most widely used credit bureaus: Equifax, Experian, and TransUnion.

You can take a look at your credit report to understand exactly what’s affecting your credit score. This document contains all of the information used to create your credit score.

What Are the Penalties for Bad Credit?

Having bad credit can make it difficult to get approved for new credit cards, a mortgage, or other loans. You may be offered a high interest rate or other unfavorable terms if you are approved.

Bad credit can impact other areas of your life, as well. Landlords may not accept you as a tenant, or they may only agree if you have a cosigner. Bad credit can even make it harder for you to get a job if your potential employer checks your credit score as part of your job application.

A good credit score shows that you’re a dependable borrower, which makes lenders more willing to have a relationship with you and give you funds. Consumers with very good or exceptional credit scores have better odds of loan, rental, and mortgage approvals. They can choose from a wider selection of credit card and loan products with more favorable interest rates.

How to Get Rid of Bad Credit

Having bad credit isn’t a permanent condition. You can improve your credit score and demonstrate that you’re a responsible borrower by correcting negative information and improving each of the five categories that make up your credit score.

Check and Correct Your Credit Report

Start by reviewing your credit report thoroughly. Look for any information that’s incorrect, such as paid debts that are listed as delinquent or accounts that you never opened. You can dispute these errors directly with the credit reporting company by sending a letter detailing any mistakes.

Check for information that should have been removed. With the exception of bankruptcy, negative information can only be listed on your credit report for up to seven years. You can dispute any negative items that haven’t expired.

Improve Your Credit Score

Removing negative information is just one part of the process. You should also add positive information by improving as many areas of your credit score as you can.

Keep your oldest credit account open and in good standing to add to your credit age. The longer you’ve had credit, the better it is for your credit score.

Don’t take on new debt or close credit cards in order to change your credit mix or amount of new credit. Closing credit accounts will suddenly leave you with a higher debt-to-available-credit ratio. It can negatively impact your credit score.

Focus on improving your payment history and lowering the amounts you owe. These are the two biggest factors in a bad credit score. Work toward bringing past-due bills current and paying down high balances. Continue to make regular payments on all your debts while focusing on paying off your larger ones.

Open new accounts sparingly. Take on only as much debt as you can afford. Make on-time payments. Keep your credit card balances low, and monitor your progress using a free credit score tool.

You might notice some improvement in your credit score right away when you’re caught up on payments, and positive information starts to show up on your credit report. It can take anywhere from several months to a few years to completely fix your bad credit, depending on how low your credit score was to start with.

Definition and Examples of Loan/Lease Payoff Insurance

Standard loan/lease payoff insurance pays the amount you owe on a totaled vehicle’s loan after your insurance company has paid you because your car has been totaled in an accident or it’s been stolen. You can only purchase this type of insurance if you’re buying the most comprehensive coverage insurance on your vehicle. It typically pays up to 25% of the vehicle’s current cash value (ACV), allowing for any insurance deductible.

• Alternate name: Gap insurance

For instance, if you bought your car and still owe $20,000 on it, it may only have a Kelly Blue Book value of $15,000. You are “upside down” on your car loan. If you are then in an accident where your car is totaled, your insurance may only pay you for the value of the car, which is $15,000. That means you still owe $5,000 to the bank for the remaining balance on your car loan. Payoff or gap insurance could help you pay the bank some or all of that remaining balance.

How Loan/Lease Payoff Insurance Works

The term “loan/lease payoff” is often used in place of gap insurance. Both coverages work in a similar way, but there are some subtle differences between the two. Providers can assign their own sets of rules to loan/lease payoff insurance that separate one type of insurance from the other. Other providers might not distinguish between the two coverages at all.

Suppose that John has purchased a new Chevy truck for $28,000. He purchased the truck with a 0% down payment and an extended six-year loan to keep his payments low.

Unfortunately, the truck is stolen within a month of purchase. The insurance company determines that the ACV of John’s truck is just $21,000 due to the plunging value of these vehicles when they’re driven off the lot. That’s a difference of $7,000, compared to what John Owens on the loan.

Luckily, John purchased loan/lease payoff coverage through his car insurance provider. This insurance will cover 25% of his ACV. It works out like this:

• 25% of $21,000 is $5,250.
• The insurance company will therefore pay $26,150 after subtracting a $100 deductible.
• John is responsible for paying for the remaining $1,850 balance.

John must pay out of pocket to meet his obligation, but he’s still better off than he would have been without the loan/lease payoff coverage, even though his loan wasn’t paid off in full. This is an extreme example of depreciation and no down payment, and it’s an unlikely scenario.

