Your Year End Financial Checkup – Part Two

December 21, 2010

Review your overall investment allocation and consider rebalancing as necessary. In conjunction with rebalancing, take some time to re-evaluate the amount of volatility or risk that is acceptable to your situation. Some considerations when evaluating your level of risk tolerance are your age, time horizon & proximity to retirement, cash flow needs, net worth, and investment objective. And, if you haven’t already, structure investments appropriately into short-term, mid-term and long term buckets; making sure you have a smart place from which to draw money should you need it.

Review account beneficiary forms to confirm that you have a named primary and contingent beneficiary that reflects your wishes. Discuss and review your estate planning documents, such as your Wills, Trusts, Health Care Directives, and Durable Powers of Attorney with your Attorney to confirm that the documents you currently have in place take full advantage of the current estate tax laws and that they accurately reflect your wishes. If you have not yet established these documents, consider meeting with an Attorney to discuss whether they are appropriate for your situation. Be sure to advise your heirs and executor where your estate planning and account documentation can be found in case of death or incapacitation.

Review your current property/casualty, life, disability and long term care insurance coverage with your Financial Advisor and other insurance advisor(s) to determine if you are properly insured.

Organize year-end financial statements and 2010 tax documents as you receive them. Also, be sure to destroy old documentation that is no longer needed in a safe manner.

Review your credit report annually. The law requires the major national consumer reporting bureaus to provide you with a free credit report each year upon request.


The Loss Damage Waiver

October 15, 2009

You’re standing at the rental car counter and the car agent asks if you would like to purchase the insurance on the car you are about to rent. The insurance seems so expensive. What do you do?

The insurance the rental car companies are trying to sell you is called “the loss damage waiver”. Purchasing this coverage from the rental agency relieves you of any responsibility for damage to a rented vehicle. Sounds good on the surface, but is it? It’s possible that you have probably already purchased the majority of what the rental agent is offering. When you purchase physical damage coverage (comprehensive and collision) for a car you own, the coverage will extend to any short-term rental vehicle. In some states (Minnesota included) the coverage for the rental vehicle extends from the liability coverage you purchased for your own personal vehicle.

Think twice before you purchase coverage you may very well already have.


September 15, 2009

The basic instrument of estate planning is the will, a legal document in which you state who will receive what portion of your property, as well as when and under what conditions they will receive it. A will also allows you to designate a guardian for your children and an executor or personal representative who carries out the terms of the will. If you die intestate-without a will-the executor and guardian are appointed by the court, and your assets are disposed of according to state law.

In all states, however, at least part of your estate will go to your children, and ,n many states they will receive more than your spouse. A will that is complete and current, on the at names all those legally entitled to a share in your estate, accounts for assets, and pays all creditors, will ensure that the administration of your estate proceeds quickly according to your intentions. Keeping those close to you informed of your plans, especially if you’re financial or family situation changes, can help avoid litigation, costly delays, and unnecessary conflict.

Vacation Properties and Income – Part 2

September 14, 2009

Another way for retirees to generate income from a vacation home is to sell it. By using the federal capital gains exclusion in conjunction with the sale of your primary residence, you can potentially realize tax-free income. Here’s how it works. The basic capital gains exclusion rules state that you must have owned and used the home as your primary residence for at least two years out of the five-year period ending on the date of the sale. If you are married, the full $500,000 exclusion ($250,000 for single homeowners) is available as long as one or both of you satisfies the ownership test (two years) and you both satisfy the use test (primary residence).

Vacation Properties and Income – Part 1

September 10, 2009

If you have a vacation home, you’re already aware of the enjoyment it provides and the benefits it can offer at tax time. But you may not be aware of how vacation property can be used to generate income in retirement or how it can play into an estate plan. In fact, vacation properties offer retirees a number of different options in managing their finances and estate.
Vacation property may be used to generate income in several different ways. The first, and most obvious, is renting it. The IRS allows you to deduct mortgage interest on your primary residence and one additional property up to a limit of $1 million in combined mortgage debt for mortgages taken out after 1987. Current tax rules also allow you to rent out a second home for up to 14 days per year without having to report the rent as income. If you rent for more than 14 days, the home is considered investment property, and rent must be reported as income. Converting the property to an investment property, however, allows you to deduct rental expenses, such as insurance and utilities, if you have a net profit on the property (deductions are limited if you report a loss). You can still use an income-producing property for personal use while maintaining your tax advantages — but only for the greater of 14 days or 10 percent of the total days it is rented. Maintenance days do not count as personal-use days, but use by in-laws or other part-owners does, even if rent is charged.

Simple Truths

September 8, 2009

As a financial advising firm, one of the simple truths we have learned is that relationships are the single greatest influence on how people use their money and plan for the future. When people talk about their hopes and dreams, they talk about the people they love. Their future, the life they wish to live, is always full of the people most important to them. They don’t talk first about dollars and cents, Dow averages, or bond yields. They talk about a spouse, a parent, a child. When imagining their financial futures, even those without family often focus on others, such as employees, friends, faith communities, and charities.

Keeping Your Emotions in Check…

September 3, 2009

In times like these, with the economy in a tailspin, and the stock market in the tank, investing requires an extra dose of patience, perseverance and perspective.
It takes patience to ride out the bear market, perseverance to continue to invest even through a difficult economy, and perspective to see the long-term picture and realize that recessions and bear markets are just part of the natural economic cycle. Slumping economies and bear markets of the past have always turned around — and there is no reason to believe that this time will be any different.