Three Estate Planning Items Everyone Needs

Many people mistakenly believe that estate planning is only necessary for the wealthy. In reality, a basic estate plan is essential for everyone, regardless of income or net worth, because we all want to minimize confusion, unnecessary costs, and stress for loved ones after a death.

It’s no secret that estate planning can be a difficult topic for many families to address, but it’s a necessary one. Without proper preparation and documentation, assets—like houses, retirement plans and savings accounts—can end up in limbo for years, sometimes requiring expensive legal assistance to straighten matters out.

At a minimum, everyone should have the following three items in place:

An up-to-date will or trust.

Wills are easy to create, but they require the distribution of assets to go through probate. Probate is a legal process that involves:

1.   Validating a deceased person’s will;

2.   Identifying, inventorying, and appraising the deceased person’s property

3.    Paying debts and taxes;

4.    And ultimately distributing the remaining property as the will directs.

The probate process often requires a lot of technical paperwork and court appearances, and the resulting legal and court fees are paid from estate property—reducing the amount that’s passed on to heirs.

A trust can be more expensive to set up and requires professional assistance, but it provides benefits that a will cannot. First, when they’re structured properly, trusts will help avoid guardianship or conservatorship if you become incapacitated. A will only works after you’ve died; a trust, by contrast, works all the time, including periods of incapacity before death.

Trusts usually avoid probate, which helps beneficiaries gain access to assets more quickly as well as save time and court fees. Depending on how it’s structured, a trust may also reduce estate taxes owed and can protect an estate from heirs’ creditors.

A durable power of attorney.

A power of attorney is a written authorization that allows someone else to make financial and legal decisions for a person if that person should become hospitalized, disabled or otherwise incapacitated.

Not all powers of attorney are created equal. Some are put in place for short periods of time only—while a person is vacationing overseas but dealing with legal matters at home, for example. That’s why it’s important to have a durable power of attorney in place, which simply means that the agreement is not for a temporary period of time. It may be valid immediately when it’s signed, or it may go into effect at a later point. But what makes it “durable” is the fact that it will survive your later incapacity. (If a power of attorney is not durable, it is revoked when you become incapacitated – the very moment when you need it most.)

Powers of attorney for property should only be given to trusted individuals, ideally those who are good with financial and legal matters. Medical powers of attorney can be separated and given to someone else, if desired.

Updated beneficiary designation forms.

Beneficiary designation forms on life insurance policies, 401(k) accounts and other assets will generally override any conflicting provisions within a will or trust. It’s essential to make sure all forms are checked and updated regularly, ideally on an annual basis.

We can assist you to create or update these basic items as well as provide suggestions for additional steps, if needed.


How To Reduce Your Debt

Unless you live on Mars, you likely have outstanding debts to pay. You can throw the bills into a garbage can, but that won’t make them go away and you can’t simply wish them away. But you can pay it down with determination. Here are but a few ways to reduce your debts:

1. Pay more than the minimum
First, break the habit of paying only the minimum required each month. Paying the minimum, usually 2% to 3% of the outstanding balance, only prolongs the agony. Besides, it’s precisely what the banks want you to do. The longer you take to repay the charges, the more interest they make, and the less cash you have in your pocket. Don’t play their selfish game.

Instead, bite the bullet and pay as much as you can each month. If your minimum payment is $100, double that to $200 or more. Examine your normal expenses, you can find the money. We all have “luxuries,” and you know what yours are.

2. Snowball your debt payments
Take a long, hard look at all your credit cards. Pay particular attention to the one with the lowest interest rate. Have you reached the maximum limit on that card? If not, consider transferring a higher-interest bill to that one. Many credit cards permit this, and it’s positively foolish not to trade an 18% debt for one at 12%.

3.  Borrow against your life insurance
Do you have life insurance with a cash value? If so, borrow against the policy. Yes, you’re borrowing your own money. But the interest rate is typically well below commercial rates, and you can take your time repaying the loan. Do repay it, though. If you die before it’s repaid, the outstanding balance plus interest will be deducted from the face value of the policy payable to the beneficiary

4. Finagle family and friends
Perhaps your family or friends could lend you the money. Who else knows, trusts, and loves you like they do? Unless you’re really the black sheep of the flock, chances are you’ll get a very favorable interest rate. They may even tolerate a late payment or two. But if you want to maintain the relationship, it’s best to keep things on the straight and narrow by using a written agreement. You should clearly establish the interest and repayment schedule in writing to avoid misunderstandings and hard feelings. And it goes without saying that you must be scrupulous about adhering to that schedule. Otherwise, you can forget the family reunions and birthday presents.

