Why Is Estate Tax Planning So Important
December 31, 2008
There are many reasons that make an estate plan very important. When you are unable to take decisions regarding your healthcare due to illness or accident there needs to be someone who can legally take such decisions on your behalf. Alternatively, if you require long-term care, which is not covered by medical insurance, you have to make alternative arrangements beforehand. There may be many responsibilities that would need to be performed in case of your incapacity or death. Your estate plan can cover all arrangements in case of the above-mentioned eventualities. To find out how it can do this, read on.
a) Planning for incapacity:- It is important to have arrangements that can ensure that you are taken care of in the event of your incapacity. To do this
. Make a living will:- This legal instrument documents your intentions about using life-sustaining measures when you are in a state of terminal illness. It expressly states your wish in this regard and acts as a bar for anyone to speak on your behalf.
. Prepare a health care power of attorney:- This document is to authorize a specific person to decide upon your healthcare measures when you fall in an unconscious or vegetative state or are unable to take your own health care decisions on account of any other reason(s). Laws in all states are not uniform on this issue but many state laws can permit you to include instructions about continuing or withholding life-sustaining care in this document.
. Buy Insurance for long-term care:- As things presently stand, health insurance does not cover the cost of long-term care. As such, in case when such care becomes necessary it is your spouse or other family members who have to foot the bill. The remedy is to take out a long-term insurance policy.
. Form a revocable living trust:- A revocable living trust will enable you to appoint a trustee who can succeed you in order to manage the trust when you cannot do this due to injury or illness/death and avoid any probate court guardianship issues.
. Create a durable power of attorney:- This a legal document that lets you appoint an ‘attorney-in-fact’ or ‘agent’ who can perform various responsibilities on your behalf. There are many responsibilities involving banking transactions, safety deposit boxes, insurance claim settlements, filing of tax returns, matters related to government benefits, purchase, sale and management of real estate etc. that have legal implications. The durable power of attorney will vest your agent with authority to carry out all the work on your behalf, legally.
b) Avoiding probate:- You can avoid you heirs going through harrowing probate proceedings, which are also very costly and can consume a big part of your estate in legal costs and fees. ‘Transfer on death accounts’ avoid probate proceedings letting you maintain sole ownership of assets as long as you are alive. Designate beneficiaries for annuities, individual retirement accounts, life insurance, and retirement plans. Note that these designations have precedence over other claims arising out of trusts, wills etc. Revocable living trusts also help avoiding probates as your trustee takes charge to manage/distribute your property in accordance to your wishes in the event of your death or incapacity. Titling your assets as ‘joint ownership with rights of survivorship’ can also avoid probate.
c) Forming charitable trusts or making gifts to charity:- Depending on your goals, you can make gifts of IRAs, retirement plans, annuities, make charity a beneficiary to life insurance benefits or establish a charitable trust(s). There are ways through which you can avoid estate tax, capital gains tax, get a reduction on income tax payable etc. along with receiving lifetime income from assets that are to be distributed to charity after your death.
d) Avoiding estate tax burden:- Form other trusts to eliminate/mitigate estate tax payable by your heirs:- You can form bypass trusts, A/B trusts or other types of trusts to ensure that your heirs are not burdened by avoidable estate taxes. Your estate tax consultant will be able to guide you how to go about this.
Sacramento CPA firms offers Estate Tax Planning to individuals and businesses. We have former IRS auditors who know the system to make sure you only get the best advice. Discover a bevy or articles at : http://www.april15.com.
All About Mortgage Rates
December 31, 2008
Mortgage rates are often the most important factor when choosing a lender and the type of loan. The interest rate affects the monthly payment the borrower has to make. If mortgage rates increase then, unless the interest rate payable on the loan is capped or fixed, the amount payable each month will also increase. The length of the loan term also affects the amount payable each month. There is a direct relationship between the term of the loan and the monthly installment. The monthly installment will be less the longer the term of the loan.
