Ways to Save for College

Posted on February 20, 2014 by

Comparing & contrasting the potential of some popular vehicles.

 

Provided by S. Brett Anderson

 

How expensive will college be tomorrow? The Department of Education projects that by 2030, the tuition cost of obtaining a four-year degree at a public university will surpass $200,000. Staggering? Indeed, but college is plenty expensive already. In 2012, tuition averaged $15,100 a year at public colleges and $32,900 a year at private colleges.1

A Sallie Mae study finds that today’s students, on average, can only pay for 24% of their college expenses. It is little wonder that student loan debt exceeds credit card debt today.1

How can you start saving to meet those costs today? With interest rates being what they are, don’t look to a garden-variety savings account. Even if current interest rates soon ascend to 2% or 3%, you would be at a disadvantage even if the bank account was large as tuition costs are climbing more significantly than inflation.

The message is pretty clear: to meet college costs, you need either a prepaid tuition plan or a savings vehicle that taps into the power of equity investing. Let’s look at some options.

Prepaid 529 plans. Offered by states and public colleges, these plans let you buy tomorrow’s tuition with today’s dollars. You purchase X dollars of tuition today, and that is guaranteed to pay for an equivalent amount of tuition in the future.

You can do this in two different ways. Some of these prepaid plans are unit plans, in which you pay for X number of college credits or units now with a promise that the same amount of credits will be covered in the future. In other words, you’re locking in tuition at current rates.

As an example, let’s say a year of college at Hypothetical State University requires 36 units. Mom and Dad use a unit plan to pay $7,500 for those 36 units now for their 6-year-old daughter. In turn, the plan promises to pay whatever those 36 units cost when she starts her first semester at Hypothetical State 12 years from now, even though it might be much more.2

The other prepaid 529 plan variant is the contract plan, or guaranteed interest plan. In these prepaid plans, you make a lump sum contribution (or arrange recurring contributions), essentially buying X number of years of tuition. In turn, the plan guarantees to cover this predetermined amount of tuition expenses in the future.2

Usually, beneficiaries of prepaid tuition plans must be residents of the state offering the plan, or prospective students of the college offering the plan. In the wake of the recession, some of these plans are not accepting new investors as some states are worried about underfunding.2,3

529 college savings plans. These state savings plans allow you to invest to build college savings rather than simply prepay them. Plan contributions are typically allocated among funds, and possibly other investment classes; the plan’s earnings grow without being taxed. The withdrawals aren’t taxed by the IRS either, as long they pay for qualified education expenses.2

You can contribute up to six-figure sums to these 529 plans – there’s a lifetime contribution limit that varies per state. Most of them are open to out-of-state residents. If the market does well, you can harness the power of equity investing through these plans and potentially make a big dent in college costs.2

There are two caveats about 529 plans. Should you elect to withdraw money from a 529 plan and use it for non-approved purposes, that money will be taxed by the IRS as regular income – and you will pay a penalty equal to 10% of the withdrawal amount. 529 balances can also negatively affect a student’s chances for need-based financial aid. In a given school year, that eligibility can be reduced by up 5.64% of your college savings.3

 

Coverdell ESAs. Originally called Education IRAs, Coverdell Education Savings Accounts offer families some added flexibility: the withdrawals may be used to pay for elementary and secondary school expenses, not just college costs. These are tax-deferred investment accounts, like 529 savings plans. Unfortunately, the current annual contribution limit for a Coverdell is $2,000. Any remaining account balance must generally be withdrawn within 30 days after the beneficiary’s 30th birthday, with the earnings portion of the balance being taxable.3,4,5

Roth IRAs. Yes, it is possible to use a Roth IRA as a college savings vehicle. While the IRA’s earnings will be taxed, withdrawals used to pay for qualified college expenses will not be taxed and will face no IRS penalty. Additionally, if your son or daughter doesn’t go to college or comes into some kind of windfall that pays for everything, you end up with a retirement account. While Roth IRA balances don’t whittle away at a student’s chances to get need-based financial aid, the withdrawal amounts do come under the category of untaxed income on the FAFSA.3

