Building awareness about the financial planning profession

The first factor you should consider when choosing a school for your financial planning certificate is whether they are accredited or not. 

An accredited university is recognized by an accrediting agency deemed suitable for this task by the Department of Education. 

In addition to checking for accreditation, you'll also want to do some research of your own into the course materials and the success of graduates of this program. Make sure their courses are going to give you the kind of training you need for this job, and find out whether past graduates are working in the field and doing well.

The candidate must demonstrate that he or she has extensive experience in the financial planning field. 
The CFP Board defines work experience as "the supervision, direct support, teaching or personal delivery of all or part of the personal financial planning process to a client" and such experience must fall within one or more of the following six primary elements of financial planning.

FPA collaborates with other organizations to help the public discover the value of financial planning and build awareness about the financial planning profession. 
Examples include a partnership with the AARP, which resulted in a guide for financial professionals working with older clients, and a partnership with SallieMae in which FPA and Nellie Mae conducted student loan repayment and financial planning seminars in schools and graduate programs across the country.

The Certified Financial Planner (CFP) designation is a professional certification mark for financial planners conferred by the Certified Financial Planner Board of Standards (CFP Board) in the United States, and by 25 other organizations affiliated with Financial Planning Standards Board (FPSB), the international owner of the CFP mark outside of the United States. 

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from Choosing A Financial Planner
Questions and Answers - Blog http://ift.tt/1KroNGf

SSA administers the retirement, survivors, and disabled social insurance programs

SSA administers the retirement, survivors, and disabled social insurance programs, which can provide monthly benefits to aged or disabled workers, their spouses and children, and to the survivors of insured workers. 

In 2010, more than 54 million Americans received approximately $712 billion in Social Security benefits. The programs are primarily financed by taxes which employers, employees, and the self-insured pay annually. 

These revenues are placed into a special trust fund. These programs are collectively known as Retirement, Survivors, and Disability Insurance (RSDI).

The nearly 500 page social security book is split into sixteen chapters plus an index. All the chapters contain clear to see advice on the chapter topic, with side bars, tables, cautions, lists, and extra resources. The group of the book makes it easy to determine the various components best for your own situation or needs. Again, the publication does a very good job of providing basic information regarding the themes within an straightforward way. 

The chapters or topics include: Social Security, Basic fundamentals; Social Security Retirement Benefits; SS Disability Benefits; SS Dependents Benefits; SS Survivors Benefits; When you should Claim Social Security Benefits, and What type to say; Supplemental Security Income; Getting Benefits; Appealing a Social Security Decision; Federal Civil Service Retirement Benefits; Veterans Benefits; Medicare; Medicare Procedures: Enrollment, Claims, and Appeals; Medigap Insurance; Medicare Part C: Medicare Advantage Plans; and Medicaid and State Supplements to Medicare.

During working years, the low wage worker is eligible for the Earned Income Tax Credit (FICA refunds) and Federal child credits and may pay little or no FICA tax or Income tax. By Congressional Budget Office (CBO) calculations the lowest income quintile (0 20%) and second quintile (21 40%) of households in the U.S. pay an average income tax of  3% and  6% and Social Security taxes of 3% and 9% respectively. By CBO calculations the household incomes in the first quintile and second quintile have an average Total Federal Tax rate of 0% and 8% respectively. Higher income retirees will have to pay income taxes on 85% of their Social Security benefits and 100% on all other retirement benefits they may have.

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from SOCIAL SECURITY BENEFITS EXPLAINED - Blog http://ift.tt/1NsD18i

Deciding when to begin receiving Social Security benefits is a complicated decision

Deciding when to begin receiving Social Security benefits is a complicated decision. 

You'll need to consider a number of scenarios, and take into account factors such as both spouses' ages, estimated benefit entitlements, and life expectancies.

A Social Security representative can't give you advice, but can help explain your options.

You also have the right to retain a social security benefits attorney to represent your case. 

According to some statistics, claimants that have been represented by attorneys have become more successful in receiving their benefits. Following this fact, you must consider the advantageous points regarding having an attorney to represent your disability claim.

It is very simple to become eligible for social security benefits. You need to accumulate at least forty social security credits during your working life to qualify for the minimum social security income.  You can earn a maximum of four credits in a year, and the amount of earned income needed to obtain a social security credit is set each year. 

For example, in 2011 you need to have at least $1,120 of earned income to obtain one credit.  This makes it fairly easy for most people to obtain the four credits each year and qualify for the minimum social security benefits after 10 years of working.

All people who want to avail or to receive Social Security benefits must first submit an application and wait for its approval. 

However, there are various instances wherein denial of Social Security application occurs and necessary steps can be taken by a person in order for an application to be reconsidered.

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from SOCIAL SECURITY BENEFITS EXPLAINED - Blog http://ift.tt/1GIT4ZT

The development of your personal financial plan is only the beginning

Basically, personal financial planning will take into account the following areas: budgeting, savings and investment, insurance, management of "big ticket" items, cash flow management. 

A good financial planning book will let you know that a good financial plan starts with budgeting, and it is true. A budget enables you to decide how much you can spend and keep. 

Of course, the main idea is to ensure that your outgoings (expenses) do not exceed your income. This will create excess funds with which to save and invest.

To really benefit from financial planning you have to be as open and honest as you can as only when your financial advisor really has an understanding of your goals, both long and short term, can they set into motion a plan of action that is suited to you, your lifestyle and future. 


The development of your personal financial plan is only the beginning of a long term relationship, financial planning services should be ongoing and include an annual review of the performance of your investments, any changes in your situation and what needs to happen next to carry on meeting your financial objectives.

