Smart Money: Easement agreement with city should be in writing

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|bold_on|Dear Bruce: Our community has requested an easement on one side of our home to gain access to put in a storm- water drainage basin. I'm not opposed to granting them the easement. Their first offer is a big fat $1 with a verbal commitment to plant trees. They are removing five or six trees and a row of honeysuckle bushes that serve as a visual barrier to the neighboring property. I'm told they want to plant trees as opposed to offering money. I've asked in writing for the replacement of the trees; some land improvement by stabilizing a steep bank, which will be upset when they come in here; and, $2,000. Doesn't this seem reasonable? Charlie.|ret||ret||tab|

|bold_on|Dear Charlie: Without knowing the specifics of what they are doing to your property, the reasonableness is not easy to determine. The one thing that I am absolutely certain about, though, is that everything should be in writing. They might ask you, "Don't you trust me?" and the answer is, "No, I do not. I don't know if you will be here when this goes into effect." Furthermore, I see no reason for them to be granted an easement for free. This property belongs to you, and while you very likely will not be able to use the bordering property, it does diminish the value of your property to some degree and you should be compensated for it. If you can't work this out by yourself, there are many attorneys who specialize in condemnation matters. |ret||ret||tab|

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|bold_on|Dear Bruce: I have a diamond ring from my first marriage with an appraised value of $5,800. I have been told that a jeweler will only give me $1,500 to $2,000, since the markup on diamonds is so extreme. Is $2,000 the value of the ring for purposes of collateral for a loan, or would the appraised value of $5,800 be the determining factor? T.W., Cincinnati|ret||ret||tab|

|bold_on|Dear T.W.: The likelihood is that if you are going to sell it to a jeweler, the $1,500 to $2,000 figure is in the ballpark. The appraisal you have is likely full retail and seldom does anyone pay full retail for jewelry. If, on the other hand, you do want to sell it, you might try placing an ad in the local newspaper. Be sure that you know with whom you are dealing. |ret||ret||tab|

Don't invite people to your home to see the ring; arrange a meeting in a public place. A bank lobby would be appropriate. There would be security in place, making it clear to the prospective buyer that you have it in a safe deposit box so, no one will consider mugging you on the way home. If you do sell it to an individual, insist on cash, not a check. If you are offered a cashier's check, make sure that it is to be only on a local bank, where you can cash it immediately |ret||ret||tab|

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|bold_on|Dear Bruce: My dad retired about a year and a half ago. He recently asked me to look into long-term care insurance, because he does not want to become a burden when he can no longer take care of himself. His current income, pension and Social Security add up to about $1,000 a month. The cost of long-term care insurance is between $2,000 and $3,000 a year. Does it make sense for him to buy the insurance with his income so low? His only assets are his house and his car. Is there anything that he can do to protect the house? H.O.|ret||ret||tab|

|bold_on|Dear H.O.: If your dad gifted the home to you now, at least three years before any assistance is required, the home would satisfy the look-back period currently in place. In other words, if your father were to go into some kind of nursing facility now and collect Medicaid, the home would be in jeopardy. Given that insurance would cost about 25 percent of his income, it seems to me that he would not be able to handle that expense. He will be eligible for Medicaid if he disposes of the house. I am not enthusiastic about responding this way, but that is the reality. Whether or not you choose to impoverish him in the manner I have described is between you, your dad and your conscience. You should know that you would not be alone in doing as I have described. |ret||ret||tab|

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|bold_on|Dear Bruce: I am buying the house my sister lives in. She can't afford to buy it, and she can't afford a rent increase. I can manage the down payment to make her monthly expenses no greater than what she is currently paying. My financial adviser feels that I should take out a 10-year interest only mortgage, secured by my investments. I would not need the money during the next 10 years. During that time, if my sister moves out, I can sell the house. What do you think? K.C.|ret||ret||tab|

|bold_on|Dear K.C.: Your sister is very fortunate to have someone such as yourself to help her out in this way. The problem that I see in terms of borrowing money against your investments is that if the market takes a hit, you may have to come up with the cash to cover a margin call, which you most assuredly would receive if your investments drop significantly in value. |ret||ret||tab|

Given the relative cost in terms of interest that you can earn on your current investments, it would not be unreasonable to just make the down payment for your sister. |ret||ret||tab|

Forget about the money, and when the house is sold, recapture your investment and any profit there might be with appreciation of the home. |ret||ret||tab|

|bold_on|(Bruce Williams is a national radio talk show host and syndicated columnist. He can be contacted through the Business Journal by writing to PO Box 1365, Springfield 65801 or via e-mail at sbj@sbj.net.)|ret||ret||tab|

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