By, estateplanning.com


A will provides your instructions, but it does not avoid probate. Any assets titled in your name or directed by your will must go through your state’s probate process before they can be distributed to your heirs. (If you own property in other states, your family will probably face multiple probates, each one according to the laws in that state.) The process varies greatly from state to state, but it can become expensive with legal fees, executor fees, and court costs. It can also take anywhere from nine months to two years or longer. With rare exception, probate files are open to the public and excluded heirs are encouraged to come forward and seek a share of your estate. In short, the court system, not your family, controls the process.

Not everything you own will go through probate. Jointly-owned property and assets that let you name a beneficiary (for example, life insurance, IRAs, 401(k)s, annuities, etc.) are not controlled by your will and usually will transfer to the new owner or beneficiary without probate. But there are many problems with joint ownership, and avoidance of probate is not guaranteed. For example, if a valid beneficiary is not named, the assets will have to go through probate and will be distributed along with the rest of your estate. If you name a minor as a beneficiary, the court will probably insist on a guardianship until the child legally becomes an adult.

For these reasons a revocable living trust is preferred by many families and professionals. It can avoid probate at death (including multiple probates if you own property in other states), prevent court control of assets at incapacity, bring all of your assets (even those with beneficiary designations) together into one plan, provide maximum privacy, is valid in every state, and can be changed by you at any time. It can also reflect your love and values to your family and future generations.

Unlike a will, a trust doesn’t have to die with you. Assets can stay in your trust, managed by the trustee you selected, until your beneficiaries reach the age you want them to inherit. Your trust can continue longer to provide for a loved one with special needs, or to protect the assets from beneficiaries’ creditors, spouses, and irresponsible spending.

A living trust is more expensive initially than a will, but considering it can avoid court interference at incapacity and death, many people consider it to be a bargain.

Believe it or not, you have an estate. In fact, nearly everyone does. Your estate is comprised of everything you own— your car, home, other real estate, checking and savings accounts, investments, life insurance, furniture, personal possessions. No matter how large or how modest, everyone has an estate and something in common—you can’t take it with you when you die.

When that happens—and it is a “when” and not an “if”—you probably want to control how those things are given to the people or organizations you care most about. To ensure your wishes are carried out, you need to provide instructions stating whom you want to receive something of yours, what you want them to receive, and when they are to receive it. You will, of course, want this to happen with the least amount paid in taxes, legal fees, and court costs.

That is estate planning—making a plan in advance and naming whom you want to receive the things you own after you die. However, good estate planning is much more than that. It should also:

        Include instructions for passing your values (religion, education, hard work, etc.) in addition to your valuables.

        Include instructions for your care if you become disabled before you die.

        Name a guardian and an inheritance manager for minor children.

        Provide for family members with special needs without disrupting government benefits.

        Provide for loved ones who might be irresponsible with money or who may need future protection from creditors or divorce.

        Include life insurance to provide for your family at your death, disability income insurance to replace your income if you cannot work due to illness or injury, and long-term care insurance to help pay for your care in case of an extended illness or injury.

        Provide for the transfer of your business at your retirement, disability, or death.

        Minimize taxes, court costs, and unnecessary legal fees.

Be an ongoing process, not a one-time event. Your plan should be reviewed and updated as your family and financial situations (and laws) change over your lifetime.

By, Estateplanning.com

Here’s a checklist that you can use to evaluate your current policy, or to compare a new policy before you buy:

 