Life insurance. Some households look into so-called “cash-rich” life insurance – whole or universal life policies – as a means to fund a college education. This requires a big head start, as when you buy one of these policies the bulk of your premiums go toward the life insurance part of the contract for several years and you have yet to build up much cash value. The big feature here is that most colleges don’t consider life insurance when evaluating financial aid applications.3

Would a trust be worth the expense? Rarely, families set up tax-advantaged trusts for the purpose of college savings. In the classic model, the family is incredibly wealthy and the kids are “trust-fund babies” bound for elite and very expensive schools. Unless you have many children or your family is looking at potentially exorbitant college costs, a trust is probably overdoing it. The college savings vehicles mentioned above may help you save for education expenses just as effectively, all without the administrative bother associated with trusts and the costs of trust creation.

S. Brett Anderson  may be reached at (832) 230-1896 or banderson@allsureinsurance.com.

www.allsureinsurance.com

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Posted in Texas Life and Health Insurance | 0 Comment

MAJOR RISKS TO FAMILY WEALTH

Posted on February 20, 2014 by

Will your accumulated assets be threatened by them?

Presented by S. Brett Anderson, Allsure Insurance

 

All too often, family wealth fails to last. One generation builds a business – or even a fortune – and it is lost in ensuing decades. Why does it happen, again and again?

 

It is because families fall prey to serious money blunders – old and new. Classic mistakes are made, and changing times aren’t recognized.

 

Procrastination. This isn’t simply a matter of failing to plan, but also of failing to respond to acknowledged financial weaknesses.

 

For example, let’s say we have a multimillionaire named Alan. Alan gets a call one afternoon from his bank, which considers him a VIP. It turns out that his six-figure savings account lacks a designated beneficiary. He thanks the caller, and says he will come in soon to take care of that – but he never does. His schedule is busy, and the detour is always inconvenient.

 

While Alan knows about this financial flaw, knowledge is one thing and action is another. Sadly, procrastination wins out in the end and those assets end up subject to probate. Then his heirs find out about other lingering financial matters that should have been taken care of regarding his IRA, his real estate holdings, and more.

 

Minimal or absent estate planning. Forbes notes that 55% of Americans lack wills, and every year multimillionaires die without them – not just rock stars and actors, but also small business owners and entrepreneurs. Others opt for a living trust and a pour-over will, or just a basic will created online.1

 

This may not be enough. Anyone reliant on a will risks handing the destiny of their wealth over to a probate judge. The multimillionaire who has a child with special needs, a family history of Alzheimer’s or Parkinson’s, or a former spouse or estranged children may need more rigorous estate planning. The same is true if he or she wants to endow charities or give grandkids a nice start in life. Is this person a business owner? That factor alone calls for coordinated estate and succession planning.

 

A finely crafted estate plan has the potential to perpetuate and enhance family wealth for decades, perhaps generations. Without it, heirs may have to deal with probate and a painful opportunity cost: the lost potential for tax-advantaged growth and compounding of those assets.

The lack of a “family office”. Years ago, wealthy families sometimes chose to assign financial management to professionals. The family mansion boasted an office where those professionals worked closely with the family. While the traditional “family office” has disappeared, the concept is as relevant as ever. Today, wealth management firms consult families, provide reports and assist in decision-making in an ongoing relationship with personal and responsive service. This is a wise choice when your financial picture becomes too complex to address on your own.

 

Technological flaws. Hackers can hijack email accounts and send phony messages to banks, brokerages and financial advisors greenlighting asset transfers. Social media can help you build your business, but it can also lend personal information to identity thieves who want access to digital and tangible assets.

 

Sometimes a business or family installs a security system that proves problematic – so much so that it is turned off half the time. Unscrupulous people have ways of learning about that. Maybe they are only one or two degrees separated from you.

 

No long-term strategy in place. When a family wants to sustain wealth for decades to come, heirs have to understand the how and why. All family members have to be on the same page, or at least read that page. If family communication about wealth tends to be more opaque than transparent, the mechanics and purpose of the strategy may never be adequately conveyed to heirs.

 

No decision-making process. In the typical high net worth family, financial decision-making is vertical and top-down. Parents or grandparents may make a decision in private, and it may be years before heirs learn about it or fully understand it. When the heirs do become decision makers, it is usually upon the death of the elders – only now the heirs are in their forties or fifties, with current and former spouses and perhaps children of their own to make family wealth decisions more trying.