Fixed mortgage rates tie in the interest rate current at the start of the mortgage for either the entire term of the mortgage or for a set period. If you wish to have a set amount for each installment then a fixed rated mortgage seems like a good option. It will give you the security of knowing what you are going to have to pay each month. The monthly installment does not increase when mortgage rates go up. However, if the underlying interest rate decreases then borrowers on a fixed rate mortgage will not receive any decrease in their monthly payment. In the case of variable or adjustable rate mortgages the amount payable each month may increase or decrease depending on the prevailing interest rate.
There a plenty of factors that determine what loan is right for you. Mortgage rates are important but you need to consider whether or not you need the security of a fixed rate mortgage and what term your mortgage should have.
Mortgage rates depend on the preferred term. Mortgage terms will normally be between fifteen an 30 years although terms as long as fifty years have been known. The state of the economy, the type of property, the number of occupants and the credit worthiness of the borrower are also big determiners of the mortgage rate.
Mortgage rates are applied to the outstanding principal amount. The rate is decided upon by the lender and depends on the factors referred to above. As the principal amount reduces the amount of each installment that is applied to the principal will increase. So at the start of the mortgage most of the installment will go towards paying off the interest, at the end of the terms the majority of the installment can be applied to the principal amount. Borrowers can arrange just to pay interest in the first few years but although this may relieve some financial pressure at the start of the mortgage it may mean the mortgage costs quite a bit more over its duration.
Another option is to have an interest only mortgage which means that all you have to pay each month is the interest. The amount payable will depend on the mortgage rates unless the mortgage has a fixed rate. You then need to put in place some other means of paying off the capital borrowed. This could be by way of an endowment or pension.
Shelley Green is the owner of http://www.mortgages-click.com, a site that specializes in Mortgages. Shelley Green is also the owner of Loans Click and Refinance Click.
Orlando Offers Hot Real Estate Opportunities
December 30, 2008
There’s no doubt that Florida’s one of the hottest real estate markets in the United States. Offering the best year-round climate and some major attractions - both natural and manmade - this state is a Mecca for those who want the best of all possible worlds. The key to finding the best real estate in the Orlando area is checking the property listings against your personal needs.
Before you jump in and buy a condo or a three bedroom single-family home, it’s a good idea to do some research about the area. Orlando is a metro area with lots of little suburbs. Some areas are nice, others aren’t so great. Some areas are close to all the attractions, others are a bit far. Before you buy, check into the neighborhood, the real estate values, schools and more. A little homework, even online, can net a great buy in a fantastic neighborhood and help you avoid a mistake.
In general the Orlando area is a draw for both full-time residents and vacationers for a number of reasons. Here are some of the tops:
* Proximity to parks. The Orlando area is home to Disney, MGM, Sea World and more. When it comes to theme parks few places under the sun offer more than Disney. The Kissimmee/St. Cloud area, Celebration and the outskirts of Orlando proper are all close to the major parks. This makes them ideal for everyday living and even for purchasing vacation homes for personal use or rental.
* Nightlife. The Orlando area is one of those places that almost never sleeps. Its nightclubs, including those found in Church Street Station, are hopping every night of the week.
* Dining. World class dining can be found in Orlando and its neighboring locales. From ethnic cuisines to freshly caught seafood, it can be had here.
* Cultural. A number of museums and galleries call this location home.
* Education. Orlando is home to the University of Central Florida and a burgeoning movie and television school. Here filmmakers and wannabes are taking advantage to the film industry that’s growing up in the Orlando area.
* Central location. Whether you want to visit the Keys, the beaches of east or west Florida or visit the hilly locations of north Florida, Orlando’s central location makes it a great homeport for a number of different day trips.
* Outdoor activities. Florida living provides lots of opportunities for outdoor fun. Almost 365 days out of the year, this state is great for water sports, hiking, biking, hunting, fishing and more.
Real estate in the Orlando area includes single-family homes, condos, manufactured homes and more. Prices range from the modest $100,000 well into the millions depending on what you’re looking for. The property listings for this city and its immediate neighbors are perfect for finding a full-time home or even a vacation getaway.
With all there is to see and do, Orlando is a great place to visit and an even better one to settle down in. From theme parks to industrial giants, many companies make this area home, making employment opportunities varied and many. When looking at Orlando property listings check the neighborhood, look into amenities and set your price limit.