• What is the daily benefit amount for nursing home care?  Make sure it’s enough to cover the cost of care in your community.  
• What types of care alternatives are covered?  Look for home health care, home health care aides, adult day care, assisted living facilities and respite care.
• What is the daily benefit amount for home health care or other alternative types of care?  This should be at least 80% percent of the benefit for nursing home care.
• Are home care benefits subject to a daily, weekly or monthly maximum benefit?  A policy with a weekly or monthly benefit limit may pay more in benefits that a policy with a daily limit.
• How is eligibility for benefits determined? Policies typically require you to need assistance in performing activities of daily living (ADLs) such as eating, dressing, bathing, etc. or diagnosis of a cognitive impairment.
• What is the maximum benefit?  This may be the length of time the policy will pay for care, or it may be expressed as a maximum dollar amount.  Ideally, benefits should last 4 years or more.
• What is the waiting period before benefits begin? Similar to the deductible on your auto insurance, this is the cost you pay out of pocket.  A longer elimination period can lower your premiums.
• Does the benefit amount increase with inflation?  An inflation protection benefit is especially important if you purchase a policy before age 65.  Usually there is a substantial added premium for this feature.
• Are premiums waived while you are receiving nursing home care?  Are premiums waived if you are receiving home health care?
• Is the plan guaranteed renewable?  This means the company can’t cancel you as long as you pay your premiums.
• What are the limitations for pre-existing conditions?
• Does the policy have a return of premium feature?  This means your premiums may be refunded under certain conditions, such as not filing a claim.  Usually there is a substantial added premium for this feature. 

Note: This is a general description of long term care insurance features and benefits.  Specific benefits and limitations are determined by the actual policy language. 

IRA’s, or Individual Retirement Accounts, are a common and widely used tool in retirement savings plans.  There are various types, from Roth’s to traditional IRA’s.  With so many choices, and all of the accompanying rules and regulations, there is plenty of room for mistakes.  Here are 8 common ones you’ll want to avoid:

1.       Not naming IRA beneficiaries. 

Not naming your IRA beneficiaries, or not keeping those beneficiaries up to date can result in tax consequences.  This can occur because of the distribution of the IRA assets to the estate of the IRA owner.  Not keeping beneficiaries current and in line with your other estate planning tools and documents can cause you big problems.

2.       Not taking advantage of increased contribution limits

The contribution limits for 2012 are $5,000, and $6,000 for those who are age 50 and older.  If IRA’s are your preferred retirement savings vehicle, you need to fully fund them to have a chance at a comfortable retirement.

3.       Missing important dates

You have 9 months to pay the taxes on an IRA you’ve inherited.  By September 30 of the year after the owner’s death to identify who’s life expectancy will determine the RMD’s for that IRA.  Also, Generally speaking, those distributions must begin by the end of that same year.  You don’t want to make the IRS mad, right?

 

4.       Placing an IRA in a trust

If you put your IRA in trust, or in other words, make a trust the owner of your IRA, you get to pay taxes, NOW!  Yep, immediate taxation, including a 10% penalty if the IRA owner is under age 59 ½.

5.       Not “stretching” your IRA

If the plan is to maximize a beneficiary’s payouts, you need to make sure they are aware of the opportunity to “stretch” that IRA.  Stretching and IRA allows properly designated beneficiaries to take payouts based on their life expectancy, allowing for additional growth and potentially lower taxes than withdrawing those funds in a lump sum.

6.       Not contributing for a nonworking spouse           

It is common that we make poor assumptions.  One of these is that IRA’s for those with little or no income can’t be done.  That’s not true.  IRA contribution limits for nonworking spouses are the same as for those who are working.  Again, if IRA’s are your preferred vehicle, you’ll probably want to contribute to both spouses’ IRA’s.  There are a few rules to follow, of course, so talk to your tax advisor before you start.

7.       Taking the wrong RMD (required minimum distribution)

Once you’re in your seventies, you have to withdraw at least a minimum percentage of your IRA.  If you don’t, excepting Roth IRA’s, you’ll get the added bonus of an income tax penalty of 50% of that amount that should have been withdrawn.  That’s pretty stiff, so don’t mess that up!

8.       Paying penalties on early IRA withdrawals

If you take a distribution from your IRA prior to age 59 ½ you can be charged a penalty for that distribution.  The exception to this rule is found in IRS Code Section 72(t).  This section allows “substantially equal periodic payments” to be withdrawn from the IRA without the penalty.  If you need to access some of your funds, talk to your tax advisor first.  They may be able to save you from that penalty with just the use of their pen, paper, and a calculator.  Almost superhuman, isn’t it?

This is the time of year for two things… no not football and hunting.  Nope, not those scentsy candles and warm cider.  Yep, you nailed it: Medicare and tax savings ideas.  This is the time of year when we all start looking at year-end and figuring out what we can do to avoid some taxes. 