One would definitely like to know as why financial planning is so important and specific to Phoenix. The reason is because Phoenix is not a major manufacturing region in the country or even in the state. Owing to its pristine white beaches, it attracts a lot of tourists and hence tourism is one of the thriving businesses here. 

Also due to its idyllic setup it is a favored place for retired people as well. Little industries do exist but they are not as big or important to change/alter the economy of the city. Moreover, there are more people employed in various services (mainly state and federal) than people in any other sector. 

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from Choosing A Financial Planner
Questions and Answers - Blog http://ift.tt/1LEtFZ1

Your Financial To-Do List

Things you should be thinking about every year.

 

What are your financial, business or life priorities? Your goals? Specify them, then consider investing, saving or budgeting methods you could use to realize them.

Think about deductions. If you have made a great deal of money in a given year and have the option of postponing a portion of the taxable income until the following year – that may bring some tax savings.

Can you maximize your retirement plan contribution at the start of the year? If you can do it, and you want to do it, do it early – the sooner you make your contribution, the more interest those assets may earn.

Required Minimum Distributions? Retirees over age 70½ must take RMDs from traditional retirement plans. Make sure you are aware of the deadlines.

Transaction? Did you (or will you) sell any real property this year? Start a business? Receive a bonus? Sell an investment held outside of a tax-deferred account? These moves may have an impact on your taxes.

Charitable gifts? Remember, if you make charitable contributions this year, you may claim the deductions on your return.

Mortgage payments? Can you make a January mortgage payment in December, or make a lump sum payment on your balance? If you have a fixed-rate mortgage, a lump sum payment may reduce the loan amount and total interest paid.

Life changes? Did you marry or divorce? You may want to change beneficiary designations and/or take look at your insurance coverage. If your last name is changing, you will need a new Social Security card. Are you returning from active duty? Check the status of your credit, and the state of any tax and legal proceedings that might have been preempted by your orders. Review the status of your health insurance, and revoke any power of attorney you may have granted to another person.

Do not delay – get it done. Talk with a qualified financial or tax professional so you can focus on being financially healthy from year to year.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

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Choose the financial planner who is with the Planning Association

Recommendation; avoid getting involved with a financial planner who is completely new to you. Ask around from people if they know anyone they trust in financial planning. 

Meet only those financial planners who come recommended. 

Choose the financial planner who is with the Planning Association so that the person is following at least a certain code of ethics. Before you sign up to show them your books, meet with them and ask them about their experiences, qualification and specialization. 

Make sure that they understand your problems and what you expect from them.

One of the most widely used standards adopted by practicing financial planners in several countries is the CFP service mark which originates in the United States. 

However, each country has its own rules and laws about how this certification can be used in promoting or practicing financial planning (for reasons of consumer protection and to comply with local financial services legislation). 

For example, in the UK, it is conferred by the Institute of Financial Planning and the FPSB UK, now an accredited body for awarding qualifications on the Qualifications and Credit Framework (QCF).

Financial Advisor, Financial Consultant, Investment Advisor, Financial Planner, Registered Representative, Stock Broker, Variable Products Agent or Insurance Agent are many of the terms used in the financial services industry to describe the professional duties performed. Fee based or commission based compensation are terms which get thrown into the mix, causing client confusion. 

In reality, a licensed professional can have all of those titles, perform all of those services, which we just identified, and work in a fee or commission based capacity with a client.

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from Choosing A Financial Planner
Questions and Answers - Blog http://ift.tt/1TYn0LM

Women, Money, and the Long-Term

Are you too focused on the short-term?

 

How many short-term financial decisions do you make each week? You probably make more than a few, and they may feel routine. Yet in managing these day-to-day issues, you may be drawn away from making the long-term money decisions that could prove vital to your financial well-being.

 

How many long-term financial decisions have you made for yourself? How steadily have you saved and planned for retirement? Have you looked into ideas that may help to lower your taxes or preserve more of the money you have accumulated?

 

Start by taking inventory. Look at your investments and savings accounts: their balances, their purposes. Then, look at income sources: yours, and those of your spouse or family if applicable. Consider your probable or possible income sources after you retire: Social Security and others.

 

This is a way to start seeing where you are financially in terms of your progress toward a financially stable retirement and your retirement income. It may also illuminate potential new directions for you:

 

• The need to save or invest more (especially since parenting or caregiving has the potential to, at some point, interrupt your career and/or affect your earnings.)
• The need for greater income or additional income sources down the road.
• Risks to income and savings (and the need to plan greater degrees of insulation from them.)

 

Devoting even just an hour of attention to these matters may give you a clearer look at your financial potential and needs for tomorrow. Proceed from this step to the next: follow with another hour devoted to a meeting with an experienced financial professional.

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

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The New Gradual Retirement

Working a little (or a lot) after 60 may become the norm.

Do we really want to retire at 65? Not according to the latest annual retirement survey from the Transamerica Center for Retirement Studies which gauges the outlook of American workers. It found that 51% of us plan to work part-time once retired. Moreover, 64% of workers 60 and older wanted to work at least a little after 65 and 18% had no intention of retiring.¹ 

Are financial needs shaping these responses? Not entirely. While 61% of all those polled in the Transamerica survey cited income and employer-sponsored health benefits as major reasons to stay employed in the “third act” of life, 34% of respondents said they wanted to keep working because they enjoy their occupation or like the social and mental engagement of the workplace.¹    

It seems “retirement” and “work” are no longer mutually exclusive. Not all of us have sufficiently large retirement nest eggs, so we strive to stay employed – to let our savings compound a little more, and to leave us with fewer years of retirement to fund.

We want to keep working into our mid-sixties because of two other realities as well. If you are a baby boomer and you retire before age 66 (or 67, in the case of those born 1960 and later), your monthly Social Security benefits will be smaller than if you had worked until full retirement age. Additionally, we can qualify for Medicare at age 65.^2,3

We are sometimes cautioned that working too much in retirement may result in our Social Security benefits being taxed – but is there really such a thing as “too much” retirement income?