More Resources
Orlando real estate opportunities.
http://www.orlandorealestatestore.com
For sale homes and houses listing.
http://www.homesfindit.com
No Money Down The Benefits of Real Estate Joint Ventures
December 30, 2008
Investors are attracted to the real estate market because of the incredible potential it has to multiply their money. Appreciation rates of properties are very high and almost all property deals guarantee you certain amount of profit.
One of main reasons why many others are not able to invest in real estate is that they do not have sufficient cash to pay the down payment for the purchase. However, there are plenty of financial schemes with ‘No Money Down’ option available for small investors to enable them to sustain the costs of purchasing property.
New investors can consider joint ventures, wherein one person finances the project and the other does the actual work. As a result, the one who does all the work has to put no money down for upfront costs. If you are new to the real estate game, and do not have enough funds to bear the upfront costs, you can opt for a joint venture. It is legally binding, and both parties agree upon a certain percent of profit each would receive after the project is completed.
It is a mutually beneficial partnership, wherein profits are divided according to individual contribution in terms of labor and money. The joint agreement is drawn to provide legal protection to the concerned parties in case the project fails.
A joint venture is beneficial if you are in one of the following situations:
1. When you lack borrowing capacity
If you have some money to pay the down payment, but are not eligible for a loan, joint venture would be beneficial for you. You can enter into a partnership with someone who has the necessary funds or is eligible for a loan to support your project.
2. When you do not have liquid cash or equity
You may be eligible for a loan due to your income or credit score. However, you may not have the necessary cash required to pay for the down payment of property purchase. In such a case, you can enter into a partnership with a person who can take care of the down payment.
With literally ‘no money down’ towards down payment, you can begin your dream project. There are instances wherein the seller carried a certain amount of the loan as a second mortgage. In exchange, you are required to give him a certain percent of the profits as decided in the agreement.
3. You have the necessary skills
There are investors who have the expertise to carry out a project or who have skills required for renovation. They may lack the funds for the project or may not have the inclination to invest money in the project. If you are one of those, then you can find a partner who has the money but lacks the time and expertise to complete the project.
It is important to draw an agreement carefully including all minute details to avoid any form of dispute in future.
Discover exactly how Sal Vannutini combined two of the easiest (yet brutally powerful) real estate investing strategies and made an insane $31,510 Profit In Just 49 Days… And How You Can Do The Same!”. Visit http://www.FixerUpperFortunes.com
Credit Card Balance Transfer How To Use It To Your Advantage
December 29, 2008
A credit card balance transfer is not right for everyone. Just like most of the options in the world of finance there are some definite benefits to getting your own balance transfer credit card as well as some pretty significant downsides. The key to success with any kind of balance transfer or any other financial product or service is to first learn all that you can about that particular subject before you can understand how to use it to your advantage. Never jump into getting a balance transfer credit card without all the facts, this is where so many people end up in hot water, they leap before they look and when it comes to money that is always a bad combination.
The benefits of a balance transfer are great in many cases. For example who doesn’t want to be able to switch the balance from one credit card with high interest to one with no interest at all? That is exactly what you can do when you have a new credit card that is still enjoying its interest free period. Of course if you do not have one of these you may simply want to perform the credit card balance transfer in order to enjoy a lower interest rate. This can save you thousands of dollars a year if you are looking at a significant amount of credit card debt.
There is a growing movement of consumers who are getting credit card after credit card so that they can constantly perform balance transfers. This is easy to do as all you need is to make sure that you are approved for a new credit card when the interest free period of your old one runs out, ensuring that you can simply perform a credit card balance transfer to the new card and once again enjoy paying no interest. Sounds easy, right?
This kind of balance transfer is straightforward and anyone can do it if they have a halfway decent credit rating. And if you can control your spending habits it might even be a good idea as the balance transfer credit cards will allow you a nice amount of breathing room and the time you need to start paying off the principle rather than just the interest on your loan. If on the other hand, you are like most people and you find it hard to not spend money when you can, then a credit card balance transfer is probably not the best solution for you.