 

Horizontal decision-making can help multiple generations understand and participate in the guidance of family wealth. Estate and succession planning professionals can help a family make these decisions with an awareness of different communication styles. In-depth conversations are essential; good estate planners recognize that silence does not necessarily mean agreement.

 

You may plan to reduce these risks (and others) in collaboration with financial and legal professionals who focus on estate planning and wealth transfer issues. It is never too early to begin.

 

S. Brett Anderson may be reached at (832) 230-1896 or banderson@allsureinsurance.com.

Http://www.allsureinsurance.com

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – www.forbes.com/sites/financialfinesse/2012/01/19/a-common-sense-approach-to-estate-planning/ [1/19/12]

Posted in Texas Life and Health Insurance | 0 Comment

Has someone tried to steal your Identity?

Posted on February 20, 2014 by

HAS YOUR IDENTITY BEEN STOLEN?

 

Keep an eye out for these signs.

Presented by

Allsure Insurance

   

According to data compiled by Norton, cybercrime hits over 74 million Americans annually. You know you have been victimized when you get that courtesy call or email from a bank or credit card issuer – but is there a way you can tell prior to that moment?1    

There are warning signs of cybercrime. Watching out for them just might save you money and headaches. If you notice any of the following conditions,  pay attention.

Odd little charges appear on your credit card. Big charges are of course a giveaway, but criminals might first venture some little charges. This often happens when more sophisticated identity thieves buy or obtain credit or debit card numbers through syndicates or online forums (they do exist). 

You stop getting credit or debit card statements. A thief may have changed the billing address. What time of the month do these bills arrive? Knowing when may alert you to something fishy.  

Weird packages show up at your home or office. “I didn’t order a new PC,” you react when the truck pulls up at your door. Well, maybe a thief did and forgot to change the default shipping address on your online profile at a retailer.   

Bizarre calls & emails enter your life. Your friends get spam in their inboxes; you get calls from debt collection agencies. At first, you may categorize the calls as simple mistakes and apologize for the spam. Instead, check it out – it may indicate crime.

Your loan apps get rejected. Your credit score can plunge as a result of a thief’s extravagance and detachment. If you can’t get a loan or your credit report shows a plunging score, something may be up.

Victimization can be quite subtle. Some identity thieves never progress to shopping sprees or draining bank balances. They have other goals in mind, just as ignoble.

Some people steal personal information so that they can hide from creditors. They would like to plug in your address or phone number on assorted financial, federal and state documents for purposes of evasion as well as future opportunity. If you suspect this may be happening, file an identity theft report with the U.S. Postal Service (or a police report, but some identity theft experts think notifying the USPS may be just as effective). You can also let bill collectors who mistakenly call know that you have done so, out of a belief that you have been victimized.2

 

Tax refund identity theft rose 97% last year. The Taxpayer Advocate Service (an independent agency within the Internal Revenue Service) looked into more than 34,000 cases of such theft in fiscal year 2011, nearly double the amount from fiscal year 2010. Certain taxpayers logged into the IRS website this year to see the status of their refunds only to be asked to verify essential information. Identity thieves had filed online income tax returns in their name and using their Social Security numbers, but the crooks had directed the tax refunds toward new addresses. The IRS is finding it hard to resolve such issues as speedily as it used to: its workload has increased in recent years, but its funding has not.3

S. Brett Anderson may be reached at 832-230-1896 or banderson@allsureinsurance.com

Http://www.allsureinsurance.com

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or a recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – www.dailyfinance.com/2012/07/12/8-signs-your-identity-has-been-compromised/ [7/12/12]

2 – www.credit.com/blog/2012/05/can-you-be-sort-of-an-id-theft-victim/ [5/15/12]

3 – abcnews.go.com/Business/income-tax-identity-theft-needed-social-security-number/story?id=15834826#.UB4G_JGluZQ [3/8/12]

Posted in Texas Life and Health Insurance | 0 Comment

August 20 Weekly Economic Update

Posted on February 20, 2014 by

Allsure Insurance Presents:
WEEKLY ECONOMIC UPDATE

 

 

WEEKLY QUOTE

“Loyalty to a petrified opinion never yet broke a chain or freed a human soul.”

