Articles

Husband could pay wife in retirement benefits

A husband could satisfy a $120,000 installment payment he owed to his ex-wife under their divorce agreement by transferring some of his retirement benefits to her, a Virginia court recently ruled.

The wealthy couple’s divorce decree required the husband to pay the wife a total of $1.2 million in 10 annual installments.

To make his first installment payment, the husband transferred to the wife $120,000 from his rollover IRA and 401(k) plans.

The wife argued that this violated the divorce decree because, due to taxes and penalties, she would net only $61,000 if she cashed out the retirement benefits right away.

But the court sided with the husband. It said the installment payment was okay because the property he transferred to his wife had a value of $120,000 at the time of the transfer.

Postnuptial agreement must be ‘fair’ at the time of divorce

A postnuptial agreement is similar to a prenuptial agreement – it sets out what each person is entitled to if the marriage fails. The difference is that a postnuptial agreement is signed after the wedding has taken place.

Postnuptial agreements are increasingly being accepted as legally valid. But they’re not foolproof, and sometimes a spouse can avoid their terms – especially if those terms just don’t seem particularly fair.

For instance, the Connecticut Supreme Court recently refused to enforce a postnuptial agreement that a couple had signed back in 1989.

Under that contract, the wife had agreed to accept $75,000 as a cash settlement of any alimony claim if the couple split up, and gave up any rights to her husband’s car-wash business. [Read more...]

Couples must obey divorce agreement – even if circumstances change

A typical divorce agreement may include a division of property, alimony, and child custody. In many cases, the alimony and custody rules can be modified at a later date if circumstances change. However, a property division usually can’t be modified – even if unforeseen circumstances mean that one spouse got a much better (or worse) deal than anybody expected.

For instance, when an Alaska couple split up, they had to figure out how to divide some stock that they jointly owned in two companies. They decided that the husband would get the stock, and he’d pay his wife a total of $50,000 for it in a series of installments over time.

Eventually, the husband fell behind on the payments, and the wife sued. [Read more...]

Who’s getting married? Who’s getting divorced? Census numbers tell the tale

The U.S. Census Bureau has gone back through its data from the 1940s to the present, and has compiled a new report analyzing marriage and divorce in America. Who’s getting married? Who’s getting divorced? And how are the answers changing over time?

One of the most interesting findings is that the divorce rate has started to level off and decline. But that’s not necessarily because couples are more likely to stay together for life. Rather, a lot of couples are simply not getting married in the first place, so that when they split up, it doesn’t result in a divorce.

Here’s a closer look at some of the findings:

People are waiting longer to get married. Back in the 1950s, the median age for a first marriage was 23 for men and 20 for women. By 2009, though, the median age had risen to 28 for men and 26 for women. [Read more...]

Sellers could sue after buyer’s deposit check bounced

A man agreed to buy a house on New York’s Fire Island for $1.2 million. He wrote a deposit check for $120,000, and signed a contract saying it was a cash deal and wasn’t contingent on his being able to arrange financing.

However, the man told the seller that he needed some time to deposit the $120,000 in his account, and asked that the check not be cashed right away.

The seller verbally agreed. After 12 days, though, the seller signed the contract and deposited the check. It bounced. [Read more...]

Must landlords allow tenants to use medical marijuana?

As more and more states allow medical marijuana use, landlords face the question of whether to allow tenants to smoke pot for medical reasons.

On the one hand, even if medical marijuana is legal under state law, it’s still technically illegal under federal law – even if the federal government is doing little or nothing to block the drug’s medical use.

On the other hand, landlords are generally required to make reasonable accommodations for disabled tenants, such as allowing grab bars in showers or service animals in an otherwise “no pets” building. Some tenants are arguing that allowing medical marijuana use is a type of reasonable accommodation.

However, this argument suffered a blow recently when the U.S. Department of Housing and Urban Development issued a memo stating that medical pot is not a reasonable accommodation of a disabled person.

The memo applies to landlords who accept “Section 8” subsidized housing. It says that these landlords cannot treat medical marijuana as a reasonable accommodation. However, it stopped short of saying that landlords have to evict such tenants – it left that decision to the individual landlords.

As more states move to decriminalize the drug, this question will likely only become more complicated.