Income aside, there is another question we all face as retirement approaches.

How much control will we have over our retirement transition? In the Transamerica survey, 41% of respondents saw themselves making a gradual entry into retirement, shifting from full-time employment to part-time employment or another kind of work in their sixties.¹

Is that thinking realistic? It may or may not be. A recent Gallup survey of retirees found that 67% had left the workforce before age 65; just 18% had managed to work longer. Recent research from the Employee Benefit Retirement Institute fielded roughly the same results: 14% of retirees kept working after 65 and about half had been forced to stop working earlier than they planned due to layoffs, health issues or eldercare responsibilities.³

If you do want to make a gradual retirement transition, what might help you do it? First of all, work on maintaining your health. The second priority: maintain and enhance your skill set, so that your prospects for employment in your sixties are not reduced by separation from the latest technologies. Keep networking. Think about Plan B: if you are unable to continue working in your chosen career even part-time, what prospects might you have for creating income through financial decisions, self-employment or in other lines of work? How can you reduce your monthly expenses?   

Easing out of work & into retirement may be the new normal. Pessimistic analysts contend that many baby boomers will not be able to keep working past 65, no matter their aspirations. They may be wrong – just as this active, ambitious generation has changed America, it may also change the definition of retirement. 

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

    

Citations.

1 – http://ift.tt/1BBwBC3 [5/5/15]

2 – http://ift.tt/z8sL5x [6/11/15]

3 – http://ift.tt/1JHNbSs [5/22/15]

 

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You Could Retire…But Should You?

It might be better to wait a bit longer.

 

Some people retire at first opportunity, only to wish they had waited longer. Thanks to Wall Street’s long bull run, many pre-retirees have seen their savings fully recover from the shock of the 2007-09 bear market to the point where they appear to have reached the “magic number.” You may be one of them – but just because you can retire does not necessarily mean that you should.

Retiring earlier may increase longevity risk. In shorthand, this is the chance of “outliving your money.” Bear markets, sudden medical expenses, savings shortfalls, and immoderate withdrawals from retirement accounts can all contribute to it. The downside of retiring at 55 or 60 is that you have that many more years of retirement to fund.

Staying employed longer means fewer years of depending on your assets and greater monthly Social Security income. A retiree who claims Social Security benefits at age 70 will receive monthly payments 76% greater than a retiree who claims them at age 62.¹

There are also insurance issues to consider. If you trade the office for the golf course at age 60 or 62, do you really want to pay for a few years of private health insurance? Can you easily find such a policy? Medicare will not cover you until you turn 65; in the event of an illness, how would your finances hold up without its availability? While your employer may give you a year-and-a-half of COBRA coverage upon your exit, that could cost your household more than $1,000 a month.^1,2

How is your cash position? If your early retirement happens to coincide with a severe market downturn or a business or health crisis, you will need an emergency fund – or at the very least enough liquidity to quickly address such issues.

Does your spouse want to retire later? If so, your desire to retire early might cause some conflicts and impact any shared retirement dreams you hold. If you have older children or other relatives living with you, how would your decision affect them?  

Working a little longer might be good for your mind & body. Some retirees end up missing the intellectual demands of the workplace and the socialization with friends and co-workers. They find no ready equivalent once they end their careers.

Staying employed longer might also help baby boomers ward off some significant health risks. Worldwide, suicide rates are highest for those 70 and older according to the World Health Organization. Additionally, INSERM (France’s national health agency) tracked 429,000 retirees and pre-retirees for several years and concluded that those who left the workforce at age 60 were at 15% greater risk of developing dementia than those who stopped working at 65.³

It seems that the more affluent you are, the more likely you are to keep working. Last year, Bank of America’s Merrill Lynch and Age Wave surveyed wealthy retirees and found that 29% of respondents with more than $5 million in invested assets were still working. That held true for 33% of respondents with invested assets in the $1-5 million range. Most of these millionaires said they were working by choice, and about half were working in new careers.¹  

Ideally, you retire with adequate savings and a plan to stay physically and mentally active and socially engaged. Waiting a bit longer to retire might be good for your wealth and health.

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – tinyurl.com/o8lf6z2 [8/1/14]

2 – http://ift.tt/1EXHWfZ [2/5/15]

3 – http://ift.tt/1IuYKIo [3/20/15]

 

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The U.S. Savings Bond Tax Trap

Open that safe deposit box. See if your bond has matured.

 Did you buy U.S. Savings Bonds decades ago? Or did your parents or grandparents purchase some for you? If so, take a look at them before April 15 rolls around. Your bonds may have matured. That means they are no longer earning interest, and it also means you need to cash them in.¹

Check those maturity dates. Sometimes people hold U.S. Savings Bonds past the date of final maturity, often by accident. The old bonds are simply stashed away somewhere and forgotten.