Loan/Lease Insurance vs. Gap Insurance

Gap insurance tends to be a bit more generous and flexible than loan/lease payoff coverage and in some critical ways. You can often avoid out-of-pocket costs at all with gap insurance. You won’t be forced to come up with a portion of the balance in order to retire the loan against the destroyed or stolen vehicle.

Loan/Lease Payoff Insurance	Gap Insurance
Does not cover deductibles	May cover deductibles
Pays only up to 25% of the vehicle’s current cash value	Pays the difference between the vehicle’s current cash value and the loan balance against it

Do I Need to Buy This Coverage?

It’s always best to discuss this type of coverage with your insurance agent rather than deciding on your own whether you need it. Make sure you understand all the details and restrictions that apply to loan/lease payoff agreements.

It can provide helpful coverage even if it doesn’t pay 100% of what you owe, and it will certainly come in handy compared to not having any access to coverage when you know you’re underwater on your car loan. However, some consumer advocates argue that the premiums for these coverages are often too high given that claim payouts are fairly infrequent.

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Definition and Examples of High-Value Home Insurance

High-value home insurance is a type of homeowners insurance that is designed for homes with high market value. A high-value home is defined as property worth $750,000 or more.

Homes that fall into this group might include heritage homes, or homes with special architectural or interior design elements. Of course, they may simply be a mansion. This type of insurance is a full package of coverages and is one of the most comprehensive you can buy. High-value policies provide much better coverage than a standard homeowners insurance policy.

note

High-value home insurance isn’t only for houses. You can purchase this type of policy for high-value condos, as well.

How High-Value Home Insurance Works

If you have an above-average priced home, standard forms of home insurance that provide “average coverage” may not be enough to protect or replace your property if you file a claim. To ensure that your policy limits are high enough to avoid paying large amounts of money out of pocket, you may want to think about buying high-value home insurance.

Will Standard Home Insurance Be Enough?

Although the details be set according to the terms in your contract, a standard homeowners insurance policy covers a wide range of costs that might occur in the course of owning a home. At the most basic level, it pays for the cost to repair or rebuild the structure of your home if it is damaged. It will also replace the items within it if they’re taken or destroyed. (Claims of this nature will factor in depreciation in the value of your items, and any payouts will reflect this.) It funds lawsuits that a person might bring against you, due to bodily harm or damage to others’ property, so long as the cause relates to your home. Lastly, it covers any extra costs you might incur for living away from home while your home is being repaired, such as for a hotel or home rental.

How Does High-Value Home Insurance Differ?

Most high-value home insurance policies provide all of the coverage offered by a standard home insurance policy, but with higher limits and extra coverage for the unique needs of people who own expensive homes (and items within those homes).

For example, suppose that John and Jane are next-door neighbors. Both have high-end homes with period features, including ornate wall carvings. Each home has a current market value of $750,000. John has standard homeowners insurance with a structural coverage limit of that same amount. Jane has a high-value home insurance policy featuring a built-in guaranteed replacement cost coverage.

A major fire occurs on their street, and both John and Jane’s homes have to be rebuilt. Because the homes have features and materials that are hard to replace, the current cost to rebuild each is $850,000. John’s policy does not cover more than the stated limit, which leaves him $100,000 below what he needs, after his home is built back to his former glory. In contrast, Jane’s policy comes with the extra feature, so it would cover the full cost of work, even if it exceeds the coverage limit.

What Does High-Value Home Insurance Coverage?

The most common reason for choosing to purchase high-end home insurance is expanded coverage limits, compared to standard homeowners insurance policies, but it can also include a wide range of extra perks or add-on services.

Compared to standard home insurance, a high-end policy includes larger policy limits or enhanced coverage for the following:

• Structural repair or replacement: Structural coverage for standard homeowners insurance may be limited to the cost to rebuild the home. If you think the true cost to build your home back to the state it was in before damage occurred will be higher than what is stated in the contract, you’ll need to get extended or guaranteed replacement cost coverage. This is often an add-on or a rider that will cost you more each month. In contrast, many high-value home insurance policies include extended or guaranteed replacement cost coverage as part of the package. This will allow you to rebuild your home to its former state, even if the cost of doing so exceeds your stated limit.

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The guaranteed replacement cost option covers the full cost of rebuilding the property, no matter how much it exceeds the coverage limit. Extended replacement cost is a more modest option that covers any costs that exceed the limit, up to a certain percentage.