Here are 3 quick and easy ways to save on taxes this year.

1.      Spit income.  If you are married or have a common-law spouse, you can split your income and possibly save on taxation.  The reason this works is because our tax system is progressive, meaning the more you make, the higher percentage you pay, unless, of course, you’re a Romney, then you don’t (just kidding there, No political agenda meant).  This may allow you to optimize deductions and tax credits available.

2.      Trusts.  If you have a hefty amount of assets, it is time to stop procrastinating the funding of your trusts.  The 5 plus million dollar gift tax exemption is set to expire and reset to the 1 million dollar mark at year-end.  While this may not be an immediate tax savings, it’s something that needs to be effected and funded near immediately to take advantage of the current tax breaks before they expire.

3.      Don’t forget the dependent care tax credit.  Basically, if you pay someone to care for a dependent under age 13, you may qualify for a tax credit up to $2,100.  This depends on your adjusted gross income and is a percentage of care costs of between 20% and 35%.   This credit isn’t just for child-related care costs either.  If you pay someone to look after a spouse or dependent of any age, such as a disabled family member, you may be eligible.

As always, we recommend you visit with a tax professional on any thoughts mentioned here.  We are not CPA’s or certified in any way to give tax advise and recommend you take these suggestions to your professional, or contact ours at [email protected].

1. Don’t leave email sitting in your in box.
2. Admit multitasking is bad.
3. Do the most important thing first.
4. Check your email on a schedule.
5. Keep web site addresses organized.
6. Know when you work best.
7. Think about keystrokes.
8. Make it easy to get started.
9. Organize your to-do list every day.
10. Dare to be slow.

Ed wrote this article for Ezine Articles.  This site has great information. 

Check them out at www.ezinearticles.com

As a financial planner, I feel like Indexed Universal Life insurance is one of the most misunderstood and underutilized tools and asset classes in the market today. I believe that this is because of the newness of the product itself. Indexed Universal Life (IUL from here on out) has only been around for a little over 15 years. Because of this, most financial advisors don't fully understand it. IUL's came around after they received their education and set their practices. Thus, individuals aren't learning from experts, but rather, they rely on media pundits for any information on these programs. In an effort to further educate you, and promote a wonderful product, I give 5 reasons to buy an IUL.

The first great reason to have an IUL in your retirement portfolio is the fact that these products provide minimum guarantees. Unlike placing your funds directly into the market, these funds are protected from the market. They earn interest in a unique way. Interest is credited based on the performance of a chosen index. Rather than being invested in the actual market, you merely receive a portion of the index return. Again, the worst-case scenario is that you earn 0% in a given year. You can never lose money due to market fluctuations. Each year that you do earn interest, that interest is locked in and becomes part of the principal amount guaranteed to not be at risk to the market. What a great way to plan for retirement. This system of guarantees also removes the risk of retiring at the wrong time, when your account value is low due to market losses. It also prevents catastrophic damage to your retirement due to losses in the early years of your retirement.

In addition to the downside protection, these products can perform very well; often times outperforming the market returns seen in a typical investment portfolio. So you don't have to give up a good return to find a safe haven for your retirement nest egg.

The second great reason for purchasing an IUL is the tax-free death benefit.

Life insurance is often used as a tool in estate planning. It is treated favorably by the IRS tax codes. Often, the funds coming from a death benefit from a life insurance policy are passed on to beneficiaries income tax-free. Indexed Universal Life is no different. It becomes a wonderful tool to pass on assets tax-free. Unlike other retirement options, such as a 401k, the assets held in an IUL pass on without taxes and give you immediate access to the funds, unlike assets held in real estate. It is also very typical, due to the death benefit common in all life insurance policies, that the death benefit will exceed the accumulation value of the account, meaning you not only leave more to your beneficiaries by paying less in taxes, but also because of the higher death benefit.