While the Treasury will not penalize you for holding a U.S. Savings Bond past its date of maturity, the Internal Revenue Service will. Interest accumulated over the life of a U.S. Savings Bond must be reported on your 1040 form for the tax year in which you redeem the bond or it reaches final maturity. This must be done even if you (or the original bondholder) chose to have the interest on the bond accumulate tax-deferred until the final maturity date. Failure to report such interest may lead to a federal tax penalty.²

You are supposed to pay tax on a U.S. Savings Bond in one of two ways. Most bondholders choose to defer the tax until the bond matures. Once they redeem the bond, they report the interest through a 1099-INT form. Others choose to pay the tax annually prior to cashing the bond in, reporting the increase in the value of the bond as taxable interest each year.^2,3

What if you find out you have held a U.S. Savings Bond for too long? You need to amend your federal tax return for the year in which the bond reached final maturity. You can file an amended return with the help of IRS Form 1040X. It may seem more logical and less arduous to report the forgotten, accumulated U.S. Savings Bond interest on your latest federal tax return, but the IRS does not want you to do that. The longer you leave the accumulated interest unreported, the greater the chance you will be cited for a tax penalty (or assessed a larger one than the one already in store for you).²

Another note about reporting interest: if a U.S. Savings Bond has matured and you have failed to redeem it, you will not find a Form 1099-INT for it in your records. Only redemption will bring that 1099-INT your way. (The accumulated interest for the bond should have been reported to the IRS regardless.) After you cash in that old bond, you will thereafter receive a 1099-INT. It will record that the interest on the bond was earned in the year of the bond’s final maturity.²

Plan ahead & keep track. U.S. Savings Bonds were issued on paper for decades and were often purchased on behalf of children and grandchildren. They are issued electronically now and receive little recognition, yet they can still prove quite useful to a retiree looking to improve cash flow. When you cash in a bond, or even multiple bonds, the “cash infusion” may help you put off withdrawing assets from another retirement account. While the interest on U.S. Savings Bonds is taxed by the IRS, it is exempt from state and local taxes.⁴

You want to keep track of the maturity dates, the yields and the interest rates on your bonds, as that will help you to figure out what bond to redeem when. A decades-old U.S. Savings Bond may cash out at anywhere from three to nine times its face value at full maturity.⁴

A useful search tool. Do you own a Series E U.S. Savings Bond? You might want to check on its maturity date at http://ift.tt/1K0PxNB, which provides records of Series E bonds issued since 1974.⁵

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. 

 

Citations.

1 – http://ift.tt/1RhBqm0 [3/2/15]

2 – http://ift.tt/1K0PxND [3/18/15]

3 – http://ift.tt/1RhBqm2 [2014]

4 – http://ift.tt/1K0PxNH [1/26/14]

5 – http://ift.tt/1ohEP5m [9/19/14]

 

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Protecting Yourself Against Cyberattacks

How vulnerable is your data?

 

25% of Americans were cyberhacked between March 2014 and March 2015. The American Institute of CPAs announced that alarming discovery in April, publishing the results of a survey conducted by Harris Poll. Disturbing? Certainly, but the instances of pre-retirees being victimized were even greater – 34% of adults aged 55-64 reported having their data stolen or compromised within that period.¹

  

Small businesses are also commonly victimized. While identity theft has eroded consumer and employee trust in Target, Sony, Home Depot, Anthem and Wells Fargo, they will survive; a small business with limited IT resources may not. Symantec says that 30% of all targeted cyberattacks occur against firms employing fewer than 250 workers. The National Cyber Security Alliance says that the average small business that gets hacked has a 60% chance of closing its doors within six months.²

Hackers will not put your household out of business, but they can steal the assets within your checking account or your workplace retirement plan in seconds. They can also take your Social Security number, email address, annual income data and more and sell it or retain it to hurt you in the future.

 

Cyberattacks within the financial world are especially frightening. Bank and brokerage accounts are respectively insured by the FDIC and SIPC, yet that insurance only protects a customer or client in cases of institutional failure. It does not cover cybertheft.³

 

How can you strengthen your online defenses against cyberthieves? One way to do that is through two-factor authentication, or 2FA.

Corporations are starting to realize the vulnerability of a username-password combination. Given that so many usernames are derivations of real names, and given that many passwords are still mentally convenient, a hacker can access such accounts with relative ease.

If a company installs another security factor beyond the username-password combination – such as a voiceprint audio I.D. or a one-time numeric code texted to your phone to permit account access – hacking an account becomes much harder. This two-factor authentication may become the norm in the near future.  

Too many Americans use simple passwords, sometimes at multiple websites. (Did you know that “password” is one of the most commonly used passwords?) Fortunately, free software has emerged to generate random passwords for different accounts. High net worth households are discovering Norton Identity Safe, RoboForm, LastPass, Dashlane and other apps capable of creating super-strong passwords.⁴

Aside from using stronger passwords, avoid falling prey to the classic mistakes. When you use free Wi-Fi at a coffeeshop or airport or make a bid at an online auction site of questionable origin, you are taking your chances. The same goes for opening mystery email attachments and sharing private data on websites lacking the HTTPS protocol.

 

Will cybersecurity improve in the coming years? A widely adopted 2FA standard may make online theft much harder to pull off. Other defenses are being touted, some with more merit than others. Using a fingerprint as a password sounds good, but has a crippling drawback: you can change a password, but try changing your fingerprint. Some consumers are getting new EMV-equipped credit and debit cards that rely on microchips rather than magnetic strips; many of these are not the chip-and-PIN cards common to Europe, however. Instead, they are chip-and-signature cards. The second security factor is simply you signing your name. Cybersecurity analysts believe that while the chip-and-signature cards are better than the old technology, they fall short of chip-and-PIN cards.⁵

True cybersecurity may prove elusive, but personal vigilance and password management software are good steps toward building a better defense against cyberattacks.

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – http://ift.tt/1TvfWGn [4/21/15]

2 – http://ift.tt/1GtwMyv [4/23/13]

3 – http://ift.tt/1TvfWWB [2/12/15]

4 – http://ift.tt/1TvfWWD [5/6/15]

5 – http://ift.tt/1TvfY0H [4/30/15]

 

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Social Security Survivor Benefits

How do you claim them? How much can you receive?

About 5 million widowed Americans get Social Security survivor benefits. If your spouse has passed, you may be eligible to collect them. This means that you could receive as much as 100% of your late spouse’s Social Security income in addition to your own.^1,2

Some widows and widowers aren’t aware of these additional retirement benefits. That’s a shame, because they can provide significant financial help during a period of uncertainty.