Protect yourself if you’re buying a house with an unmarried partner

Back in the old days, the typical homebuyer was a married couple. But today, there’s a huge increase in the number of unmarried couples who are buying a home together.

It might not sound very romantic, but it’s a good idea for such couples to think about what their financial obligations will be regarding the home, and what would happen if they were to split up at some point in the future.

For instance, you might want to consider signing a “cohabitation” or “domestic partner” agreement. [Read more...]

Be careful if you’re asked to sign a ‘letter of intent’

If you’re involved in the sale or lease of commercial real estate, very often you’ll be asked to sign a “letter of intent.” A letter of intent isn’t a formal lease or purchase agreement; rather, it’s a signed statement that the parties plan to negotiate a deal later that involves certain elements.

Because a letter of intent doesn’t seem like a contract – it seems more like a simple handshake acknowledgement that the parties hope to hammer out a formal agreement later – some people sign them without giving them a great deal of care.

This can be a mistake. Letters of intent are contracts in themselves, and can have serious consequences. [Read more...]

U.S. makes large home mortgages harder to get

Starting October 1, 2011, large home mortgages on expensive houses are harder to get – because the U.S. government is trying to gradually play less of a role in the mortgage market.

Currently, government-related entities such as Fannie Mae and Freddie Mac guarantee or purchase the majority of home mortgages in the U.S. Lenders are much more willing to provide mortgages if they know the loan can be backed by these entities.

However, the U.S. doesn’t guarantee all mortgages – it only backs mortgages that meet certain criteria. In particular, there’s a size limit to how large a mortgage it will guarantee. [Read more...]

Note these tax deadlines

February 15 – Deadline for providing 2011 Forms 1099-B and 1099-S to recipients.
February 28 – Payers must file 2011 information returns (such as 1099s) with the IRS. (Electronic filers have until April 2 to file.)
February 29 – Employers must send 2011 W-2 copies to the Social Security Administration. (Electronic filers have until April 2 to file.)
March 1 – Farmers and fishermen who did not make 2011 estimated tax payments must file 2011 tax returns and pay taxes in full.
March 15 – 2011 calendar-year corporation income tax returns are due.

Resolve to put your tax and financial house in order this year

The only way to achieve financial security is to monitor your tax and financial affairs throughout the year. And what better way to kick off the new year than to tidy up your financial and tax house. Here are some tips to get you started.

Take control of your credit cards. Over-reliance on credit cards hurts you in several ways. With interest rates typically in double digits, it’s the most expensive way to borrow money. Think of those monthly interest payments as draining off dollars that you could be investing in a home or saving for your retirement. And too much debt can hurt your credit score and make other borrowing more difficult. It takes time and discipline to reduce credit card debt, but it’s well worth the effort. [Read more...]

Use adjusted tax numbers for your 2012 tax planning

Each year the IRS adjusts certain tax numbers for inflation and tax law changes. Here are some of the adjusted numbers you’ll need for your 2012 tax planning.

Standard mileage rate for business driving remains at 55.5¢ a mile. Rate for medical and moving mileage decreases to 23¢ a mile. Rate for charitable driving remains at 14¢ a mile.
Section 179 maximum first-year expensing deduction decreases to $139,000, with a phase-out threshold of $560,000.
Transportation fringe benefit limit decreases to $125 for vehicle/transit passes and increases to $240 for qualified parking. [Read more...]

Here’s what happens to a will after a person dies

Many movies and television shows include a scene where a family gathers around a big table after a relative has died to listen to the reading of the will. While this makes for great drama, things don’t usually happen this way in the real world. In fact, there is no requirement that a will be read out loud to anyone.

So what does happen with the will?

Once the will is located, it should be given to the estate’s attorney. Instead of reading the will aloud, the estate’s attorney sends copies to anyone who may have an interest in it. This includes:

The executor or personal representative, who is in charge of applying for probate, managing the decedent’s property, and making sure the instructions in the will are carried out. [Read more...]

The difference between Alzheimer’s disease and dementia

Many people use the terms “Alzheimer’s disease” and “dementia” interchangeably, but the two have different meanings, and it can be very important to know the difference.