    

– Mark Twain

   

  

WEEKLY TIP

We all have impulses that can make us spend more and save less. Recognizing them can help us to improve our financial behaviors.

 

  

WEEKLY RIDDLE

What is the longest word in the English language to have only one vowel repeated? (Hint: It has 16 total letters and the vowel is repeated 4 times).

  

  

Last week’s riddle:

A common English word refers to a person or thing not being in a place. But just by inserting a space within it, you can get two words meaning that a person or thing is present. What is this word?

  

Last week’s answer:

Nowhere. It can become now here by inserting a space.

August 20, 2012

    

CPI FLAT FOR A SECOND CONSECUTIVE MONTH

In July, the federal Consumer Price Index showed no overall advance. That was the case in June as well, and that might just bolster the case for easing at the Federal Reserve. Consumer prices rose only 1.4% annually, the smallest increase since the November 2010 index. Core CPI (minus food and energy costs) rose 0.1% last month. As for wholesale prices, they rose 0.3% in July – the largest jump in five months, even as wholesale gas prices slipped 3.1%.1,2

RETAIL SALES IMPRESS

American retail purchases soared 0.8% in July after a (downwardly revised) 0.7% retreat in June. It was a real sea change – the first positive month for the category since March. The monthly increase in retail gasoline sales was just 0.5%, which had little effect on the overall gain.3

Housing starts DIP; permits hit  4-YEAR peak

U.S. builders broke ground on 1.1% fewer projects in July. The good news: permits for new construction hit a pace of 812,000, a high unseen since August 2008.4

CONSUMERS ARE FEELING A BIT BETTER

Economists polled by MarketWatch expected a dip in August’s initial University of Michigan consumer sentiment index. Instead, it rose 1.3% to 73.6 – the best reading since May. The index’s gauge of current economic conditions improved to 87.6 in August from 82.7 in July.5

THE SUMMER RALLY ROLLS ON

Feeling slightly bullish? You aren’t alone. The Dow and S&P 500 have now advanced for six straight weeks, and the CBOE VIX (the “fear index”) closed at 13.47 Friday, its lowest mark in five years. The numbers for the week: DJIA, +0.51% to 13,275.20; S&P 500, +0.87% to 1,418.16; NASDAQ, +1.84% to 3,076.59. Gold lost 0.21% on the COMEX for the week while oil soared 3.38% on the NYMEX. Gold settled Friday at $1,619.40, oil at $96.01.6,7,8

THIS WEEK: On Monday, Lowe’s reports Q2 earnings. Tuesday, Best Buy, Dell and Meditronic follow suit. Wednesday brings the National Association of Realtors report on July’s existing home sales, the July 31 FOMC minutes and earnings from Hewlett-Packard. In addition to weekly jobless claims, Thursday offers July data on new home buying, a new FHFA home price index and Q2 results from Hormel. Friday, the report on July’s durable goods orders arrives along with the latest USDA outlook on food prices.

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+8.66

+16.34

+0.30

+5.12

NASDAQ

+18.10

+22.50

+4.56

+12.61

S&P 500

+12.77

+18.78

-0.38

+5.27

REAL YIELD

8/17 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

-0.43%

0.01%

2.45%

3.10%

 

Sources: cnbc.com, bigcharts.com, treasury.gov, treasurydirect.gov – 8/17/126,9,10,11

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.

These returns do not include dividends.

 

Please feel free to forward this article to family, friends or colleagues.
If you would like us to add them to our distribution list, please reply with their address.
We will contact them first and request their permission to add them to our list.

 

Allsure Insurance Disclosure

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

Citations.