You can file for survivor benefits at age 60. In fact, you can claim them as early as age 50 if you are disabled (per Social Security’s definition of disability) and if the condition that left you disabled began before or within seven years of your husband’s or wife’s death. In contrast, you can’t put in a claim for spousal Social Security benefits until age 62.^1,3

You have to call Social Security to apply for these benefits. Dial 1-800-772-1213 to do that (or 1-800-325-0778 if you are deaf or have trouble hearing). The SSA doesn’t yet permit widows and widowers to apply for survivor benefits online.¹

You are actually calling to make an appointment at your local Social Security office, where you can file your survivor benefits application. The SSA says that the process will be faster if you complete its Adult Disability Report beforehand and bring it with you. You can download this form; you will find a link to it at http://ift.tt/1GHEeY9.¹

Are you eligible to receive all of your late spouse’s Social Security income, or less? That depends on a few factors. You can apply for the survivor benefits at full retirement age (66 or 67), and receive 100% of the monthly Social Security benefit of your late spouse. If you were to apply for survivor benefits somewhere between age 60 and full retirement age, you will receive between 71.5-99% of your late spouse’s monthly benefit.²

If you are disabled and file for survivor benefits in your fifties, then you will be poised to collect 71.5% of your late spouse’s monthly Social Security income.²

Are you caring for a child who is age 15 or younger? If so, you are eligible to collect a survivor benefit equaling 75% of your late spouse’s monthly Social Security income. In fact, that child is also in line to receive a 75% survivor benefit if he or she is a) younger than 18, b) a K-12 student younger than 19, or c) disabled. (In addition, it is also possible for a surviving spouse to collect a one-time $255 death payment if the spouse has already been getting benefits on the deceased worker’s Social Security record or became eligible for benefits upon that worker’s passing.)^2,4

In rare cases, even parents of deceased Social Security recipients are eligible for survivor benefits. If a deceased worker has parents who qualify as his or her dependents, those parents may receive survivor benefits if they are age 62 or older. If there is a single surviving parent, he or she can collect an 82.5% survivor benefit; if the late Social Security recipient was caring for two dependent parents, they can each collect a 75% survivor benefit.²

Social Security does cap the benefit amount that a family can receive. A household can’t get survivor benefits exceeding 150-180% of those received by the late Social Security recipient.²

Divorce is no barrier to survivor benefits. Divorced widows and widowers are eligible for them as well.²

What if you marry again? If you have been widowed and marry again after age 60 (or age 50 if you are disabled), you will still qualify for Social Security survivor benefits. If you remarry prior to age 60, however, you can’t receive survivor benefits while married.²

In certain circumstances, you can “switch out” of survivor benefits. If you remarry and your new spouse gets Social Security, you can apply for spousal benefits based on his or her earnings. If the amount of the spousal benefit would be greater than your survivor benefit, you will get benefits equal to the higher amount.²

Also, you can switch from collecting a survivor benefit to your own retirement benefit starting at age 62 (if you are eligible to collect Social Security at that time and your own benefit would be greater than the survivor benefit).²

Could a pension reduce your survivor benefits? Yes, it could. If you worked at a federal, state or local government job at which you didn’t pay Social Security taxes, the Government Pension Offset, or GPO, kicks in (with rare exemptions). Any pension you receive as a byproduct of that job will lower the amount of your survivor benefit by two-thirds of the amount of your pension. As an example, if you get $600 a month from your state government retirement fund, your $500 monthly survivor benefit would thereby be reduced by $400, or cut to $100 a month.⁵

       

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – http://ift.tt/1GHEeY9 [2/4/15]

2 – http://ift.tt/1IfIU4a [2/3/15]

3 – http://ift.tt/1GHEgPH [12/18/14]

4 – http://ift.tt/1IfIU4e [2/4/15]

5 – http://ift.tt/1IfIVVC [2/4/15]

The post Social Security Survivor Benefits appeared first on http://ift.tt/1zy8js2

What is “Money Management”?

Why do some Financial Professionals suggest third-party asset manager?.

 

Some investors are puzzled when a financial professional recommends third-party asset managers to supervise their portfolios. Why would they recommend turning over the active management of the portfolio to someone else?

Why? Because it may be in the best interest of the investor. The portfolio management capability and resources of a single financial professional or small financial consulting group can pale in comparison to what an outside money manager might provide.

It can be a value-added service. Most financial advisors devote their time to helping their clients address retirement and legacy planning issues. A third-party money manager allows them to spend more time focusing on these issues instead of which investments to be buying or selling.

Before a suggestion like this is made, the financial professional should evaluate the risks and goals associated with the investor prior to committing client capital, to ensure that the proposed move is appropriate for a client. They should also look at the third-party manager’s approach – its performance, how it hedges and why, what kinds of investments are being added and subtracted, how timely any changes in strategy have been deployed, and how often it communicates.

This is simply part of fiduciary responsibility. Before a financial professional can suggest a third-party asset manager to a client, they must study the makeup of the organization, its managers and its team, and product offerings.

A potential “step up” for the investor. Bringing in a third-party portfolio manager may help an individual investor access more sophisticated institutional investment strategies. Many of these management firms favor “open architecture” – an investor’s portfolio can include a wider variety of investments. Some allow the client and the financial professional the opportunity to monitor the portfolio in “real time” (or something approximating it). So “hiring out” the management of a portfolio could be a good choice for your situation.

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

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Reasons Not to Write Your Own Will

Do-it-yourself is cheaper, but you could do some things wrong.