• Possessions: High-value home insurance affords higher limits for items like money, jewelry, art, antiques, or even business items kept at home. If you only have a standard policy, it often costs 10% more to insure your personal belongings at the cost to replace them, versus the true cash value. And if your claim is based on the current cash value of your items, it will pay out less for older items than you first paid for them, due to depreciation. High-value home insurance most often insures your items at the replacement cost, rather than at the current value, which will give you a bigger payout.
• Liability: High-value policies often include higher limits for personal liability, medical payments, and loss assessments. They also often cover costs if you need to defend against claims of slander, libel, or defamation.
• Additional living expenses: You’ll often enjoy much higher coverage limits for living costs you incur while waiting for your home to be restored, such as hotel stays, meals, or laundry.

Some high-value home insurance policies also provide niche coverages that are not often offered by standard policies. They include things you might not even think of if you suffer home damage, such as the cost to replace locks if your keys are stolen, or to protect against identity theft, or the cost to replace food that has been spoiled due to an electric outage. A policy might even cover the costs of a kidnapping or ransom, and legal defense fees.

note

Having coverage for living expenses while your home is often a major asset. Many high-end home insurance policies cover the costs needed to meet your former comforts. If your standard of living aligns, you can even stay in a high-end hotel with all the perks while you take the time to hire the right architects and builders to restore your home after an adverse event.

Do I Need High-Value Home Insurance?

Not every dwelling needs high-end home insurance. This type of coverage is specifically designed for houses that would cost a great deal to reconstruct or repair, or if the items in the home are hard or impossible to replace.

High-value home insurance might be a good choice for you if any of the following are true.

• Your home is worth $750,000 or more
• Your home is a heritage home
• Your home has older construction features not found in common methods or practices
• Your home has unique architectural features
• Your home uses materials that are hard to replace
• You own expensive or priceless fine art, rugs, collections, jewelry, wine, or other items that are kept at home
• You chose high-end appliances or fixtures that can not be found at standard stores
• The interior and exterior design features are unique, such as luxurious outdoor living areas, guest houses, swimming pool areas, custom landscaping, or bespoke features that were created by an interior designer

How Much Does High-Value Home Insurance Cost?

High-end homeowners insurance policies will cost more than standard versions, because of their increased coverage limits and top-of-the-line personalized experience. Owners of high-value homes need to budget for higher premiums each year. In 2018 (the latest data from the Insurance Information Institute), homeowners in the US paid, on average, $1,249 in annual premiums for standard home insurance. You can bet that a high-value policy will be much higher.

There are many ways to reduce the price you pay for insurance, no matter the type you choose.

• Get multiple quotes: Shop around with the major insurers in your state to get the best rate.
• Choose a high deductible: The insurance deductible is the amount you pay before your insurance coverage kicks in. Opting to pay more out of pocket when you file a claim is a common tradeoff for lower premiums.
• Bundle your homeowners and auto insurance: Buying both policies from the same insurer can save you anywhere from 5% to 15% on premiums.
• Look for discounts: Some insurers offer discounts for retirees, or for employees or members of certain organizations.

Key Takeaways

• High-value home insurance is a special type of homeowners insurance designed for homes worth $750,000 and more.
• It provides higher limits on coverage than standard policies, plus additional types of coverage for the unique needs of people who own high-end homes.
• This type of insurance can cost more than $1,200 per year, but you can lower your costs by shopping around and looking for deals and discounts.

How Does Title Insurance Work?

Your home is usually the most expensive purchase you will ever make. Title insurance is a way of protecting homebuyers and mortgage lenders from financial losses that may be attached to a bad title for the home you’re buying. Most mortgage lenders require a title search to ensure the property has a clear or clean title before you close on your new home. But sometimes things get missed.

Title insurance, with varieties sometimes called a loan policy, lender’s policy, or owner’s policy, can help protect you and the lender from any potential disputes, debts, claims, or issues that might arise after your sale is complete. For instance:

• Conflicting wills
• Liens or judgments
• Previous fraud or paperwork forgery
• Heirs who come forth to claim the property
• Unpaid property taxes or fees

Title insurance protects against “any issue that can prevent the seller from legally handing over the title of ownership to the homebuyer. Or unresolved issues pertaining to the title that the previous owner has swept under the rug,” Gates Little, CEO of AltLine at the Southern Bank Company, told The Balance in an email interview.

Title insurance is required whenever you buy a property that is secured by a mortgage or when you refinance your mortgage. However, title insurance can be optional if you buy your home for cash or through another unconventional sales transaction.

Here’s a quick look at how title insurance works:

• The buyer selects a licensed title company to complete a title search. Your real estate agent, lender, or builder may recommend one, or you can choose your own.
• The title company checks the property history, including public records, deeds, court records, and names associated with the property.
• If any issues are found, the title company will attempt to resolve the problem before the buyer closes on the sale.
• Once any known issues are cleared, the property’s ownership is now eligible to be transferred to the buyer.
• Before closing on the sale, the lender will require you to purchase title insurance to protect it from future issues.