5. Borrow from your 401(k)
Do you participate in a 401(k)qualified retirement plan at work? Most 401(k) plans have a feature that lets you borrow up to 50% of the account’s value, or $50,000, whichever is smaller. Interest rates are usually a point or two above prime, which makes them cheaper than that found on credit cards. Not only is the interest typically much lower than that on credit cards, the best part is you pay it to yourself. That’s right, every dime in interest paid on a 401(k) loan goes directly into the borrower’s 401(k) account, not the lender’s. Check with your accountant or financial adviser for more detail for any possible drawbacks.

6. Renegotiate terms with your creditors
OK, you’ve done all you can. Savings are gone; relatives have been tapped out; you don’t have a home or 401(k) to borrow against. You feel like you’re against that proverbial wall. The money just isn’t there. Is bankruptcy the only way out? No way. Try pulling an ace out of your sleeve prior to taking that step. What ace? The threat of bankruptcy, of course.     Let your creditors know your situation. Tell them that if you are unable to renegotiate terms, you’ll have no other recourse but to declare bankruptcy. Ask for a new and lower repayment schedule; request a lower interest rate; and appeal to their desire to receive payment.

7. As a last resort, file bankruptcy
What if you decide you can’t pay down your debt using any of the methods listed above? What should you do? The absolute last resort is bankruptcy. Although we firmly believe everyone has a moral obligation to repay their debts to the utmost of their ability, there are times when repayment may be impossible. In those cases, bankruptcy may be the only available course of action. Nevertheless, be aware of the significant drawbacks.

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Easy Ways To Buy A House In Foreclosure

One person’s misfortune can become someone else’s blessing – and that’s particularly true with foreclosures on residential property. When homeowners are unable to keep up with their mortgage payments, lenders foreclose and take the house back. But the lender doesn’t want the house. It wants the money it loaned for the purchase. The only way it can get that money is to sell the home to someone else.
Get Pre-approved for a Mortgage
When you bid on or make an offer on a foreclosed home, it’s a good idea to line up your financing ahead of time. The foreclosure process generally ends with the house being auctioned to the highest bidder. You’ll need cash for this type of sale.
The lender who foreclosed doesn’t automatically finance a new mortgage for you if you buy the house. If you buy from the owner or the lender during or right after the foreclosure process, you’ll need preapproval for a mortgage.

Buying a House Before Foreclosure

Foreclosure is a long, drawn-out process. The house you want may be scheduled for auction in approximately a month’s time, if the owner does’t come up with the past-due payments. In this case, you can approach the homeowner directly and make an offer before the auction takes place.
If your offer covers the existing mortgage, you can add a cushion so the owners have enough money to relocate. Even added together, this amount might still be below market value.

Buying a Home After Foreclosure

Lenders don’t have to let the house go to the highest bidder at auction if the bid is less than the mortgage balance. When this happens, the lender keeps the house. You can make a purchase offer to the lender, but it will generally want market value for the property, not just the amount of the outstanding mortgage.

Set Aside Money for Repairs

Whether you buy the home from the lender, the owner, or at auction, you take it in “as is” condition. If the house you buy needs repairs, neither the owner nor the lender will make them. It can be difficult to know how much to set aside for repairs if you buy at auction, because you may not have a chance to inspect the house first.

Be Wary of Liens on Property

If you buy at auction, and if one of the owner’s creditors took a lien against the property, you’re usually responsible for paying it after the sale. The lien transfers to you as the new owner.

A Foreclosure Lawyer Can Help

The law surrounding the purchase of foreclosured residential property is complicated. Plus, the facts of each case are unique.  For more detailed, specific information, please contact our office.