 

 

Maybe you have seen those will-in-a-box kits. Maybe you have even considered picking one up. Think twice about that. While you can draft a will on your own, there are plenty of reasons why you may not want to go that route. Most people do it to save money, but they may overlook or forget to take care of some important details – details that may eventually cost them much more than the amount they could save. Some of the big mistakes include…

 

Ignoring state law differences. Many will kits and online wills and trusts do not take state laws regarding the administration of probate or trusts into account. An estate planning attorney will inform you of these state laws; a will kit or website may not.

 

Blind faith in software. While software or an online form can help you draft a will, there is no guarantee that the technology will ask you the specific, unique questions an attorney might pose in regard to the fine points of your estate. It may not even make you aware of them.

 

Not revoking an earlier will. Most wills contain boilerplate language that automatically revokes any preceding will. If you are writing your will totally on your own (some people still do), you may not realize the necessity of such a clause.

 

Assumptions. If you will property to an heir, what happens if you outlive that heir? What if you will an asset to a friend or relative today, and that asset is gone when your will is executed someday? These are things to think about that most people writing a will have not considered.

 

Vagueness. Sometimes executors are not given sufficient power by the language of a will. Sometimes a home will be left to a spouse in trust, but with no one assigned to pay for upkeep of the home during the rest of that widow’s lifetime. Alternate executors are sometimes omitted from wills, and names of non-profit groups can easily be misstated or misspelled, inviting complication and possible dispute of charitable intent.

 

Not getting it notarized. Regardless of how “official” your homemade will looks, it still requires witnessing and signing to be legally valid. There are many stories of people finding out that the will or living trust they paid money for is not actually binding as it has never been notarized.

Wills, trusts, and estate plans should be crafted with the help of attorneys. Fortunately, many financial professionals have relationships with attorneys. Instead of searching the Internet or the Yellow Pages for a stranger, ask the financial advisor you consult for a referral.

 

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. 

 

 

 

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Long-Term Investment Truths

Key lessons for retirement savers.

 

 

You learn lessons as you invest in pursuit of long-run goals. Some of these lessons are conveyed and reinforced when you begin saving for retirement, and others you glean along the way.

    

First & foremost, you learn to shut out much of the “noise.” News outlets take the temperature of global markets five days a week (and even on the weekends), and fundamental indicators serve as barometers of the economy each month. The longer you invest, the more you learn to ride through the turbulence caused by all the breaking news alerts and short-term statistical variations. While the day trader sells or buys in reaction to immediate economic or market news, the buy-and-hold investor waits for selloffs, corrections and bear markets to pass.

 

You learn why liquidity matters. The older you get, the more you appreciate being able to quickly access your money. A family emergency might require you to tap into your investment accounts. An early retirement might prompt you to withdraw from retirement funds sooner than you anticipate. If you have a fair amount of your savings in illiquid investments, you have a problem – those dollars are “locked up” and you cannot access those assets without paying penalties. In a similar vein, there are some investments that are harder to sell than others.

Should you misgauge your need for liquidity, you can end up selling at the wrong time as a consequence. It hurts to let go of an investment when the expected gain is high and the P/E ratio is low.

     

You learn the merits of rebalancing your portfolio. To the neophyte investor, rebalancing when the market is hot may seem illogical. If your portfolio is disproportionately weighted in equities, is that a problem? It could be.

Across a sustained bull market, it is common to see your level of risk rise parallel to your return. When equities return more than other asset classes, they end up representing an increasingly large percentage of your portfolio’s total assets. Correspondingly, your cash allocation shrinks as well.

The closer you get to retirement, the less risk you will likely want to assume. Even if you are strongly committed to growth investing, approaching retirement while taking on more risk than you feel comfortable with is problematic, as is approaching retirement with an inadequate cash position. Rebalancing a portfolio restores the original asset allocation, realigning it with your long-term risk tolerance and investment strategy. It may seem counterproductive to sell “winners” and buy “losers” as an effect of rebalancing, but as you do so, remember that you are also saying goodbye to some assets that may have peaked while saying hello to others that you may be buying at the right time.

 

You learn not to get too attached to certain types of investments. Sometimes an investor will succumb to familiarity bias, which is the rejection of diversification for familiar investments. Why does he or she have 13% of the portfolio invested in just two Dow components? The investor just likes what those firms stand for, or has worked for them. The inherent problem is that the performance of those companies exerts a measurable influence on the overall portfolio performance.

Sometimes you see people invest heavily in sectors that include their own industry or career field. An investor works for an oil company, so he or she gets heavily into the energy sector. When energy companies go through a rough patch, that investor’s portfolio may be in for a rough ride. Correspondingly, that investor has less capacity to tolerate stock market risk than a faculty surgeon at a university hospital, a federal prosecutor, or someone else whose career field or industry will be less buffeted by the winds of economic change.

 

You learn to be patient. Even if you prefer a tactical asset allocation strategy over the standard buy-and-hold approach, time teaches you how quickly the markets rebound from downturns and why you should stay invested even through systemic shocks. The pursuit of your long-term financial objectives should not falter – your future and your quality of life may depend on realizing them.

 

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

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The Value of Double-Checking Your Retirement

As you approach your “third act,” does it need to be adjusted?

 

Motivational speaker Denis Waitley once remarked, “You must stick to your conviction, but be ready to abandon your assumptions.” That statement certainly applies to retirement planning. Your effort must not waver, yet you must also examine it from time to time.¹

For example, the level of risk you chose to tolerate at 35 or 40 may not be worth tolerating at 55 or 60. Additionally, you may realize that you will need more retirement income than previously assumed. With those factors and others in mind, here are some signs that you may need to double-check your retirement strategy. 

 

Your portfolio lacks significant diversification. Many baby boomers are approaching retirement with portfolios heavily weighted in equities. As many of them will have long retirements and a sustained need for growth investing, you could argue that this is entirely appropriate. If your retirement is near at hand, however, you might want to consider the length of this bull market and the possibility of irrational exuberance.