1 – www.reuters.com/article/2012/08/15/usa-economy-idINL2E8JF2C720120815 [8/15/12]

2 – www.chicagotribune.com/business/sns-rt-us-economy-ppibre87d0gq-20120814,0,3794223.story [8/14/12]

3 – articles.marketwatch.com/2012-08-14/economy/33191357_1_sales-at-gasoline-stations-furniture-store-sales-retail-sales [8/17/12]

4 – www.sfgate.com/business/bloomberg/article/Housing-Starts-in-U-S-Decline-as-Permits-Reach-3793297.php [8/16/12]

5 – www.marketwatch.com/story/consumer-sentiment-rises-in-august-2012-08-17-10103922 [8/17/12]

6 – www.cnbc.com/id/48701551 [8/17/12]

7 – money.msn.com/market-news/post.aspx?post=2dab9cc0-86e7-48a1-b678-b50cb7e539d7 [8/17/12]

8 – montoyaregistry.com/Financial-Market.aspx?financial-market=common-financial-mistakes-and-how-to-avoid-them&category=29 [8/17/12]

9 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F17%2F11&x=0&y=0 [8/17/12]

9 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F17%2F11&x=0&y=0 [8/17/12]

9 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F17%2F11&x=0&y=0 [8/17/12]

9 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F17%2F07&x=0&y=0 [8/17/12]

9 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F17%2F07&x=0&y=0 [8/17/12]

9 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F17%2F07&x=0&y=0 [8/17/12]

9 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F16%2F02&x=0&y=0 [8/17/12]

9 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F16%2F02&x=0&y=0 [8/17/12]

9 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F16%2F02&x=0&y=0 [8/17/12]

10 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [8/17/12]

10 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [8/17/12]

11 – treasurydirect.gov/instit/annceresult/press/preanre/2002/ofm71002.pdf [7/10/02]

 

 

 

Posted in Texas Life and Health Insurance | 0 Comment

LOOKING AT THE NEW ESTATE TAX LAWS

Posted on February 20, 2014 by

What has happened since 2010 & what could happen in 2013.

Presented by S. Brett Anderson

 

With 2013 approaching, many families and their financial, tax and legal consultants are weighing major estate planning decisions. A short-term window of opportunity may be closing. The relatively low estate tax rates we have now may soon disappear, along with one of the largest federal tax breaks available in decades.

 

Estate taxes are at 80-year lows. At the end of 2010, Congress reset the estate, gift and generation-skipping tax (GST) rates at 35% and raised the lifetime federal gift, estate and GST tax exemptions to $5,120,000 until January 1, 2013. Some Capitol Hill legislators want to see these rates retained, even made permanent. Two other scenarios may be more likely.1,2

 

In the first scenario, the Bush-era tax cuts expire at the end of 2012 and it becomes 2001 all over again: the lifetime estate and gift tax exemptions fall to $1 million and estate taxes are reset to 55% (60% for some households).3

 

In the second scenario, Congress makes good on President Obama’s request to turn the clock back to 2009: estate taxes reset to a top rate of 45% with a $3.5 million personal exemption. (The lifetime gift tax exemption would still fall to $1 million.)3

 

The current $5.12 million personal exemption is portable between spouses. This represents a major tax break for wealthy families – an opportunity to transfer significantly greater amounts of wealth without triggering transfer taxes.

 

Currently, executors have an option to transfer an unused portion of a deceased spouse’s $5.12 million lifetime unified gift/estate/GST exemption to a surviving spouse. So with this new portability, a married couple can potentially transfer up to $10.24 million of assets without incurring any federal estate tax. In 2013, this portability is scheduled to disappear.3,4

 

Portability is not automatic. When the first spouse passes away, the executor of his or her estate must file a federal estate tax return even if no estate tax is owed. That move formally notifies the IRS that you are transferring the unused or partially used personal exemption to the surviving spouse. This estate tax return is due nine months after the death of the first spouse, with a six-month extension permissible.5,6

 

If some planning needs to be done to bring the value of your taxable estate under $5.12 million (or $10.24 million), your executor could make donations to qualified charities or non-profits on your behalf to lower the taxable value of your estate, although your heirs would consequently be left with less.4

 

You can shrink your taxable estate without reducing the lifetime exemption. In 2012, the annual federal gift tax exclusion is set at $13,000. So you (and your spouse) may gift up to $13,000 each to an unlimited number of individuals in 2012 without reducing your lifetime $5.12 million gift/estate tax exemption. Those gifts can even be made as payments for school expenses (except housing costs) or medical bills.4

 

Keep the $13,000 annual exclusion limit in mind: in 2012, gifts in excess of $13,000 per individual do cut into the $5.12 million lifetime exemption dollar-for-dollar.4

 