Dementia is a general term for memory loss that is severe enough to interfere with daily life. The signs of dementia may include forgetfulness; difficulty making plans, thinking ahead, or using language; and a change in character traits, among other symptoms.

Alzheimer’s disease is a partially hereditary disease that causes a loss of brain cells. The symptoms start out mild, but grow progressively worse over time. An early symptom of Alzheimer’s is difficulty learning new information. [Read more...]

10 million Americans are now caring for aging parents

Nearly 10 million adults age 50 and over are now caring for an aging parent, according to a new study published by MetLife.

There has been a dramatic rise in the number of men and women providing parental care over the past decade and a half, the study notes. In 1994, only 9 percent of women and 3 percent of men in that age group were providing care to parents. By 2008, the percentage of female caregivers had more than tripled to 28 percent, while the figure for males had quintupled to 17 percent.

Daughters are more likely to provide help with personal activities such as dressing, eating and bathing, while sons are more likely to provide financial assistance, the study found. [Read more...]

Your IRA can be a valuable tool for estate planning

IRAs are popular investment vehicles for retirement. But if you don’t need all the assets in your IRA to support yourself after you retire, they can also be an excellent tool for estate planning.

Handled properly, an IRA can provide tax-sheltered growth for your heirs for many years to come. But you need to be careful, because it can be easy to make costly mistakes.

An IRA, or Individual Retirement Account, is a personal savings plan that allows you to set aside money for retirement. The advantage of an IRA is that you may be able to deduct some or all of your contributions from your taxes. [Read more...]

Note to anyone who recently moved to (or vacations in) Florida

Florida has a new law on powers of attorney. The law is important for anyone who recently moved to Florida, as well as anyone who lives elsewhere but owns a vacation home there or regularly spends time in the state.

Florida will no longer accept powers of attorney unless they are signed by two witnesses and notarized. Also, powers must take effect immediately, rather than only if the person becomes incapacitated.

Power of attorney documents that were signed before October 1, 2011 are still valid in Florida even if they don’t meet these requirements, but:

A bank or other institution in Florida can refuse to accept an out-of-state document unless the agent provides a letter from an attorney saying the document is legally valid in its home state; and [Read more...]

Some states let you ‘win’ a will contest while you’re still alive

People are sometimes concerned that after they die, a beneficiary (or more likely a non-beneficiary) will go to court to contest their will. Typically, a disgruntled would-be heir might claim that the person who made the will wasn’t mentally competent, or was under undue influence from some other person. These types of will contests can be very expensive, and they can cause a lot of emotional hardship within a family.

Recently, a handful of states have allowed people who make a will to go to court while they’re still alive and have a judge rule that the will is valid – thus preventing a will contest.

These states include Alaska, Arkansas, Nevada, North Dakota and Ohio. Similar legislation is pending in Delaware.

Even if you don’t live in one of those states, you might be able to obtain a court ruling there, such as by putting your assets into a revocable trust and hiring a trustee in that state. [Read more...]

Watch out for scams when selling your business

You’ve spent years developing your business, building its value, enhancing its reputation. Now you’re ready to move on. You place a “Business for Sale” advertisement in the Internet classifieds, and the next day an eager – overly eager – buyer approaches you with a deal that seems too good to be true. The buyer offers full price and wants to structure the deal as a stock sale. A stock sale means the buyer will get the entire business, including all its assets (cash, checking accounts, receivables, inventory, and so on) at closing. The buyer doesn’t ask tough questions about the firm and seems in a hurry to close the sale. He or she offers a 10% down payment and says the full balance will be paid off within a year. [Read more...]

IRS expands innocent spouse relief

If you file a joint income tax return with your spouse, you are considered “jointly and severally” liable for the payment of all taxes owed. The IRS can come after either you or your spouse for the entire amount of tax due, plus any penalties and interest due.

The law has “innocent spouse” rules that may limit an individual’s responsibility for unpaid taxes resulting from filing a joint return. If the “innocent spouse” can establish that he or she did not know, or have reason to know, that there was an understatement of tax when signing the joint return, relief can be requested. [Read more...]

Last-minute 2011 deal reached on payroll tax cut

On December 23, 2011, Congress finally approved a two-month extension of the payroll tax cut for American workers. The agreement was reached after weeks of partisan bickering. Though both Democrats and Republicans wanted a one-year extension of the tax cut, they could not agree on how to pay for a year-long extension and settled on a paid-for two-month extension.