Pick The Right Insurance Policy

Owning a home may be the American dream. But it’s also a mighty valuable asset, often filled with some expensive possessions, which you will want to protect in case of fire, theft, lawsuits and more.
Enter homeowner’s insurance, which is a type of property-casualty insurance. The property insurance covers your home and its contents. The casualty insurance protects against legal liability caused by injury to other people or damage to their property.  Now, do you have enough coverage?
Grabbing An Umbrella Policy
If you’ve lived in your home for five years or more and haven’t reviewed your coverage, you may be underinsured against a major loss. It’s easy to fix this. First, read the coverage limits when your policy comes up for renewal each year. If it would be impossible to rebuild your house for the amount specified in the policy, call the insurance company and have the coverage increased. Since it may cost more to rebuild your home than its current market value, insure it for replacement cost. While the market value of your home includes the land, don’t include land in the replacement cost.
A yearly insurance check-up should also account for any major purchases or additions. If you have put in a new kitchen and appliances, added a room to your house or purchased a large home-entertainment system, you may want to increase your coverage. You may also want separate riders to cover expensive jewelry or artwork. But since the purpose of insurance is to prevent a financial disaster and to cover every small loss, consider whether you can afford to replace these items out-of-pocket.
All homeowner’s and auto policies come with liability coverage to protect against judgments arising from injury to others on your property or in an auto accident. But standard liability coverage, even if it’s $300,000 to $500,000, will not be enough to protect against a court judgment that could be $1 million or more. For this, you might want an “umbrella” or “excess liability” policy. According to the Insurance Information Institute, you can typically buy a $1 million umbrella policy for about $150 to $300 a year. The next million will cost about $75 and about $50 for every million after that. The cost may be higher in large metropolitan areas. You will likely have to buy the umbrella policy from your existing homeowner’s or car insurance company.

Credit Card Fraud On The Phone

Credit cards: Americans love them and so do the Scam Artists. With the convenience of having a credit card comes some risks – credit card fraud. The following scam has been around for some time and continues to defraud people
The Scam
You receive a call from a person claiming to be employed either at Visa or MasterCard. The caller claims to be calling from the Security and Fraud Department and tells you that your card has been flagged for an unusual purchase pattern. The caller then cites a particular purchase (typically under $500) and asks if you really purchased the questionable item. When you respond, “No”, the caller then promises to credit your account with the amount and begin a fraud investigation. The caller typically asks certain identity question, such as address and more importantly, your credit card security number (the 3 or 4 digits in the back of the card).
The caller succeeds in obtaining the security information on your account and then uses that information to make a purchase. Unless you know this is a scam, when you get your credit card statement and see the fraudulent charge, you assume that the investigation is under way and is being taken care of. Meanwhile, this is all a scam. The purpose of the scam is to get that 3-4 digit security number.
How Can You Protect Yourself?
With this particular scam, don’t give out any information over the phone unless you call the number provided in the back of your card. If you do receive a phone call reporting a fraudulent charge, hang up and call the number provided on your card.
If you have already fallen victim to this or a similar scam, contact your credit card company. Visa and MasterCard have also been encouraging defrauded consumers to file a police report.
Credit Card Fraud Prevention Tips
Credit card fraud is a serious crime as well as an inconvenience. Follow these tips so you may be able to avoid scams and fraudulent charges.
1.  Keep an eye on your credit card every time you use it, and make sure you get it back as quickly as possible.
2.  Be very careful to whom you give your credit card.
3.  Don’t give out your account number over the phone unless you initiate the call and you know the company is reputable. Never give your credit card information out when you receive a phone call. For example, if you’re told there has been a “computer problem” and the caller needs you to verify information. Legitimate companies don’t call you to ask for a credit card number over the phone.
4.   Never respond to e-mail messages that request you provide your credit card info via e-mail, and don’t ever respond to e-mail messages that ask you to go to a Web site to verify personal (and credit card) information. These are called “phishing” scams.
5.  Never provide your credit card information on a Web site that is not a secure site.
6.   Shred all credit card applications you receive in the mail.
7.   Don’t write your PIN number on your credit card – or have it anywhere near your credit card (in the event that your wallet gets stolen).
8.   Never leave your credit cards or receipts lying around.
9.   Shield your credit card number so that others around you can’t copy it or capture it on a cell phone or other camera.

10.  Keep  a  list  in  a  secure  place  with all of your account numbers and expiration  dates, as well  as  the  phone  number and address of each bank that  has  issued you a credit card. Keep this list updated each time you get a new credit card.

11.   Only  carry  around credit cards that you absolutely need. Don’t carry around extra credit cards that you rarely use.
12.   Open  credit  card  bills  promptly  and  make sure there are no bogus charges. Treat  your credit card bill like your checking account – reconcile it  monthly.  Save  your  receipts  so  you  can   compare  them  with  your monthly bills.

13.  If  you find any charges that you don’t have a receipt for – or  that  you don’t  recognize – report  these  charges  promptly  (and  in writing)  to the credit card issuer.

14. Always void and destroy incorrect receipts.
15. Shred anything with your credit card number written on it.
16. Never  sign  a  blank  credit card receipt. Carefully draw a line through blank   portions   of   the   receipt   where   additional   charges   could   be fraudulently added.
17. If  there  is  a  carbon that is used in a credit card transaction, destroy it immediately.
18. If you move, notify your credit card issuers in advance of your change of address.