The current bull has lasted about twice as long as the average one and brought appreciation in excess of 200%. It could rise higher: as InvesTech Research notes, two-thirds of the bull markets since 1955 have gained 20% or more in their final phase. Few analysts think a “megabear” will follow this historic rally, but even a typical bear market brings a reality check. The lesser bear markets since 1929 have brought an average 27.5% reversal for the S&P 500 and lasted an average of 12 months.²  

 

A poor quarter makes you anxious. You start watching the market like a hawk and check up on your investments more frequently than you once did. Some of this vigilance is only natural as you near retirement; after all, you have far more at stake than a millennial investor. Even so, this is a sign that you may be uncomfortable with the amount of risk in your portfolio. A portfolio review with a financial professional could be in order. A semi-annual or annual review is reasonable. One bad quarter should not tempt you to abandon a strategy that has worked for years, only to examine it in the face of sudden headwinds.

 

You find yourself listening to friends & pundits. Your tennis partner has an opinion about when you should claim Social Security. So does your dentist. So does a noted radio personality or columnist. Their viewpoints may be well-informed, but they are likely expressing what they would do as they share what they feel you should do. If you seem increasingly interested in the financial opinions of friends, acquaintances and even total strangers, or the latest “hot tip” on the market, this hints at anxiety or restlessness about your financial strategy. Perhaps it is warranted, perhaps not. It may be time to reexamine some assumptions.

 

You wonder about the demands your lifestyle may make on your finances. You want to travel, golf, and have fun when you retire, and those potential lifestyle expenses now seem larger than they once were. Here is another instance where you may want to double-check your retirement savings and income strategy. 

 

You see what were once “what-ifs” becoming probabilities. You sense that you or your spouse might face a serious health issue in the not-so-distant future. It looks as if you may end up raising one of your grandchildren. It seems likely that you will provide eldercare for a sibling who may move in with you. These life events (and others) may prompt a new look at your financial assumptions.

 

You think you will retire to another state. Say you retire to Florida. There is no state income tax in Florida. So your retirement tax burden may decrease with such a move (though some states have higher property taxes to offset the lack of state taxes). To what degree will geographic considerations affect your retirement income, or need for income? Such geographic factors are worth considering.³

 

You wonder how deeply inflation will impact your retirement income. A recent Morningstar analysis of retiree spending data compiled by the federal government noticed something interesting: for the typical retiree, spending declines in inflation-adjusted terms between age 65 and age 90. So the assumption that retirees increase household spending over time in light of inflation may be flawed. Of course, inflation has been mild for the past several years. If inflation spikes, however, that assumption might prove wholly valid.³

 

Looking at your retirement strategy anew has merit. As the years go by, priorities change and needs arise. New questions call for appraisals of old assumptions. Reviewing your approach to investing and saving at mid-life is only rational, for your retirement strategy must suit the objectives you now have before you rather than those you set in your past.  

 

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – http://ift.tt/1EG7QEk [4/16/15]

2 – http://ift.tt/1DbUuui [4/16/15]

3 – tinyurl.com/odyle9s [12/25/13]

The post The Value of Double-Checking Your Retirement appeared first on http://ift.tt/1zy8js2

Investing in Agreement With Your Beliefs

The case for aligning your portfolio with your outlook & worldview.

 

Do your investment choices reflect your outlook? Are they in agreement with your values? These questions may seem rather deep when it comes to deciding what to buy or sell, but some great investors have built fortunes by investing according to the ethical, moral and spiritual tenets that guide their lives.       

 

Sir John Templeton stands out as an example. Born and raised in a small Tennessee town, he became one of the world’s richest men and most respected philanthropists. Templeton maintained a lifelong curiosity about science, religion, economics and world cultures – and it led him to notice opportunities in emerging industries and emerging markets (like Japan) that other investors missed. Believing that “every successful entrepreneur is a servant,” he invested in companies that did no harm and which reflected his conviction that “success is a process of continually seeking answers to new questions.”¹

Among Templeton’s more famous maxims was the comment, “Invest, don’t trade or speculate.” Having endured the Great Depression as a youth, he had a knack for spotting irrational exuberance.^2,4

As the 1990s drew to a close, he correctly forecast that 90% of Internet companies would go belly-up within five years. In 2003, he warned investors of a housing bubble that would soon burst; in 2005, he predicted “financial chaos” and a huge stock market downturn. To Templeton, a rally or an investment opportunity had to have sound fundamentals; if it lacked them, it was dangerous.^3,4

 

Warren Buffett leaps to mind as another example. The “Oracle of Omaha” is worth $70 billion, and Berkshire Hathaway’s market value has risen 1,826,163% under his guidance – yet he still lives in the same house he bought for $31,500 in 1958, and prefers cheeseburgers and Cherry Coke to champagne or caviar. He was born to an influential family (his father served in Congress), but he has maintained humility through the decades.⁵

Money manager Guy Spier dined with Buffett in 2008 at one of the billionaire’s annual charity lunches, and in his book The Education of a Value Investor (co-written with TIME correspondent William Green), he shares a key piece of advice Buffett gave him that day: “It’s very important always to live your life by an inner scorecard, not an outer scorecard.” In other words, act and invest in such a way that you can hold your head high, so that you are staying true to your values and not engaging in behavior that conflicts with your morals and beliefs.⁵

Buffett has also cited the need to be truthful with yourself about your strengths, weaknesses and capabilities – as you invest, you should not be swayed from your core beliefs to embrace something that you find mysterious. “You have to stick within what I call your circle of competence. You have to know what you understand and what you don’t understand. It’s not terribly important how big the circle is. But it’s terribly important that you know where the perimeter is.”⁵

Speaking to a college class some years ago in Georgia, he cited the real reward for a life well lived: “When you get to my age, you’ll really measure your success in life by how many of the people you want to have love you actually do love you. I know people who have a lot of money, and they get testimonial dinners and they get hospital wings named after them. But the truth is that nobody in the world loves them. If you get to my age in life and nobody thinks well of you, I don’t care how big your bank account is, your life is a disaster.”⁵

Values and beliefs helped guide Templeton and Buffett in the markets, in business and in life. For all the opportunities they seized, their legacy will be that of humble and value-centered individuals who knew what mattered most.