The new law extends the 4.2% social security tax on wages through February 29, 2012. Without this extension, the tax rate would have gone to 6.2% on the first $110,100 of wages earned in 2012. [Read more...]

It’s tax time again

It’s time to file various tax returns once again. If any of the following tax deadlines will apply to you, circle the dates on your 2012 calendar.

January 17 – Due date for the fourth quarterly installment of 2011 estimated taxes for individuals unless you file your tax return and pay any taxes due by January 31.
January 31 – Employers must furnish 2011 W-2 statements to employees. Payers must furnish payees with Form 1099s for various payments made. The deadline for providing Form 1099-B and consolidated statements to customers is February 15. [Read more...]

Face the alternative minimum tax (AMT) head-on

The alternative minimum tax (AMT) – often called a “stealth tax” – snares unsuspecting or uninformed taxpayers each year. With a better understanding of the rules, you may be able to avoid or reduce adverse tax consequences.

Overview: The AMT is a separate tax system that runs parallel to the regular income tax system. This complex calculation includes additions for “tax preference items” and reductions for personal exemptions and certain tax deductions. There are five basic steps to computing the AMT.

Determine your taxable income for regular income tax purposes.
Make the technical AMT adjustments required by law. [Read more...]

Tax tips for year-end charitable giving

As the year draws to a close, you may decide to donate cash or property to one or more worthy causes. Besides the satisfaction of helping others, there’s another reward for your benevolence: a tax deduction on your 2011 return. But keep the following points in mind:

For starters, you may only deduct contributions made to a legitimate tax-exempt charitable organization. Note that a qualified charity cannot be established to benefit a specific individual or family.
Generally, your deduction is limited to 50% of adjusted gross income (AGI) for the year (30% of AGI for contributions to certain charities and private foundations). Any excess may be carried over for up to five years. The deduction for gifts of property have other AGI limits. [Read more...]

New worker classification program offered by the IRS

Companies that have had worker classification issues are being offered a settlement program by the IRS. The program, labeled the “Voluntary Worker Classification Settlement Program,” will let employers who previously misclassified employees as independent contractors make a minimal payment to settle the tax dispute. The program will give eligible employers substantial relief from federal payroll taxes they may have owed for past periods. Employers must agree to pay just over 1% of wages paid to reclassified workers for the past year and to treat these workers as employees going forward.

New law signed by President Obama on November 21, 2011

On November 21, 2011, President Obama signed the Three Percent Withholding Repeal and Job Creation Act into law. This new law repeals three percent withholding on certain payments to government contractors. The law, H.R. 674, was amended to include the Vow to Hire Heroes Act which provides tax credits to employers who hire unemployed veterans.

The law creates the “Returning Heroes Tax Credit” and the “Wounded Warriors Tax Credit.” Employers may qualify for a credit of up to $5,600 for hiring a veteran who has been looking for employment for more than six months. A credit of up to $2,400 applies for veterans who have been unemployed for more than four weeks but less than six months. [Read more...]

Facebook may be involved in 20% of all divorces

Facebook is playing a role in as many as a fifth of all divorces in the U.S., according to a study by the American Academy of Matrimonial Lawyers.

Facebook can come up in a divorce case in several ways. One is that marriages sometimes end because people have affairs with people they met – or re-connected with – over the social networking site.

One of the most common uses of Facebook is getting in touch with old friends. But if a marriage is in some trouble already, and a spouse gets back in touch with an old friend (or an old flame) who is emotionally available, a simple “hello” could turn into something much more complicated. [Read more...]

Husband’s credit card debt was his problem, not his ex-wife’s

Generally, whatever assets and debts a couple accumulate during a marriage can be split between them at divorce.

But what if a husband racks up an enormous amount of credit card debt without his wife knowing about it? Should she still be responsible for half the bill?

In one recent case, the Kentucky Supreme Court said “no.”

The couple in that case divorced after being married for 42 years. Late in their marriage, the husband ran up $65,000 in credit card debt trying to help their adult son recover from financial setbacks. [Read more...]

