New tax law prompts IRA conversions

Lower income tax rates make this an attractive time to convert your traditional IRA into a Roth IRA. By converting, you’ll pay taxes on those funds now instead of at some future (likely higher) rate. The main hurdle will be paying taxes owed. If you convert $50,000 from a traditional IRA to a Roth, your taxable income will increase by $50,000. If you’re in the 24% tax bracket, that amounts to $12,000 in taxes owed. That might feel like a hit now, but it could be a financially sound decision, particularly if you expect to be in a higher tax…..

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Insurers push back on Fannie Mae policy change

Insurers are refusing to back certain mortgage applicants, despite Fannie Mae approval. The pushback comes less than a year after Fannie Mae eased its debt-to-income (DTI) requirements, allowing borrowers with DTI of up to 50 percent to obtain low down payment mortgages, assuming the borrowers fell within other risk benchmarks. Fannie Mae’s policy change was welcomed by housing advocates who said it would open the housing market up to credit-worthy people with high debt loads. The Urban Institute estimated that the shift could assist 95,000 new borrowers annually. DTI is a significant factor in mortgage decisions. If your DTI is…..

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When your parents die with debt

At any age, the death of a parent is a difficult experience. But these days more adult children are dealing with an added stressor: the realization that Mom or Dad died with debt. In the past decade, there’s been a steep increase in debt among senior households. According to a report from the Employee Benefit Research Institute, half (49.8 percent) of families age 75 and older have debt, averaging $36,757. Most senior debt is tied to housing expenses, but auto loans, medical bills, credit cards and student loans also factor in. If you think your parent may die with debt,…..

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Cities shifting rules on short-term rentals

A number of cities have been passing new rules governing Airbnb, HomeAway, and other short-term rental hosts. For example, Charleston, South Carolina allows property owners to rent out their primary residence, with restrictions. The new rules ban whole house rentals and limit guests to no more than four adults at one time. Hosts will have to register with the city to stay in compliance. The city of Los Angeles, meanwhile, is considering similar legislation. The latest draft caps the number of days someone can rent out their home at 120. But qualified hosts without nuisance complaints can pay a fee…..

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Five rights that trust beneficiaries have

If you are the beneficiary of a trust, it may feel like you are at the mercy of the trustee. But depending on the type of trust, trust beneficiaries may have rights to ensure the trust is properly managed. A trust is a legal arrangement through which one person, called a “settlor” or “grantor,” gives assets to another person (or an institution, such as a bank or law firm), called a “trustee.” The trustee holds legal title to the assets for another person, called a “beneficiary.” The rights of a trust beneficiary depend on the type of trust and the…..

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Escalation clauses: a bidding-war option

If you’re vying for housing in a red hot real estate market, you may want to add a new tool to your arsenal: an escalation clause. An escalation clause is an addendum to your offer stipulating you will raise your offer to beat any competing buyers, up to a set price. Escalation clauses are useful in competitive markets where homes get multiple offers. If you end up in a bidding war, the escalation clause automatically raises your bid, giving you the advantage over other buyers. For example, you might offer $400,000 on a home with an escalation clause stipulating that…..

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Three reasons why giving your house to your kids isn’t the best way to protect it from Medicaid

Are you afraid of losing your home if you have to enter a nursing home and apply for Medicaid? While this fear is well-founded, transferring the home to your children is usually not the best way to protect it. Although a home generally does not have to be sold in order to qualify for Medicaid coverage of nursing home care, the state could file a claim against the house after you die. If you get help from Medicaid to pay for the nursing home, the state must attempt to recoup from your estate whatever benefits it paid for your care. This…..

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HUD makes reverse mortgages less attractive

The Department of Housing and Urban Development (HUD) has made changes to the federal reverse mortgage program. Citing the need to put the program on better financial footing, HUD has raised reverse mortgage fees for some borrowers and lowered the amount homeowners can borrow. The changes took effect on October 2, 2017. They affect borrowers who take out new loans, but not existing loans. A reverse mortgage allows a homeowner who is at least 62 years old to use the equity in his or her home to obtain a loan that does not have to be repaid until the homeowner moves, sells,…..

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How to reverse Medicare surcharges when your income changes

Are you a high-income Medicare beneficiary who is paying a surcharge on your premiums but who has experienced a drop in income or is anticipating one? If your circumstances change, you can reverse those surcharges. Higher-income Medicare beneficiaries (individuals who earn more than $85,000) pay higher Part B and prescription drug benefit premiums than do Medicare beneficiaries with lower incomes. The extra amount the beneficiary owes increases in stages as the beneficiary’s income increases. The Social Security Administration uses income reported two years ago to determine a beneficiary’s premiums. So the income reported on a beneficiary’s 2016 tax return is used to determine…..

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What happens when a nursing home closes?

The expansion of alternatives to nursing homes, such as assisted living and community care, has been financially challenging for the nursing home industry, and every year a small percentage of facilities close their doors. The state or federal government may also shutter a facility for safety issues. Moving into a nursing home can be a stressful experience by itself. If that nursing home closes, residents can experience symptoms that include depression, agitation, and withdrawn behavior, according to The Consumer Voice, a long-term care consumer advocacy group. While there may not be much that can be done to prevent a closure, residents do…..

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