The third great reason for looking at an IUL is for the incredible supplemental retirement income that can be generated from it. What if you could put an unlimited amount of money into a Roth IRA, pay taxes on the principal now and have an income generated, tax free, for your retirement, and you could even access it early if you wanted? That would be an incredible deal, right? Well, it exists. It's called an IUL. You can create a tax-free income through these IUL's without having to worry about the timing of the market. Rather than rolling the dice of where the tax brackets fall out over your lifetime, why not draw at least part of your income through a program that allows you to fund it limitlessly, and not have to worry about paying taxes on the gains?

This is achieved through policy loans. It's a new concept, but hear me out. Through a policy loan, you are able to draw out an income from your IUL tax-free. Everyone always asks me "what if tax laws change?" Valid question. In theory, it is possible that the laws change and these funds do become taxable, but that would be odd. The government doesn't tax our loans, only the asset by which the loan is guaranteed. Think for example of your car loan... you pay a property tax on that auto, but you don't have to treat the loan from the bank that you used as income because it wasn't income, you have to pay it back. These policy loans function the same way.

Diversification is the fourth reason to purchase an IUL. Since the bulk of your retirement funds are probably in taxed deferred savings accounts, like traditional IRA's and 401k's, IUL's can provide a diversification, not only in asset class, but also in the tax treatment of the account. We typically believe in diversification and have been taught that since our high school years, yet we all have our retirement in the same types of vehicles. All are tax-deferred time bombs with minimum distribution ages and minimum distribution requirements or maximum contribution amounts controlled by the government and current economics in the USA. We are all typically in a blend of stocks and bonds, crossing our fingers that when that day comes to retire, we are up, not down. Hopefully we've picked well, though we be uneducated as can be, and yet we bank on this as our retirement program and a whole industry has built itself around it. Amazing that we've heard this same concept preached for over 2 decades and we're still drinking the kool-aide. I'm not going to tell you to not drink, just try a different flavor for a minute. It should be noted that when taxes go up, and they inevitably will, you will pay taxes on those funds that are in taxed deferred accounts. This can hurt the value of the dollars you have saved in those accounts. There is also a little thing called an RMD. Required Minimum Distributions are what the federal government requires us to withdraw from our retirement accounts, based on our age, as a percentage of our account balance. There is always the possibility of these percentages increasing so the taxes can be collected on these funds. This could also cause you to withdraw funds you don't need. An IUL gives you a great hedge against these potential tax issues.

Finally, the fifth reason to purchase an IUL is because they allow you to work towards becoming your own banker. Have you ever found it odd that you borrow money from a bank even though you have money in the bank? I have. Most IUL's have loan provisions allowing you to borrow from and pay back your life insurance. The nice thing is, by doing this, you pay yourself the interest rather than the bank. You continue to have a retirement fund that is growing and you aren't loosing years' worth of interest to the bank. Think of all the interest you have paid for credit cards, auto loans, your mortgage, etc. You can borrow yourself the money instead and you don't have to worry about the approval process at the bank. Many business owners feel that term insurance is the only type of life insurance for them because they don't want to tie up their money. This is a false assumption. The funds "tied up" in life insurance are not locked up, but rather, provide more access to funds than most investment opportunities. The funds can be borrowed and replaced with relative ease, making it a wonderful program for creating your own personal banking system.

One final little bonus is that your IUL is permanent insurance, as long as it is built correctly and you fund it properly. You'll likely have lifetime coverage, even after stopping your premium payments and taking withdrawals. Long after your term insurance is gone, you'll still have a death benefit to leave those you love.

For these reasons, along with many others, indexed universal life insurance is a great way to help fund your retirement. It is not perfect for all situations, and it is always wise to consult your advisor before purchasing any retirement funding program. That being said, there are five reasons you should give your advisor a call and find out if an IUL is right for you.

(Ezine Articles, 2011; http://ezinearticles.com/?5-Reasons-to-Purchase-an-Indexed-Universal-Life-Insurance-Policy&id=6790878)

1.     Find a place for every item. 

2.      Play clutter cop. The better you are about keeping things out of your home, the less likely things will pile up inside. Take freebies. It's nice to get a T-shirt or coffee mug, but will you really use it? Enjoy it? If not, decline it. Or let's say you're a voracious reader.