Wife shares in husband’s future partnership profits

A husband’s interest in a business partnership that produced a consistent stream of profits “counted” as marital property, and his wife can receive a share of his interest at divorce, the highest court in Massachusetts recently ruled.

The husband was a partner in an investment advisory firm. Under the terms of the partnership, he received annual cash payments in the form of salary, incentives, return on capital and merit pay.

The wife claimed a share of the value of his partnership interest. The husband objected, arguing that his partnership interest wasn’t “property” since he had no right to the annual payments, which were merely an “expectancy” of future income. (State law says that a divorcing spouse has no right to share in a mere “expectancy” of a benefit.) [Read more...]

Divorced mother couldn’t demand home schooling

When a divorced couple have different religious beliefs, and when children are involved, it can sometimes lead to court.

That’s what happened recently in New Hampshire, where a mother wanted to home-school her daughter according to her religious beliefs, but her ex-husband wanted the child to go to public school.

A judge ruled that it was in the daughter’s best interest to attend public school. The mother appealed to the New Hampshire Supreme Court, arguing that requiring the daughter to go to public school violated her parenting and religious rights under the Constitution. [Read more...]

Father’s child support is reduced by SSDI benefits

A father’s child support obligations could be reduced by the amount of his Social Security Disability Insurance payments that went directly to his children, the Vermont Supreme Court recently decided.

The father had been ordered to pay $326 a month in child support when he and his wife divorced. Soon afterward, he went to prison for five years.

When he got out of prison, he applied for SSDI benefits. He received a retroactive payment that included more than $14,000 that went directly to his ex-wife on his children’s behalf.

The father argued that his child support obligations should be reduced by the amount of this payment to his children. [Read more...]

Military promotion might not increase ex-wife’s pension share

The ex-wife of an Air Force officer might not be able to share in an increase in the officer’s pension benefits that resulted from a promotion he received after the couple divorced, according to a New Jersey appeals court.

The couple divorced when the husband was a captain. The divorce settlement gave the wife 50 percent of his military pension, which was based on his 11 years of service to that point.

By the time the husband retired, he’d reached the rank of major. His promotion entitled him to a larger pension benefit.

But the court said the wife couldn’t automatically share in the increase. Rather, it ordered a hearing to determine how much of the husband’s promotion was due to the couple’s joint efforts while married, and how much was due to the husband’s individual efforts after the divorce.

Thinking about divorce? Redo your estate plan, too

Divorce is stressful, and if you’re considering a marital split, the last thing you’re probably focusing on is your estate planning documents. But if you’re thinking of getting divorced, it’s usually wise to revise your estate plans now rather than later.

For example:

You might have signed a power of attorney document that allows your current spouse to make gifts, sign contracts, and make financial decisions for you.
You might have a life insurance policy that names your spouse as the beneficiary.
You might have a lot of your money in joint accounts to which your spouse has unlimited access.
You might have a health care proxy that allows your spouse to make medical decisions for you if you become incapacitated. [Read more...]

Employers may need to tell workers they can form a union

The National Labor Relations Board recently proposed a rule that would require employers to post a notice in the workplace informing employees of their right to form a union.

The rule hasn’t been adopted yet, but if it is, employers who fail to comply could be fined or sued for unfair labor practices.

Such a notice could conceivably have an effect in smaller workplaces – such as those with 10 or 15 workers – where a union could form quickly if a majority of employees agree to organize.

Company’s ‘one strike’ drug-testing policy is okay

An employer can have a “one-strike” drug-testing policy that permanently disqualifies applicants who have previously flunked a drug test, according to a federal appeals court in California.

In this case, an employer rejected an applicant for a longshoreman job when he failed a pre-employment drug screening.

Some time afterward, the man allegedly stopped using drugs, but when he reapplied, the employer rejected him again under its one-strike rule.

He sued, claiming that the one-strike policy violated the Americans with Disabilities Act. That law prohibits employers from discriminating against rehabilitated drug users. [Read more...]

New mothers might be exempt from physical ability tests

A woman who had recently had a baby and who was denied a job as a security guard after failing a physical-fitness test could sue the company for pregnancy discrimination, a federal judge in Alabama recently ruled.

The test required job applicants to perform 29 sit-ups in two minutes.

