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Recent Blog Posts
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.
At What Age Should You Start Planning for Retirement?
Although people understand that retirement is something they should have long-range plans for, many do not start thinking about it until they hit middle-age—and oftentimes even later. However, many financial advisors agree that it is never too early to begin retirement and estate planning needs. In fact, they suggest that setting things in motion when a person is in their twenties is not too early.
To begin, a person first needs to understand the different retirement account options there are, as well as other investment options. Look for accounts that offer compound interest. Compound interest is interest earned not only on the principal amount of fund you deposit in your account, but also on the interest that the account is earning. Earning interest on principal and interest is compound interest.
The First Digital Asset Law Goes into Effect
Years ago, when a person passed away, personal property and documentation were tangible items. Items such as book and record collections, photographs, and important paperwork were all items that could be physically touched and handed to the person who was inheriting them.
In today's electronic world, however, many people own a multitude of digital assets and records. The question thus becomes, who is the owner of these this digital property when the owner of record dies? What happens to online musical libraries, kindle collections, social media accounts, and cloud storage files?
The Importance of Family Discussions in Estate Planning
Although people do not like to think about their own mortality, the realities of life is that it will end one day. And that is why making plans to ensure that our wishes are met and our families are taken care of is so important.
A study that was conducted by Fidelity Investments revealed that many adult children and their parents avoid having family discussions about estate planning. Topics such as retirement finances, elderly care and will and inheritance issues are issues that should be discussed, but quite often, are not. In fact, according to the study, four out of 10 families have not had those conversations at all.
Begin Illinois Retirement and Estate Planning Now for the Future
Statistics show we are living longer than previous generations. The average life expectancy for an American is 78.7 years, and that number increases each year. One major reason for this increase is the vast improvement in diagnosis and treatment of cardiovascular disease.
A longer life allows for the opportunity to enjoy retirement after working for 40 to 50 years. Therefore, if sound financial retirement planning decisions are made, the saved funds will allow for an enjoyable retirement as well as sufficient care should one become medically incapacitated due to illness or injury.
Financial advisors note several common mistakes that many people make, but are easily avoidable, when investing for their retirement. One of the most common mistakes is not paying attention to unadvertised fees. For example, if a person pays a 1 percent fee over the 40 years he or she is working and saving, this percentage can add up to tens of thousands of dollars that will not be in his or her Illinois retirement fund.
Estate Planning for Parents with Special Needs Children
Estate planning can be confusing with all the rules and laws to consider. But if you are a parent of a special needs child, estate planning can be even more complicated because of the worry over who will look out for your special needs adult child when you are gone. Also, the cost of care for a special needs child can be astronomical. For example, a study done by the University of Pennsylvania and the Children's Hospital of Philadelphia concluded that the lifetime cost for a person with autism that involves an intellectual disability is $2.4 million.
Planning for Death to Ensure Your Wishes Are Preserved, Part One
The conversation of planning for death, incapacitation, and mental or psychological deterioration is difficult. Even when instructions are left, the truth remains that too often the actual intention of these documents are subverted. This unfortunate situation lends itself to an incredible amount of conflict among loved ones, with many of whom are too emotional to be rational.
Many of these issues arise not only after death, but also during chronic illnesses, after unexpected accidents, and any time one is not in a state to make a competent decision. Thus, it is necessary to place the utmost time and consideration into designating the person, or persons, whose duty it will be to ensure your wishes are legally preserved.
Estate Planning Errors: Common Mistakes to Avoid
Life is not always within our realm of control, and this is a fact that is often hard to swallow. However, it is an incredibly important concept to understand when partaking in daily responsibilities and activities, as everything carries a risk. And for this reason, it is critical to address the "what if's" before they arise by hiring a professional to draft a cohesive estate plan.
Several common mistakes can be made during estate planning, and these can be harmful both before and after death. In fact, these mistakes can have broad implications on family and loved ones. Consider the following list of frequently seen estate planning errors:
Majority of Baby Boomers Ignore Estate Planning Needs
Sixty-four percent of baby boomers do not have a living will, health care proxy, or other advance directives that deal with end-of-life issues. These results were discovered via a survey conducted by the Associated Press (AP), in conjunction with LifeGoesStrong.com.
A health care proxy or health care power of attorney "allows an individual to select a person he or she trusts to make decisions about medical care." Advance directives are critical documents to have in place because they clearly state a person's medical choices. Both are essential to have in the event an illness or accident makes it impossible for an individual to articulate his or her wishes.
