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Doug MacGray’s Weekly Financial Update - Week of February 25, 2008

February 25th, 2008 by John Thomas

FORECLOSURES OVER HYPED?:  The foreclosure figures used by much of the media come from RealtyTrac, a source that counts each filing in the foreclosure process. One house has to go through several steps in the process (each with its own “filing”), so counting each one as a separate foreclosure, as many in the media do, is inaccurate. 
HOME VALUES DECREASING?:  In a one year period, home prices have decreased by about 4.5 percent.  However, since January 2000, the national average home price has risen by 80.45 percent, according to the S&P/Case-Shiller index of home prices.  Declines from record highs should be put in perspective.  However, according to Moody’s Economy.com, nearly 8.8 million homeowners, or 10.3% of the total, have mortgages that are higher then the value of their houses.
A SLUMP IN HOUSING ACTIVITY:  Housing starts were up overall in January of 2008, but all of the gain were in the multi-unit construction area.  Single-family home construction actually dropped 5.2%.  Even worse, building permits fell 3.0%, the lowest level since 1991, which doesn’t look good for the future of the housing sector.
LEAVING YOUR ESTATE TO YOUR CHILDREN “IN EQUAL SHARES”:  Four out of five people split what they have equally among their children, according to an article in this month’s Money Magazine.  When I was drafting estate planning documents, I found the percentage even higher, but I always asked questions to make sure it was right for them.  Here are some circumstances which could dictate that “equal shares” may not be right:  
  • One of your children has an addiction, such as gambling, alcohol, drugs
  • One of your children got a full scholarship to college for whatever reason (grades, athletics, etc) but you paid for all four years of your other children’s tuition.
  • One of your children takes you into their home in your old age, while your other children live far away.
  • One of your children provides significant monetary assistance to you in your old age, while your other children are unable or unwilling to do so.
  • One of your children is smart, ambitious, and/or independent and sets out on their own at age 18, while another languishes at home living off of you well into their 20s (or even later).
What I would more commonly see is variations on the manner  of distribution.  For example, one child gets her inheritance “at my death” in lump sum and the other gets it in several staggered distributions due to his past indiscretions in dealings with money.
It is an issue that deserves a lot of thought, so don’t let your estate planning attorney rush you through this decision.
MONEY DOES NOT BUY HAPPINESS…WHAT DOES MAKE US HAPPY?:  A recent article on MSN found the following are the best indicators of happiness (I have not done any independent research to determine the veracity of any of these findings):
  • Being married. 43% of married men and women report being “very happy” while only 24% of unmarried people say the same.
  • Attending religious services at least once a week.
  • Living in a sunny region.
  • Employment.
  • Good health.
  • Being socially engaged.
  • Helping others.
  • Living in a well-designed city.
If you would like to speak with Doug or schedule and appoitment to meet with him, please give me a call at 302-368-7132 Ext.12 and I can provide you with Doug’s information.

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