The woman claimed she was unable to complete enough sit-ups because her stomach muscles were weak from childbirth several months earlier. She sued the employer under the federal Pregnancy Discrimination Act. [Read more...]

Employer could require a doctor’s note after sick leave

A city didn’t violate its employees’ right to medical confidentiality by making them provide a doctor’s note when coming back from sick leave, a federal appeals court ruled recently.

The city of Columbus, Ohio had adopted a policy demanding that police department employees who took sick leave give supervisors a physician’s note stating the “nature of the illness” and whether the worker could return to regular duty.

Several employees sued, arguing that the policy violated patient confidentiality rules under the Americans with Disabilities Act. [Read more...]

Company sued for ‘pressuring’ employee on medical leave

A company can be sued if it “pressures” an employee who is on medical leave by repeatedly calling to find out when the employee plans to return to work.

That’s the message of a new case from a federal court in Arkansas.

In that case, a woman took leave from her housekeeping job at a hospital to recover from back surgery. She claimed that while she was out, her immediate supervisor called her every week to ask when she was coming back. In one conversation, she asked if her job was in jeopardy, and the supervisor responded by telling her that she should return as soon as she could. [Read more...]

Medical marijuana law doesn’t preempt workplace drug policy

Many states have passed laws in recent years allowing people to use marijuana for medical reasons.

But while these laws may protect users against the police, they won’t necessarily protect them against their employers.

For example, a Wal-Mart employee in Michigan recently sued the company for firing him under its drug-use policy when he tested positive for marijuana. The employee claimed he was wrongfully fired because he used marijuana after work for medical reasons. [Read more...]

Workers can sue for ‘cat’s paw’ discrimination

In an old French fable, a sneaky monkey talks an unwary cat into grabbing roasting chestnuts from a fire. The cat burns its paw and drops the chestnuts, and the monkey walks off with them.

From this fable comes the phrase “cat’s paw,” meaning an innocent person who’s used as a tool for someone else’s dirty work.

In the employment world, a “cat’s paw” situation is one where a supervisor is prejudiced against a worker, but rather than firing the worker for an illegal reason, he or she persuades a higher-up manager to fire the worker for some trumped-up but legitimate-sounding reason. [Read more...]

Supreme Court helps workers who are fired for complaining

Once again, the U.S. Supreme Court has made it easier for workers to go to court and claim that they were fired in retaliation for asserting their rights.

In recent years, the Court has decided a number of cases that made it easier for workers to sue if they were fired for complaining about discrimination.

But what if a worker was fired for complaining about something else? What if a worker was fired (or otherwise punished) after making a comment about the way the employer allocates tips? Or about unsafe equipment? Or overtime practices? [Read more...]

‘Secrets’ of maintaining your credit score revealed

The Fair Isaac Corporation, creator of the FICO credit score, usually doesn’t reveal many details about how missing a mortgage payment will affect people’s scores. But the company recently issued a commentary to lenders that contained some unusually specific information.

FICO scores range from 300 to 850. Scores of 750 or higher generally qualify for the best credit terms.

Here are some of the newly released details:

Being 30 days late on a mortgage payment – even if it was an accident – can lower a 780 score by 100 points. That’s a huge drop. [Read more...]

What to do if the government wants your land by ‘eminent domain’

If a government entity wants to take all or part of your property by eminent domain, it’s required to pay you the land’s fair market value. Typically the government will send you a notice telling you what it thinks the land is worth, and offering to pay that amount. Its valuation will usually be based on an appraisal that it has commissioned.

Some property owners who get an eminent domain notice rush out and get their own appraisal, but this is often a mistake. It’s almost always better to talk with an attorney first before hiring an appraiser. [Read more...]

Can landlords limit the number of people in an apartment?

Do landlords have a right to limit the number of people who can occupy an apartment?

The answer, as often happens in the law, is, “It depends.”

In general, landlords own the property and they can decide how many people can live there. However, a landlord is not allowed to discriminate against tenants based on their “familial status.” (This rule was added to the federal Fair Housing Act back in 1988.)

What does “familial status” mean? It means that a landlord can’t refuse to rent to a family with children. So if a family with seven children wants to rent an apartment, the landlord can’t say “no” based on that fact alone. [Read more...]