Example of Title Insurance

Unpaid property tax is a common example of why you may need title insurance. “If a seller has years of unpaid property taxes, those fees (and their interest) could be passed along to the new homeowner unless they have title insurance,” Little said.

Here’s another example: “When you purchase a home, only to find out that certain renovations or additions were done without a permit and must be demolished. “This has obvious financial implications that can be insurmountable without title insurance,” Little said.

Types of Title Insurance

Title insurance policies come in two types: lender’s policies and owner’s policies.

Lender’s Policy

This type of policy only benefits the lender. It protects it from potential claims against the property that could come up later. Your lender will require you to obtain a lender’s policy to protect the investment they have made into the property.

Owner’s Policy

Owner’s title insurance benefits you. It is a separate policy that protects your ownership rights if someone tries to sue you or file a claim against the property. This type of insurance is optional.

Title Insurance vs. Homeowners Insurance

Title insurance is different from homeowners insurance. Here are the main differences:

Title Insurance	Homeowners Insurance
Protects your ownership of the home or property	Protects you from financial losses if your property is stolen or damaged due to weather, for example
You only pay the premium once at closing	Premiums are paid every year

Do I Need Title Insurance?

Absolutely. “Title insurance is important because you can never know a home’s (or homeowner’s) full history. Even a professional title search can have holes. So obtaining title insurance can protect you from the consequences of a stranger’s poor decisions,” Little said.

One way to look at it is as assurance instead of insurance, because it gives you peace of mind. So if any issues come up down the line, or if anyone ever challenges your ownership of the property, your title company will handle the dispute for you. “Without owner’s title insurance, a homebuyer would have to hire an attorney out of pocket,” Chris Birk, a vice president at Veterans United Home Loans, told The Balance by email.

Frequently Asked Questions (FAQs)

What are the advantages of owner’s title insurance?

“The history of a property is not always a simple line of ownership,” Maria Hanson with ExpertInsuranceReviews.com said. “Every unique feature of a property’s history can present a unique set of legal risks. The title insurance company makes it their job to go through that history with a fine-tooth comb to mitigate their risk. The title insurance company accepts responsibility for you or to the lender that the property is able to be purchased.”

Is title insurance a one-time fee?

Title insurance is a one-time fee that is typically rolled into your closing costs. The cost of a lender’s title insurance policy varies, depending on your state, the home’s value, and whether you are buying versus refinancing. Prices can range from $500 up to $2,000. However, you may save money when you buy owner’s and lender’s title insurance from the same company instead of buying them separately.

How long is title insurance good for?

When you buy a lender’s title insurance policy, it is good until you pay off the home loan because it is designed to protect the lender. However, when you buy an owner’s title insurance policy, you only pay for it once, but your coverage will last for as long as you own the home.

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A leveraged exchange-traded fund (ETF) is a type of financial product designed to track an underlying index at higher rates of return. It can offer returns as high as 2-3 times the returns of a traditional ETF, but that also makes it a riskier investment option.

Leveraged ETFs are quickly becoming one of the most popular types of ETFs. And while they are an aggressive new ETF innovation, they are also a controversial one. Before you can formulate an opinion on whether these new funds are good for you, you need to know the basics.

Definition and Examples of a Leveraged ETF

A leveraged ETF is a type of exchange-traded fund that tries to outperform the underlying asset that it tracks, usually by producing two to three times the return of the correlating asset.

• Alternate names: Geared ETF, geared ETP

For example, if the tracked index rises 1%, a 2x leveraged ETF wants to create a 2% return on investment (ROI). There are also inverse leveraged ETFs, which offer multiple positive returns if an index declines in value. They work the same as normal inverse ETFs; they are just designed for returns of two to three times the opposite of the index.

How Leveraged ETFs Work

Leveraged ETFs are designed to include the securities in the underlying index, but also include derivatives of the securities and the index itself. These derivatives include, but are not limited to:

• Options
• Forward contracts
• Swaps
• Futures

In other words, leveraged ETFs can be tied to different industry sectors, commodities, or currencies, just as regular ETFs can be. However, while they seek to present better returns than the index they track, their inclusion of riskier assets like options, forward contracts, swaps, and futures meant that leveraged ETFs present more risk than a regular ETF.

For example, over the course of a few months, an index could rise by 2% but the leveraged ETF that tracks it could fall by 6%. This is due, in part, to the fact that leveraged ETFs reset daily—the goal is to outperform the market on a daily basis. So, you could see a lot of volatility over time, whereas the index the leveraged ETF tracks will likely be far less volatile. And because leveraged ETFs reset daily, they can lead to bigger losses in volatile markets that you may not experience with the index the ETF tracks.

