Three Estate Planning Tips to Avoid Probate


Probate is the process of validating the legitimacy of a will, distributing assets according to that will or intestate laws if no will is present, and paying any claims of the deceased’s creditors. This process is known to be fairly expensive, including costs such as hiring attorneys, appraisers, accountants, auctioneers, etc. The probate process can also be very lengthy, in extreme circumstances lasting a couple of years. The process is also open to public inspection. For these reasons, many people try to avoid the probate process all together. Here are three easy tips to avoid your assets passing through probate: JTWROS: Add a “joint owner with right of survivorship” to a bank account or other property. For married couples, using the distinction of “tenancy by the entirety” is another alternative. Be cautious of any taxable gifts this strategy may create, either immediately or in the future. Also be aware that there are...

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Retirees get significant tax benefits in New York State


New York State has long been known as the “land of taxes.” Higher-than-average real estate, income, and sales taxes have been a reality for many years. However, New York offers some significant tax breaks to older residents, making it less onerous to retire and remain in the state.   Here are some of the major tax breaks a retiree in New York can look forward to:   Taxes on Social Security: The good news here is that all Social Security income is tax-free in New York, regardless of your income or the size of your Social Security benefit. The federal government may tax some of your Social Security benefit if your income is above certain guidelines, but New York will take a pass. This is an important benefit and a bonus for New Yorkers since 12 other states levy income taxes on Social Security benefits if their residents pay federal income taxes on the...

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Beneficiary Designations: What is the difference between Per Stirpes and Per Capita?


You’ve done your part to set up a will and properly named your beneficiaries on key accounts. You’ve made your first important moves in the sometimes complicated process of estate planning. Suddenly, a tragic death in the family has you wondering “What will really happen with my assets when I pass?” Properly setting up your beneficiary designations is critical to ensuring your wishes are followed when you’re gone.   When a Parent Loses a Child When a parent loses a child a “per stirpes” or “per capita” designation comes into play. These estate planning terms may seem like mere legal jargon, but they are crucial to ensuring that your assets pass to your heirs according to your wishes. The terms are added to a beneficiary titling to determine where the deceased child’s share of your inheritance will go.   Per Stirpes – This designation means that if one of your children dies before you, their...

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The Most Important Number You Need To Know When Thinking About Retirement


When meeting with clients who are about to retire I inevitably come to the question of how much money do you need each year to live on? Very few people have an answer to that question. If you don’t know how much you need how can you ever expect to know if you are ready to retire? Let me give you an example: if someone asked you to help budget how much gas they might need for an upcoming road trip what would you ask them? Obviously you’d ask where they are going.  Now imagine they said they didn’t know.  There would be no way for you to help them because you don’t know if they are driving across the country or across town. Knowing how much you need to live on is vital to preparing for retirement.  Unfortunately this means you need to budget, which is one of those things we...

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Federal Student Loans: Should the Parent or Child Take out the Loan?


Every parent wants to do what is best for their child and give them a chance to lead a successful life. For many this ideal includes a college education. This is why many parents sign for student loans without a second thought to what the implications might be. The Federal government offers loans to parents to help pay for their child’s college education, these loans are called Parent PLUS loans. Students have several loan options including Federal Perkins loans, Subsidized and Unsubsidized Stafford loans, and Graduate PLUS loans. Below I’ll compare the Parent PLUS loans to the Direct Subsidized and Unsubsidized Stafford loans a student can receive.   Interest Rates When using Federal student loans, students may be eligible for subsidized or unsubsidized loans. For loans disbursed between 7/1/2017 and 7/1/2018, undergraduate students will pay an interest rate of 4.45%. Conversely, parents under the PLUS loans program will pay 7% in interest. The...

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Investing in the markets vs. saving at the bank


The difference between putting your money in an insured bank savings account and investing it in the stock market seems obvious. Money at the bank doesn’t fluctuate in value, assuming there are no fees on the account. Money in the stock market fluctuates minute by minute, and there is no guarantee you will get out what you put in. But there is another big difference that savvy investors understand: saving large amounts of money at the bank allows the bank to take advantage of your hard-earned money. Investing in stocks allows you to earn all of the potential profits from your investment, rather than having to share them with someone else. Put your money in the bank and it will guarantee the principal and pay you interest. Sounds like a sweet deal, but you have to realize the banks are not charities. They are profit-making enterprises. They are willing to pay you...

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Small business owners: Is your retirement plan working for you?


Many small employers offer 401-k retirement plans as an employee benefit.  These plans offer a method for individuals to save and invest for their own retirement security and reward them with tax benefits and often some form of employer contribution.  For most employees, their 401-k plan is the most effective wealth building and retirement planning tool in their financial planning toolkit.  For the employer, it is a tool to recruit, reward, and retain the best employees and to be competitive in the labor marketplace. However, the owners of small firms are usually employees too.  They have their own unique set of retirement, tax, and investment goals.  In the financial planning/investment management world, we often speak of proper diversification as a tool to reduce risk when managing a portfolio.  But the prototypical highly-focused and hardworking entrepreneur often concentrates the majority of their resources (time, effort, and money) into one asset; their business...

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Interest rates flash a warning


It is a common misperception to think the stock market is a good predictor of things to come. Savvy investors know that the bond market and current bond interest rates are important indicators to monitor. You’ll hear experts talking about the “yield curve,” which is simply the shape of the line on a chart of interest rates, ranging from short-term rates offered on one-month Treasury Bills to those offered on 30-year Treasury Bonds. Normally, short-term interest rates are lower than long-term rates, and the yield curve slopes upward left to right. In that case, investors are betting the economy will grow and prices will rise over time. In order to protect themselves against inflation, longer-term investors demand higher interest rates. This year, that upward curve has been flattening out: even though the Federal Reserve has raised short-term interest rates to 1%, long term rates in recent weeks have dropped slightly, rather than increased....

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A first-time homebuyer’s guide


Buying your first home is exciting! Start out by considering your needs, wants, and wishes for your new home.  Some first time buyers want to start out smaller and buy the classic “starter home." Others prefer to wait until they are financially ready to buy a home they plan on staying in for several decades. What can you afford? How should you run some initial calculations? Several factors play into what your monthly mortgage payment will be. First, what is the amount you plan on borrowing (cost of the home minus your down payment)?  Second, what is the interest rate you will be charged by the bank? A quick Google search will give you a good idea what current mortgage interest rates are. The length of your mortgage also makes a difference. If you choose a 15-year mortgage, your payments will be higher and interest rates will be lower when compared...

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