Beware the Pitfalls of Naming a Minor as your Beneficiary

A minor generally doesn’t have the right to manage his or her assets, including any inheritance. But sometimes a minor child becomes the beneficiary of a sizable family inheritance. That can occur because a parent dies without a will or trust, leading to an unavoidable direct inheritance by the child. If a minor is chosen as a beneficiary of a retirement account or life insurance policy, many challenging issues can arise. First of all, a minor is not legally allowed to take control of inherited assets left directly to him or her. Instead, an adult or financial institution has to…..

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Estate Planning Options for Blended Families

The dynamics of a blended family, defined as one where at least one spouse has at least one child from a prior marriage or relationship, can complicate financial and estate planning because no off-the-shelf plans apply. It’s important to contact your estate-planning lawyer to ensure complete review of all personal and economic aspects of your family and a resulting plan that works for everyone involved. From designating account beneficiaries to updating wills and trusts, it takes attention to detail to ensure specific wishes are carried out properly. Effective, collaborative planning can address the family’s needs and goals while building trust…..

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IRS: Account transcripts can serve as estate tax closing letter

A recent IRS notice confirms that an account transcript issued by the IRS qualifies as a substitute for an estate tax closing letter, as long as the transcript includes the proper transaction code. An estate tax closing letter indicates that the IRS has accepted an estate tax return and that the estate’s federal tax liabilities have been satisfied. Once the letter has been received, it makes it clear to the executor of the estate that it can proceed with finalizing the estate administration process. The receipt of the closing letter is often needed to meet requirements for state law probate…..

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Credit monitoring: Be aware the credit score you get might be different than lenders receive

Subscribing to a credit monitoring service to keep tabs on your credit score can be a helpful way to manage and protect your credit. But did you know that the score you purchase isn’t always the same as the one the lender obtains from a credit reporting agency? That comes as a surprise to many borrowers. But the real questions are why is this the case and what can you do about it? Both credit monitoring services and credit reporting agencies make money by selling credit reports. You can buy an educational credit score from a credit monitoring service when…..

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IRS: Account transcripts can serve as estate tax closing letter

A recent IRS notice confirms that an account transcript issued by the IRS qualifies as a substitute for an estate tax closing letter, as long as the transcript includes the proper transaction code. An estate tax closing letter indicates that the IRS has accepted an estate tax return and that the estate’s federal tax liabilities have been satisfied. Once the letter has been received, it makes it clear to the executor of the estate that it can proceed with finalizing the estate administration process. The receipt of the closing letter is often needed to meet requirements for state law probate…..

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Understanding the tax consequences of inheriting a Roth IRA

Passing down a Roth IRA can seem like a good idea, but it doesn’t always make the most sense. Before converting a traditional IRA into a Roth IRA to benefit your heirs, you should consider the tax consequences. Earnings in a traditional IRA generally are not taxed until they are distributed to you. At age 70 1/2 you have to start taking distributions from a traditional IRA. By contrast, contributions to a Roth IRA are taxed, but the distributions are tax-free. You also do not have to take distributions from a Roth IRA. Leaving your heirs a tax-free Roth IRA…..

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If your house burns down, do you still have to pay your mortgage?

At the closing for your home purchase or refinancing, you are required to sign a promissory note that says you’ll make the mortgage payments every month. That agreement remains in effect even if your house burns down. You’re also required to report any loss to the lender and your insurance carrier promptly. But a reprieve is still possible. For example, a lender might allow a borrower to suspend mortgage payments for a defined period of time or might put a hold on foreclosure activity. Based on the standard Fannie Mae or Freddie Mac mortgage form, a borrower must repair or…..

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Check your bank’s real estate notices twice

When a bank goes through a merger or agrees to buy or sell mortgage loans, certain notices must be provided to borrowers before and after the transaction closes. Federal law states clearly what notices are required and how they must be worded, but sometimes the legal rules conflict with each other. It’s helpful to have an attorney review any notices you receive to ensure that they are in compliance with federal law and evaluate how they impact the terms of your loan. Under a federal law called the Real Estate Settlement Procedures Act of 1974 (RESPA), when a bank or…..

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Retirement accounts: Tips for taxpayers turning 70 1/2

It’s a big year for the first set of baby boomers: They’re turning 70 1/2. And that means getting prepared for their first mandatory distributions from tax-sheltered retirement accounts. The first thing to keep in mind is that the amount of your required annual withdrawal is based on the assets in the account as of the prior December 31. For a taxpayer with multiple 401(k) plans, he or she must take a proportional distribution from each of the accounts. If a taxpayer has multiple IRAs, the payouts can be uneven. That is, the entire amount can be taken out of…..

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Don’t let surprise costs of home purchase shock you

If you’re buying a house, the total price you’ll end up paying is more than meets the eye. Usually, a buyer pays between 2 percent and 5 percent of the home purchase price in closing costs. Lenders often disclose these costs, but they aren’t the only hidden fees you need to consider. Other fees to keep in mind include payments to appraisers, home inspectors and settlement agents, as well as the cost of title insurance, homeowners’ insurance and property taxes. The Wall Street Journal cited a survey of U.S. homeowners conducted for TD Bank in March of 2016, which found…..

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