  

Today, socially responsible investing looks better than ever. Investors who want to their portfolios to better reflect their beliefs and values often turn to “socially responsible” investments – or alternately, “impact” investments that respond to environmental issues, women’s rights issues and other pressing societal concerns. When they emerged in the late 1980s, people were skeptical about how well such investments would perform; that skepticism is still around, but it appears to be unwarranted.

    

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

    

Citations.

1 – http://ift.tt/1IgCdUK [5/7/13]

2 – http://ift.tt/1QoZMKd [5/5/15]

3 – http://ift.tt/1IgCeIl [7/11/08]

4 – http://ift.tt/1QoZMKh [2/10/14]

5 – http://ift.tt/1E1UnCN [5/4/15]

The post Investing in Agreement With Your Beliefs appeared first on http://ift.tt/1zy8js2

When a Minor is a Beneficiary

Some factors for parents & grandparents to consider.

 

 

Naming a minor as a beneficiary brings up a major concern. If parents or grandparents make a child a primary or contingent beneficiary of an insurance policy, IRA or investment account, they should be aware that most policies and investments will not directly transfer to a minor. They need to be received by a court-approved property guardian, a trustee of a children’s trust, or a revocable living trust beforehand.¹

 

State laws prevent children from receiving large lump sums. They commonly prohibit minors from owning real property worth more than $2,500-5,000 (the limit varies per state) or receiving cash inheritances greater than that. It is incredibly rare for insurers to distribute life insurance proceeds to minors.^1,3

As for POD checking and savings accounts and CDs, banks will usually allow the child or the child’s parent(s) to receive sums less than the aforementioned limits. For larger sums, the parent(s) will likely have to turn to a court and ask to be appointed guardians for the money if no property guardian, children’s trust or revocable living trust is in place.²

 

A personal guardian is not always a child’s property guardian. Usually, one person serves as both – but if that person lacks financial literacy or accountability, another property guardian may need to be appointed to manage assets for the child until the child turns 18. If that is desired, a court must review the choice of guardian and the inherited assets will be probated.³

 

How may circumstances like these be avoided? Parents or grandparents would be wise to consider three options.

 

A property guardian can be appointed for a child in a will. If an individual who may become the child’s personal guardian is negligent or incompetent at managing wealth, this may be worthwhile. The property guardian will need court approval to sell any of the inherited assets, and rules will govern how the assets are spent.³   

A property guardian should be someone likely to live at least until the child turns 18. A bank is the property guardian of last resort, as banks charge fees and have no personal stake here.

  

An UTMA custodianship may be arranged. In 49 states (South Carolina being the exception), an adult may be appointed as a custodian for assets left or gifted to a child under the Uniform Transfers to Minors Act (UTMA). This appointment is made through the language of a will or living trust. (Vermont recognizes only the older Uniform Gifts to Minors Act, or UGMA, under which the custodian is more rigorously supervised.)³   

The UTMA custodian serves as asset manager and financial recordkeeper, overseeing the assets inherited by or gifted to the child until the child turns 21 (18 in some states). He or she is authorized to manage, spend and invest these assets for the child’s benefit and eventual use and file the relevant tax returns. These actions do not need to be supervised by the courts. When the child turns 21 (or 18), the custodianship concludes and the child receives 100% of the assets – which may be a problem.³

 

A child’s trust is another possibility. A child’s trust, also called a testamentary trust, can be established through language in a will or living trust document; it allows a trustee to use the inherited assets to fund education, health care and everyday expenses for the child. The minor need not receive the funds at 21, as is usually the case with an UTMA custodianship; the assets can be received later in that individual’s life. A variation of this, the pot trust, provides for multiple children and lets a trustee vary the amount spent per child. A pot trust exists only until the youngest child reaches legal age; ideally, the children for whom the trust is created are born within several years of each other. If the children reach legal age or the age when they are supposed to receive the assets before the trust can be implemented, then it is revoked and the inherited assets simply pass to them. These trusts can be designed to try to minimize taxes and administrative expenses.^3,4

An irrevocable variant is the §2503(c) trust, or minor’s trust. A minor’s trust is funded with irrevocable transfers of assets, which commonly begin while the trust creator is living. The transfers are tax-exempt under the Internal Revenue Code; the wealth may accumulate within the trust without the trust creator being subject to gift or estate tax. A trustee manages the trust assets until a specified date or circumstance, and then they are distributed to the young adult heir.⁴

 

Naming a minor as a beneficiary means recognizing certain factors. Financially speaking, if you fail to appoint a trustee or a property guardian for a minor through your will or living trust, then you are leaving it open to the courts to decide who that trustee or guardian may be. So it is vital to address these matters. As one or more children approach legal age, terms of your will or revocable trust need to be reviewed and possibly changed as well.    

 

 

ICA does not provide tax or legal advice.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

    

Citations.

1 – http://ift.tt/1Q0828o [5/20/15]

2 – http://ift.tt/1M4pbZ1 [5/20/15]

3 – http://ift.tt/1Q0828q [5/20/15]

4 – tinyurl.com/kg5rdtx [5/20/15]

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