3.     Do some detective work. Periodically scan your home for clutter hot spots, and spend some time figuring out why stuff accumulates there. Often, it's not what you think. Once you understand the problem, you'll find it easy to devise a solution. 

4.     Hold off on container shopping. Clutter victims often think the solution is to stock up on organizing products, so they head to the nearest superstore and stock up on bins and boxes. Big mistake. Shop for storage items only after you've done some de-cluttering -- to understand the scope of the problem, the specific cause, and an appropriate solution. 

5.     Dump duplicates. Why have two nonstick spatulas when one is enough? Why have six hairbrushes or 17 coffee mugs

6.     Beware nostalgia. If you're a doting parent, it's not easy to discard a child's creation, whether it's pastel drawings from the second grade or that cooler-sized medieval castle. But if you're serious about minimizing clutter, you must.  Take a picture of your child with the creation, and letting that be your keepsake.

7.     Weed out your wardrobe. Sort through your clothes, and your children's, at the end of each season. Does a particular garment no longer fit, or maybe it's uncomfortable? Toss it into a box. Then take the box to a favorite charity or a consignment store. And don't hold onto things because you think you might need them someday. One key to de-cluttering is getting rid of things, not simply rearranging them. Tidying up is not the same as organizing.

8.     Look for simple clutter control solutions. Often, there's an easy solution to even stubborn clutter problems. To add storage space in a crowded room, consider adding a shelf just below the ceiling. Overrun with CDs? Take them out of their jewel boxes and store them in a CD binder.

9.     Think home organization "kits." Buy some clear plastic shoebox-sized containers, and use them to create kits where you store all the items you need for a particular task. For instance, you could create a shoeshine kit, a bill-paying kit, a manicure kit, and so on. That way, you can easily find everything you need to accomplish everyday tasks.

10.Stick to a schedule. Some spaces, like kitchen counters, need daily de-cluttering. Others can be tackled weekly or monthly. When that time comes, be systematic. Take all the items in a defined area (a cabinet, a desk drawer), and spread them out so you can see what you're facing. If you're de-cluttering the drawer where you keep kitchen utensils, for example, spread them on the counter, and then sort into two piles: utensils you use regularly and those you don't use. Be patient -- effective de-cluttering takes time. "People tend to underestimate how much time it will take," says Leist. If it looks like a two-hour job, budget four. And don't get discouraged if de-cluttering takes longer than you think it should.

We found this information from WebMD.  They are a GREAT resource.   http://women.webmd.com/home-health-and-safety-9/10-ways-to-cut-clutter-in-your-home

This is the time of year for two things… no not football and hunting.  Nope, not those scentsy candles and warm cider.  Yep, you nailed it: Medicare and tax savings ideas.  This is the time of year when we all start looking at year-end and figuring out what we can do to avoid some taxes. 

Here are 3 quick and easy ways to save on taxes this year.

1.      Spit income.  If you are married or have a common-law spouse, you can split your income and possibly save on taxation.  The reason this works is because our tax system is progressive, meaning the more you make, the higher percentage you pay, unless, of course, you’re a Romney, then you don’t (just kidding there, No political agenda meant).  This may allow you to optimize deductions and tax credits available.

2.      Trusts.  If you have a hefty amount of assets, it is time to stop procrastinating the funding of your trusts.  The 5 plus million dollar gift tax exemption is set to expire and reset to the 1 million dollar mark at year-end.  While this may not be an immediate tax savings, it’s something that needs to be effected and funded near immediately to take advantage of the current tax breaks before they expire.

3.      Don’t forget the dependent care tax credit.  Basically, if you pay someone to care for a dependent under age 13, you may qualify for a tax credit up to $2,100.  This depends on your adjusted gross income and is a percentage of care costs of between 20% and 35%.   This credit isn’t just for child-related care costs either.  If you pay someone to look after a spouse or dependent of any age, such as a disabled family member, you may be eligible.

As always, we recommend you visit with a tax professional on any thoughts mentioned here.  We are not CPA’s or certified in any way to give tax advise and recommend you take these suggestions to your professional, or contact ours at [email protected].