Cash is now king in real estate sales

Cash is playing a more significant role in residential real estate sales right now than at any time in recent memory.

Consider the following:

The median down payment on houses was 22% last year.

That’s according to a study by Zillow.com of sales involving conventional mortgages in nine major U.S. cities. It’s the highest figure ever since the data started being kept back in 1997.

By comparison, just three years ago the figure was 11%. And back in late 2006, it was only 4%.

The main reason for the change: Banks are tightening their standards and demanding larger down payments to qualify for mortgages. Banks are figuring that borrowers who can afford a larger down payment are less likely to default, and less likely to end up in a situation where they are “underwater” – meaning the value of their house falls to the point where they owe more than the house is worth. [Read more...]

Trust property could be tied up by a long-term lease

A Texas man put some ranch property into a trust. The trust was designed to pay regular income from the property to the man’s son. When the son died, the ranch was to go to his grandson.

The trustee (a bank) entered into a long-term lease for the property. The result was that when the son died, the grandson didn’t get the ranch all to himself; instead, he inherited it subject to the lease, which meant he couldn’t immediately sell it.

The grandson sued the bank trustee. But a Texas appeals court sided with the bank. [Read more...]

Creating ‘conservation easements’ to save taxes becomes easier

If you own land that you want to pass on to your heirs, but you also want to make sure that some historic, scenic, or agricultural value will be maintained and not destroyed by future development, you might be able to accomplish this with a “conservation easement”…and also save taxes at the same time.

A conservation easement is a restriction on your land that says it can never be developed in certain ways. When you create such an easement, you give it to a charity – usually one that has been created to preserve some historic, scenic or agricultural heritage. In some cases you can also give the easement to a government agency.

After that, the charity or agency has the right to enforce the easement and prevent such future development. [Read more...]

Now’s a good time to review your beneficiary designations

Did you know that your will does not determine who gets your IRA or your 401(k) account when you die?

That’s right – these accounts are “non-probate” assets, which means they’re not covered by your will. Instead, they will generally go to whatever person you named as the beneficiary when you set up the account.

Similarly, your will doesn’t determine who gets your life insurance – that will go to the named beneficiary on the policy. And your brokerage account might have a beneficiary as well.

So as part of your estate plan, it’s essential from time to time to review your beneficiary designations.

For example:

You’ve remarried, but you want to leave your 401(k) to your children from your prior marriage. Under federal law, even if you name the children as beneficiaries, your account will go to your new spouse – and not your children – unless your new spouse signs a waiver. [Read more...]

Have you picked the right person as your executor or trustee?

Before you name someone as an executor or a trustee in your will – or before you agree to be an executor or a trustee – it’s a good idea to review exactly what responsibilities are involved.

These are serious jobs, and sometimes people don’t give enough thought to which person should be chosen.

Often, people simply name a spouse, a child, or a family friend. This might seem like a logical choice, and the person might expect to be given such a role, but that doesn’t mean they’re necessarily the best person for the job – particularly if they’re not detail-oriented, good with figures, and adept at handling money. Many people who quickly agree to act in these roles later come to regret it.

An executor’s job typically lasts about a year, and involves a lot of responsibility. Most executors hire an attorney and sometimes other professionals to help them through the steps and make sure they don’t make any mistakes. However, you’ll still want to pick someone who is willing and responsible enough to handle the often difficult and time-consuming tasks.

These tasks typically include:

Locating the deceased person’s will (the original, not a copy) and filing it for probate.
Obtaining a death certificate, obtaining an estate tax ID number from the IRS, and setting up an estate bank account.
Notifying beneficiaries and other potential heirs. [Read more...]

Scams against the elderly: Know the danger signs

News of yet another investment scam is alarming enough, but when the victim is elderly, the crime seems especially offensive. Senior citizens are a favorite target of con artists for a variety of reasons. Here are some popular schemes to look out for.

Scams take many forms, but those involving gold and precious metals are especially problematic right now. Buying gold is trendy, and it can appeal to a senior’s desire for tangible security. Naturally, scammers will take advantage of this appeal. If someone you know is elderly and considering a gold-related investment, make sure they do their homework and work with a reputable company. Anyone pitching gold as a safety net against doomsday scenarios or hyperinflation should be carefully vetted. [Read more...]