There is nothing more difficult than curbing spending. If you have the available space on your credit card, are you going to be able to say no to those wonderful jeans you saw in the store window? What about that fantastic stereo you just saw the other day? Can you resist them? You must be able to if you want to use this technique of avoiding interest with credit card balance transfers. If you are in doubt then find another way!
More and more balance transfer credit cards are hitting the market today because the industry is recognizing what a powerful tool balance transfers can be for consumers. Everyone wants to save some money and the sad fact is that it can be very difficult, especially since having credit cards makes it so easy to spend more than we actually have. A credit card, especially a balance transfer credit card, can be a powerful weapon in your financial management toolbox; you just need to know your limits and your weaknesses. That is the only way to avoid trouble with balance transfers.
A credit card balance transfer could be your saving grace; then again perhaps it is the wrong solution for you. The only way that you can be sure is to learn all you can about the credit card balance transfer process and all of its pros and cons.
For more information on how a credit card balance transfer can save you money, Robert Alan recommends that you visit CreditCardAssist.com.
It is Important to Start Investing Early
December 29, 2008
When you take your first steps into the working world, a step that usually comes hand in hand with finally moving out on your own, there are a lot of places you suddenly find your money disappearing to. Not only is there an onset of bills of the like you may have never imagined but there is the desire to buy all those things you were always wanting to buy. Now that you finally have the money to get that bigger TV, the car and gadgets you have always wanted it’s hard to stop yourself.
The problem that many people have when they first get to this position is that in doing all of this spending the money vanishes faster than they would have ever thought. The value of a dollar never seems to fully show itself until you are making what you think is a lot of money and then watch it add up to nothing.
In essence there is nothing wrong with this. It is a stage of life like any other and it comes with its own lessons to be learned. Truly, the most important thing to keep track of in this period is avoiding any significant debt; this is doubly true if you are just getting out of school and already have that education debt hanging over you.
If you are one of the lucky people who learn how to handle that and manage their money properly then there are other steps, just as important, to take. Most of us are never taught just what we are supposed to do with our money and how we can make that money work for us. Many people manage to avoid debt and even find a way of saving chunks of each paycheck in a bank account but too few of them do anything more with their savings than that.
For so many reasons, just leaving money sitting in a bank is a bad idea; if only because by the end of each year the bank is likely to take more fees than it gives interest. While leaving enough liquid funds to get by each month is important, taking excess funds and investing them is just as important. For people that do not have excess funds it is even more important that they find a way to create them.
By investing the money wisely, typically starting off with investments that build slowly but steadily, you are able to better ensure you have money for your later years. And just because your later years are far away doesn’t mean you should wait to invest. The thing is that the best investments are the ones that take time to pay off. The ones that make you rich over night are few and far between and are also the ones that are risky enough to make you broke overnight as well.
When you invest those few extra dollars you are able to put aside early they are able to turn into bigger dollars in the years that follow. Twenty dollars a week going into an average paying fund will not turn into thousands after a few years; but if you start that twenty dollars a week when your young, then it will be worth something significant when you really need it.
Mika Hamilton runs a website offering free investment tips and strategies for people looking to get started in the investment world. visit http://www.Global-Investment-Institute.com for more tips and articles like this.
Top 5 Missed Tax Deductions
December 28, 2008
How many times have you done your taxes, and a week or a month later realized you forgot a deduction? The tax law is very complicated, so it’s easy to miss a deduction or two. In my experience, these are the top 5 missed deductions.
1. Non-Cash Donations
Did you clean out your closets this year? Chances are you donated those items to Goodwill or a similar non-profit organization. The value of donated items (clothing, furniture, etc.) is deductible. You will need to get a written receipt and assign a value to these items, but the tax savings are worth the effort.
2. Points on Refinancing
With interest rates so low the past few years, there have been a record-number of houses refinanced. If you refinanced, you may have paid points to get a lower interest rate. These points are deductible over the life of the new loan. In addition, if you incurred points on an old refinancing, any unamortized points are deductible in the year of the new refinancing.
