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Recent Blog Posts
Seventy Percent of Families Fight over Inheritance
According to projected statistics, more than $30 trillion will be passed from the baby boom generation (those born between the years 1946 to 1964) to their children and other heirs. How those baby boomers handle their estate planning could make a big difference in how much of their assets go to their heirs and how much is eaten up in legal battles.
A study that spanned over twenty years revealed that almost 70 percent of families lose a portion of their inheritance due to some kind of fight over the estate in which they are inheriting. And as some legal advisors point out, the battles are not always about money. Often, items such as a piece of jewelry or other heirloom can be in the middle of a contested battle between heirs.
Planning Your Estate: It Does Not Have to be Difficult
Many people do not like to think about estate planning because of the subject matter—facing one's mortality. They put off making plans or they just never actually sit down with an attorney to formulate what needs to be done. This inaction can often have negative consequences for the family that is left behind. However, estate planning does not have to be a difficult process. In fact, most planning can be done relatively simply, and once done, it can leave everyone involved with peace of mind.
To begin, first prepare what is called a "master document." This document should include information regarding all of your assets and debts. Additionally, include any pertinent information such as account numbers and passwords, as these accounts will need to be closed out. The master document should also contain information regarding any electronic accounts you may have, such as a digital music library or social media accounts. Include instructions regarding how assets are to be handled, as well as copies of a living trust, will, and additional estate documents.
Is a Reverse Mortgage Option the Best Choice?
Some seniors, in an effort to take advantage of the equity they have in their home, opt for a reverse mortgage, as a way to have extra money during their retirement years. A reverse mortgage lets you take a portion of your home's equity without having to take out a home equity loan through a lending institution (which would mean a monthly payment) or sell your home. In order to qualify for a reverse mortgage, you must be 62 years old or older.
With a reverse mortgage, there are no monthly payments like there are with a regular mortgage. Instead, a lender will give you the funds and you do not have to pay anything back unless you move out of the home, sell it or pass away.
When Is It Time to Write Your Will?
For most people, the thought of sitting down to write a will is somewhat unnerving. It requires thinking about a time when one is no longer alive, which is understandably difficult. According to the AARP, close to half of Americans age 45 and older have not yet written their will. Though it may be hard for some, taking the time to plan and write out a thorough will can save a family time and money.
Determining the "right" time to compose a will is not the same for everyone. Since a will must contain current information, it is a document that requires constant updates. Instead of searching for a specific age when writing a will is most appropriate, it makes more sense to view it as a periodically updated document.
Study Shows Correlation between Education and a Better Retirement
A recent study confirms that the more education a person has, the better off they are when it comes to retirement nest eggs and planning for the future.
The study was conducted by the National Center for Policy Analysis (NCPA) and used data and statistics provided by the U.S. Census, the Survey of Consumer Finances, the Bureau of Labor Statistics, and the Social Security Administration.
According to the data used for the study, each year of education a person has beyond 12th grade represents a 1 percent increase in the likelihood of employment in their senior years. For example, a person who has a bachelor's degree has a four time better rate of working than a person who only has a high school diploma.
Another statistic that appears to be affected by higher education is disability in retirement years. According to the Census data, the majority of the approximately 25 percent of seniors who reported having independent and self-care living difficulties did not have college educations.
Reverse Mortgages May Leave Financial Nightmare for Heirs
An investigation by The New York Times has revealed that there could be a serious financial backlash to the heirs of senior citizens who take out reverse mortgages. The revelations from the investigation may have seniors reconsidering other estate planning options and avoiding taking out reverse mortgages.
Reverse mortgages are available to homeowners 62 year old or older. A reverse mortgage allows the homeowner to borrow against the equity of his or her home, but the loan does not have to be paid back until the homeowner moves out or dies. Therefore, there are no monthly payments. There is, however, some disagreement over whether or not reverse mortgages actually benefit or hurt the senior homeowner.
When a person with a reverse mortgage dies, under federal law, his or her heirs are supposed to have the option of settling the loan amount for a percentage of the full amount owed. However, the Times investigation discovered that many reverse loan companies not only do not offer heirs that option, but instead threaten to foreclose on the properties unless they pay the mortgage in full.
Survey Finds Many Americans Have No Retirement Savings
Most financial advisers agree that it is never too early to begin making estate planning arrangements and plan for the future. However, many Americans do not estate plans in place, nor have they started planning for their retirement.
In a recent survey sponsored by Bankrate.com, almost 40 percent of adults said they did not have any retirement savings. And it is not just young adults who have yet to begin saving for the future. Nearly 25 percent of adults between the ages of 50 to 64 years old have no retirement savings, as well as 14 percent of adults 65 years or older.
The Legal Side of Will Writing in Illinois
Will writing ensures loved ones are financially secure when a person passes. It is not always easy to find the motivation to write a will. It is an emotional experience. However, not taking this step can lead to a multitude of issues ranging from conflict among family members to high estate taxes and even lawsuits.
A will is a document that contains the terms by which a person's assets and money will be distributed after his or her death. Every state has a list of formal requirements that must be followed when a will is written. The Illinois State Bar Association has listed the legal requirements for those who live in Illinois. These requirements include the following:
Unclaimed & Abandoned Property: The Escheatment Process
While hardworking Americans do their best to ensure family and loved ones inherit their property and savings, unattended or abandoned assets risk being turned over to the state. This process is called "escheatment," and it was established centuries ago to prevent unclaimed properties from sitting in limbo without a recognized owner.
According to the U.S. Securities and Exchange Commission, financial institutions in every state must file a report when personal property goes unclaimed or abandoned for a certain period of time. State laws establish these time periods.
Brokerage firms must abide by these laws, and for an account to be considered unclaimed or abandoned, a reasonable effort must be made to contact the owner of the account. If this proves unsuccessful and the account remains inactive for the specified time period, the state requires the firm to report the account. Through "escheatment," the state claims ownership of the account.
The Importance of Having a Well-Formulated Estate Plan
A well-formulated estate plan gives estate owners peace of mind knowing their assets and funds are going to the right place. One reason why it is important to develop an estate plan is to potentially reduce or eliminate federal estate taxes, also known as the "death tax." Calculated at 40 percent, these taxes not only diminish funds from loved ones but they can also severely impact a private company.
According to an article in Forbes, an estate is only subject to federal estate tax if it is valued at more than $5.34 million. Moreover, there is a marital exemption. If you are married, you and your partner will not have to pay federal estate taxes unless your combined estate is valued at more than $10.6 million. Although these limits mean most Americans will not need to pay estate tax, those who do could see a substantial loss in wealth. If a business is owned, there are a number of other criteria, including death or retirement of the key asset holder, that can affect a business's equity before estate tax comes into effect. Understanding these factors can put a person in a position to keep these taxes low.
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