Benefits of Leveraged ETFs

The most attractive feature of leveraged ETFs is their potential for high returns. With the ability to outperform the underlying index by two or three times on a daily basis, the rewards can be significant. Inverse leveraged ETFs offer investors a chance at better returns even if the market is falling since they can buy short. Because there are so many types of ETF products available, there is a product for almost any investor interested in these benefits.

The Risks of Leveraged ETFs

However, as a derivative product with a high return potential, leveraged ETFs are a fairly high-risk investment.

Using a 2x leveraged ETF as an example, the simple concept is that if the index rises 1%, the leveraged ETF should create a 2% return. However, simple as that sounds, it’s not always the case.

Because a leveraged ETF is designed to create multiple returns on a daily basis, it’s not likely to generate returns that high. So, if an index has a yearly return of 2%, the leveraged ETF will probably not have a return of 4%. It will be more subject to the direction of the daily returns throughout the year.

Another risk of leveraged ETFs is that they can create multiple negative returns. People hear “multiple returns” and think multiple profitsbut a sound investor knows that reward comes at the expense of risk.

Portfolio Management With Leveraged ETFs

Every ETF investment strategy should be evaluated on a case-by-case basis. Using leveraged ETFs is an advanced investment strategy and should not be taken lightly. While ETFs offer many benefits, and leveraged ETFs could possibly increase returns, there are risks involved. You should only attempt to trade these securities with a lot of prior experience—and the help of a good broker.

To get an initial feel for this market, pay attention to how some leveraged ETFs react to market conditions and conduct thorough research. A few examples to follow include:

• DDM–ProShares Ultra Dow30 ETF
• SSO–ProShares Ultra S&P500 ETF

Definition and Examples of Series HH Savings Bonds

Series HH bonds were a type of savings bond program, offered by the US Treasury, that regularly paid out interest to investors. They worked differently from Series EE savings bonds, which instead added that interest income back to the principal value of the bond.

Investors enjoyed the passive income made possible by investing in Series HH bonds. These bonds came with face values ​​of $500, $1,000, $5,000, and $10,000.

How Do Series HH Savings Bonds Work?

When an investor bought a Series HH savings bond, they received a paper certificate that detailed their purchase. If that investor wanted to cash in the bond early, then they needed to return that paper certificate.

While an investor held Series HH bonds, they would receive interest payments every six months. The interest was deposited directly into the bondholder’s bank account, providing a steady source of investment income that could be spent while the bond was still held.

Series HH savings bonds had a minimum holding time of six months. After that, an investor could cash in their bonds for the full face value at any time.

The Interest Rate on Series HH Savings Bonds

The interest rate for the Series HH savings bonds was set every six months. When an investor bought a Series HH bond, they locked in that interest rate for 10 years, after which the rate could be adjusted for the next 10 years. Series HH savings bonds reach maturity and stop earning interest income altogether 20 years after the investor bought them. At maturity, the investor is repaid the face value.

Because the last Series HH bonds were issued in 2004, some are still paying out interest.

Like the Series I savings bond, the Series HH savings bonds could be redeemed for full face value at any time after the minimum holding period. That means investors didn’t need to wait 20 years to get their principal back. However, once an investor receives their principal back, they stop earning interest income.

What It Means for Individual Investors

Since Series HH savings bonds mature after 20 years, the last of these investment vehicles will mature in August 2024, so it’s likely that there are still Series HH savings bonds out there somewhere. However, since these bonds can be cashed early, there may be fewer bonds remaining than were originally issued back in the early 2000s. The bonds that are still held will continue paying interest until they mature 20 years after their dates of issue.

If you own a Series HH Bond, you may still be collecting interest if the bond hasn’t matured yet. You can also cash in the bond if you choose.

While your local bank can’t directly cash out the bonds for you, it can help you take the steps necessary to receive your principal back. Those include certifying your signature on documents and helping you mail bond certificates to the appropriate Treasury Department address.

Alternatives to Series HH Bonds

On September, 2004, the US Treasury Department stopped offering Series HH savings bonds to investors, officially ending the program altogether. While the Treasury Department continues to offer other kinds of bonds, there is not a Series HH replacement that perfectly replicates the features of this program.

If you’re still interested in owning savings bonds, you could choose Series EE bonds, which earn interest for up to 30 years, or Series I bonds, which earn interest that’s tied to the inflation rate.

You could also choose other Treasury securities, such as Treasury bills, notes, and bonds, or Treasury Inflation-Protected Securities (TIPS).