3. Educator Expenses
If you’re a qualified educator (teacher, aide, instructor or principal), you can deduct up to $250 for materials you bought for the classroom. Qualified expenses include books, supplies, and computer equipment. This law is set to expire in 2006, so take advantage of it now if you qualify.
4. Investment and Tax Expenses
Expenses for tax planning and investment advice are deductible as a miscellaneous deduction, subject to the 2% Adjusted Gross Income (AGI) limitation. Expenses that qualify include tax preparation fees, safe deposit box fees, fees paid to investment advisors, legal and accounting fees related to tax planning, broker and IRA fees paid directly, investment publications, and more. Many people assume that they won’t have enough miscellaneous expenses to exceed the 2% AGI floor, but all of these expenses combined can be substantial, especially if you have unreimbursed employee expenses to add to these expenses.
5. College Savings or 529 Plan Contributions
Depending on which state you live in, contributions to 529 college savings plans may be deductible on your state income tax return. Because this deduction is only available on the state return (no deduction available on your federal return for 529 contributions), many people fail to include this deduction on their state tax return.
Kristine A. McKinley, CFP, CPA, and founder of Beacon Financial Advisors, offers financial and tax planning on an hourly, fee-only basis. To sign up for free financial planning tips, worksheets, checklists and more, visit http://www.beacon-advisor.com.
Switching Banks Is Your Bank Giving You The Best Deal
December 28, 2008
If you believe that your bank is costing a more money than it really needs to be, then perhaps it is time to change the habit of a lifetime and switch banks. Although many people remain loyal to their banks for life, there is no need to do this. Your bank is a business and they will treat you as such, and so in turn you should look for the best deals possible. Here are some tips on whether you should switch banks or not.
Why switch banks?
Although many people are happy with their banks, this does not mean they are getting the best deal. Obviously, if you are unhappy with your bank then it is time to look elsewhere. However, if you have been with one bank for a while then perhaps it is time to look at the alternatives. If you find that you current bank is still the best, then great. If not, then you could save yourself some money.
Look for the best deal
Before you switch banks, it is crucial that you shop around. Just because you are switching banks doesn’t mean you should switch to the first good deal you come across. Look at all the alternatives, including online banks and credit unions, before deciding on which bank has the best deal for you.
Contact you current bank
If you are thinking about moving banks, then before you do so you should contact your current bank and see if they can match the terms you can get from another bank. Don’t tell your bank you are thinking of leaving as they might remove certain privileges you have. Instead, try and negotiate a new deal, as it is often easier to get a better deal from your current bank than move to a new bank. However, if your current bank doesn’t want to negotiate then you know it is time to switch banks.
Complete application process
Once you have found the right bank for your needs, you need to complete the application process. Once you have filled in any necessary forms and made sure that all the terms make sense, your new bank can begin the process of transferring your payments and money from your old bank. If you have fairly regular accounts then this should only take a week or so to complete.
Advantages of switching banks
Of course, then main advantage of switching banks is that you can get better terms on the financial products that you already have. You may also be able to get new features from a different bank that will help you to save money or make banking easier for you.
Disadvantages of changing banks
Although there are advantages to switching banks, you must remember that it is won’t always be so easy. If you have complex accounts or are borrowing money from your old bank, then the procedure might become more complicated. Also, if you switch banks regularly it can seem like you are financially unstable. Although switching banks isn’t always the best option, if you are unhappy with your current bank or want to get a better deal then you should look at what other banks have to offer.
Peter Kenny is a writer for The Thrifty Scot. Please visit us at Savings Accounts and Child Trust Funds
Debt Consolidation Explained
December 28, 2008
The aim of debt consolidation is to allow you to pay off your debts and have lower monthly payments. Therefore, detailed research is necessary to ensure the lowest interest rate is obtained. This is because lowering the rate means the loan costs less. This saves money and allows the loan to be paid off sooner.
If you own your own home you have an advantage over those who do not. This is because you can apply for a debt consolidation loan and use the equity in your home as security. If you refinance in this way you are more likely to get approval and get a lower rate of interest. You must be disciplined though. For this method to work you must pay off your other debts with the money from the new loan. You should only use your home as collateral if you intend to make the payments on your new loan.
