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03/20/15 - How You Can Benefit from an Irrevocable Life Insurance Trust


Worried that a life insurance policy could push the total value of your estate over the $5.43 million limit and leave your beneficiaries with a substantial tax bill? Estates with a fair market value over that exemption amount are subject to estate tax.

One way to minimize estate tax is to set up an irrevocable life insurance trust. By definition, an irrevocable trust is a trust that cannot be modified or terminated without the permission of the beneficiary.

Now you may be thinking that your estate could not possibly benefit from an irrevocable trust, but once you add the assessed value of your home to retirement savings plus your insurance policy, you may be surprised. Plus, tax efficiency is only one of the benefits. Trusts are designed to allow your estate to benefit your loved ones long after you are gone.

Once you have transferred an asset into the trust, you give up all rights of ownership to that asset. Besides life insurance policies, the types of assets that can be held in the trust include investments, cash, real estate and other valuable assets.

What this effectively does is remove that asset -- for instance, your life insurance policy -- from your taxable estate. This prevents a large life insurance policy from triggering estate tax problems. Because you no longer own the asset, you also cannot be taxed on the income generated by the asset.

An irrevocable trust is a complex estate planning tool, and setting it up often requires professional help from a lawyer and a financial planner. Failure to follow the required formalities of setting up a trust fund could result in the IRS asserting unfavorable gift, estate, generation-skipping transfer or income tax on the asset.

You don't have to be ultra-wealthy to benefit from a trust. If you have a net worth of $100,000 and have a significant portion of your assets in a business or real estate, you may want to consider creating a trust (read more about five standard forms of trusts).

03/02/15 - When Your Offsite Property May Need Additional Insurance

Approximately 10 percent of American households use off-site self-storage, either as a way of managing the storage space in their current home or as a temporary measure while relocating to a new one.

If you are storing your belongings at a reputable storage facility, the likelihood of losses due to theft or vandalism is low, but that is not the only type of loss you may suffer. There is also the risk of damage due to fire, flood, rodents or mildew.

The good news is that your current homeowners or renters policy likely covers items kept in storage, but it's important to understand exactly what your policy does and doesn't cover before deciding whether or not you need to upgrade your policy.

Limitations - Find out if there are any coverage limitations on your existing policy. Often, insurance policies will cover only a percentage of the total coverage amount for items stored off-site. So if the value of what you are storing exceeds that amount, you should consider increasing your coverage.

Exclusions - Check that what you are storing isn't excluded from coverage when kept at an offsite storage facility. Common exclusions include jewelry and precious stones, currency and securities, art and antiques, business inventory or records, and collectibles.

Risks - Confirm which perils are covered under your existing policy. Your existing insurance policy may cover losses due to fire or flood, but exclude damage done by rodents or mildew or even negligence on the part of the facility operator. Confirm your coverage and check out these tips on how to protect your belongings.

Deductible - Confirm what your deductible would be in the event of a claim. Most often, it's the same as the deductible on your current policy; paying the deductible may not make sense for a smaller claim.

02/16/15 - The Lowdown on Rental Car Insurance

Have you ever wondered whether or not you actually need the car insurance offered by the rental car company? Is it necessary protection or simply a cash grab that makes you pay for coverage you already have?

The answer? It depends.

Many people aren't aware that their personal auto policy may extend to their rental car, making the daily insurance offered by the rental car company a waste of money. Sometimes this coverage is limited to personal use; if you're traveling for business, you should confirm that your rental car will be covered by your existing policy.

Here are three alternatives to expensive rental car insurance.

Comprehensive Coverage - Use your personal car insurance policy. If you have a comprehensive policy for your personal car, it is possible your coverage will extend to the rental car. Confirm your coverage before your next rental.

Rental Car Coverage - If you don't own a car or frequently rent cars for business (personal coverage may not extend to business travel), look at your policy. It may make sense for you to add rental car insurance as a separate policy or as an add-on to your existing auto coverage. All policies are different, so confirm your coverage and limitations.

Credit Card Coverage - Take advantage of built-in car rental insurance on your credit card. It's important to note that you are covered only if you pay for the entire car rental with that credit card.

Regardless of which option you choose, it's important to carefully check your policy to ensure full coverage. Possible limitations include the extra fees charged by the rental car company, other drivers not covered under your personal policy, restrictions on types of vehicles and/or travel destinations that may not be covered by your policy.

02/02/15 - Become a Safer Driver by Avoiding These Bad Driving Habits

Did you know that most auto accidents aren't accidents at all? Most often, they are the result of driver error or inattention. Don't make these dangerous driving mistakes.

Speeding - Slow down! Speeding is the most common bad driving habit and when combined with aggression, traffic congestion or driver inattention, it's a dangerous one.

Stopping Suddenly - Avoid slamming on the brakes; you may catch the driver behind you unaware. Instead, focus ahead in order to anticipate potential hazards.

Running the Yellow - Never speed up when the light changes to yellow. If you have the option of stopping safely, slow down and come to a stop before the intersection.

Making Blind Turns - Always check your blind spot before making a lane change.

Ignoring Conditions - Always adjust your driving to road conditions. Wet or icy roads, poor visibility and heavy rain or snow can seriously impact your ability to steer clear of danger.

Lane Weaving - Drive in a predictable manner. Erratically darting in and out of lanes is a risky maneuver that confuses other drivers and causes collisions.

Failing to Signal - Let other drivers know what you intend to do by signaling your turns and lane changes.

Texting - Never send or read text messages while driving. Despite stricter distracted driving laws, many drivers are still guilty of taking their eyes off the road to check their phones.

Driving Drowsy or Drunk - Make it a rule to never drive drowsy or under the influence.

Tailgating - Make sure to leave enough distance between you and the car in front of you. Proper following distance in good weather is three seconds.

01/19/15 - Deciding Your Health Care Future: What You Need to Include in a Living Will

What would you want your loved ones to decide for you if you were unable to communicate your health care wishes in the event of a serious illness or accident? Would they know what types of medical interventions you wish to receive?

A living will, also called an advance health care directive, is a document that describes just that: your wishes regarding the medical treatment you receive if you are unable to give informed consent. It allows you to give explicit instructions regarding life-sustaining treatments.

What to Include in a Living Will:

Health Care Agent - Who should make medical decisions on your behalf? While your living will acts as a guide in making those decisions, you will still need an individual to interpret your wishes and see that those instructions are followed.

When to Discontinue Care - At what point should life-prolonging treatment be ceased if your condition does not and will not improve? For example, you may want to permit a feeding tube for a short period of time while you recover, but not have it become a permanent life-sustaining measure.

Excluded Treatments - Are there any particular life-saving measures that should never be administered? Common ones include cardiopulmonary resuscitation (CPR), ventilator, intravenous feeding tube, blood transfusions or dialysis.

Palliative Care Preferences - Discuss what pain relieving measures you would like if the decision were made to forego life-prolonging treatments. This can include choosing to leave the hospital and return to the comfort of your own home.