If you are paying a number of loans at once such as credit cards and unsecured personal loans then a debt consolidation loan may be the answer for you. The debt consolidation process combines all the loans into one loan. This means you only have one monthly statement meaning only one monthly payment. It can be hard keeping track of all your loan payments each month. With debt consolidation, this means you will only have one payment. The process is normally a good option but the downside is the debt consolidation loan is normally over a longer period of time and so the overall cost is often higher.
It may seem a bit odd to be talking about refinancing as a way of debt negation but to be honest taking out a debt consolidation loan is one way where you can renegotiate the terms of your loans. It is not the only way though. Most lenders are often open to the possibility of renegotiating your loan as a way of reducing the risk of default. A debt consolidation loan is not the only way forward.
You can refinance your mortgage or get a second mortgage as a means of debt consolidation. Whether or not you can get a second mortgage for debt consolidation depends on how much equity you have. You are not likely to get a second mortgage if you do not have any equity. A debt consolidation loan does not have to be secured on your home but you are normally able to get a lower inter rate if the debt consolidation loan is secured.
Shelley Green is the owner of http://www.mortgages-click.com, a site that specializes in Mortgages. Shelley Green is also the owner of Loans Click and Refinance Click.
Do Not Lose Your Shirt With a Margin Account
December 27, 2008
The key to the FOREX market for the average investor is the margin. Without margin trading currency trading would be beyond most investors. I will explain what the margin is and how it works.
When you have a margin account you are able to control large amounts of currency with a relatively small cash deposit. When you have a margin account with a broker you are in effect borrowing money from the broker to control a larger lot of currency. Currency is normally sold in lots with a value of $100,000. A common term used when discussing margin accounts is leverage. Leverage is how much you can control with a certain amount of money. The leverage is usually displayed as a ration such as 1:100. That would allow you to control currency worth 100 times the amount of money you have invested.
To better explain this in a FOREX exchange with a 1% margin account you could control $100,000 worth of a currency while only investing $1000. Margin accounts can allow you to greatly increase your profit; they also allow you to increase your risk. With a margin account it is possible for a trader to lose more than their initial investment. With a little prudence though losses can be minimized. Most brokers will terminate a trade before the losses exceed the original deposit.
Benefits
As discussed before a margin account allows you to buy more with the money you have which can greatly increase your profit on successful trades. By controlling a $100,000 worth of currency for only $1000 the potential gain is greater. When dealing with large lots of currency even small changes can produce significant results.
Currency on the FOREX market is traded in far more precise units than actual cash is. As an example the American dollar is traded down to four decimal points. So when you were to quote the dollar against another currency you will see a price like $1.7834 instead of $1.78. A PIP is the smallest unit when trading currencies, when dealing with $100,000 lots then each pip is worth about $10.
If the price of the American dollar changes from $1.7834 to $1.7934, you have a net difference of 100 pips. If you have a lot of $100,000 then that 100 pips will translate to $1000 where as if you were not using the margin your original $1000 would only show a profit of $10. Hardly what most would consider a highly profitable trade?
In short the primary benefit of using a margin account is that it can greatly increase the profit margin of a trade.
Risks
Since there is such a significant increase in profit potential when using a margin account it only stands to reason that there is also an increase. In fact it is quite possible to have your entire margin account wiped out fairly quickly. When using a 1% margin account a shift in the currency of a single penny will cost you $1000.
The FOREX exchange has many safety features to help you reduce the risk of this happening. One example is a stop loss order. A stop loss order will automatically close out your position in a currency if the price crosses the point you have set. This allows you to limit your losses while still having the opportunity to realize a profit.
Another risk that many people overlook is that if the price nears the point where your losses are close to being equal to the value of your margin account your broker may close out your position. If you were trying to rid out a temporary downturn that you expect to turn around soon you could find that your broker has closed it causing you to lose your entire balance and have no option to make a profit if the price moves up again.
This is a basic introduction to margin accounts and how they work, visit the website listed below to learn more about the FOREX market.
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