Even so, you still might want to make large gifts of appreciating assets this year. Why? Here’s an illustration: if you gift shares valued at $52,000 to a relative, you will draw down your $5.12 million lifetime gift/estate tax exemption by $39,000 ($52,000-$13,000). Yet the future appreciation of these shares will not be included within your taxable estate. This year, you and your spouse can each give away up to $5.12 million worth of appreciating assets without incurring federal gift taxes.4

 

An ILIT may be worth a look. Death benefits from life insurance policies are rarely subject to federal tax. However, if you have any “incidents of ownership” (i.e., have or have had the ability to make beneficiary, payment, loan or cancellation decisions), the policy proceeds may end up in your taxable estate.4

 

This problem tends to affect unmarried taxpayers most, though married couples may also face it. One response is to create an irrevocable life insurance trust (ILIT) – a trust that owns an individual or couple’s life insurance policy/policies. Upon the death of the insured, the policy proceeds go into the trust rather than the insured’s taxable estate. The proceeds can subsequently be directed to the named beneficiaries of the ILIT. Two asterisks here: you have to stay alive for at least three years after moving any existing life insurance policies into the ILIT to keep the insurance proceeds out of your estate, and you don’t want to name the estate as the policy beneficiary as that negates the whole purpose of the ILIT.4

 

It is time to carefully review your estate planning strategy in light of the potential changes ahead and the window of opportunity that may soon close.

 

S. Brett Anderson may be reached at (832) 230-1896 or banderson@allsureinsurance.com.

 

http://www.allsureinsurance.com

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or a recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – businessweek.com/investor/content/dec2010/pi20101223_554594.htm [12/23/10]

2 – www.ppglc.com/CYETG11_2B.pdf [2011]

3 – online.wsj.com/article/SB10001424052970204059804577227450551030364.html [2/18/12]

4 – www.smartmoney.com/retirement/estate-planning/estate-tax-tips-for-married-couples-1300466869017/ [1/30/12]

5 – www.fa-mag.com/online-extras/6827-new-estate-tax-law-poses-dilemma-for-the-rich.html [2/14/10]

6 – www.forbes.com/2010/12/23/married-couples-guide-new-estate-tax-personal-finance-deborah-jacobs.html [12/23/10]

Posted in Texas Life and Health Insurance | 0 Comment

What if Greece exits the Euro?

Posted on February 20, 2014 by

WHAT HAPPENS HERE IF GREECE EXITS THE EURO?

 

Another downturn? Or something much less severe?

Presented by S. Brett Anderson

 

If Greece leaves the eurozone in the coming months, what kind of financial ripples could reach America?

 

Nobody can predict the endgame yet; Greece may even stay in the euro, although that is looking less and less likely. The big concern isn’t what happens in Greece – it is about what could happen in Spain or Italy as a result of what happens in Greece.

 

The effects from a Greek default (and eurozone exit) would likely be felt on four fronts in America – but first, an economic chain reaction would almost certainly play out in Europe.

 

A Greek default could imperil Spain & Italy. If Greece leaves the euro, then Greek bondholders lose their money. A crisis of confidence in the euro could prompt institutional investors to either walk away or demand even higher interest rates on Italian and Spanish bonds. The European Central Bank could then step up and provide emergency lending, bond buying and recapitalization efforts. If those efforts were to fall short, the worst-case scenario would be a default in Italy and/or Spain.

 

It could also hurt U.S. banks that aren’t sensibly hedged. If Italy and/or Spain default, a severe downturn could hit EU economies and U.S. lenders would be looking at a huge potential problem. If they are capably hedged against the turmoil in the EU, they could possibly ride through it without a lot of damage. If it turns out they have made foolishly speculative bets (cf. Lehman Brothers, JPMorgan), you could have a big wave of fear, which in the worst scenario would foster a credit freeze reminiscent of 2008. Would the Fed step in again to unfreeze things? Presumably so. Without its intervention, you could have a Darwinian scenario play out in the U.S. banking sector, and few economists and investors would see benefit in that.

 

The good news (relatively speaking) is that U.S. banks have cut their exposure to Greece by more than 40% as that country’s sovereign debt crisis has unfolded. Pension funds and insurers have joined them.1

 

Stocks could fall sharply & the dollar could soar. The greenback would become a premier “safe haven” if foreign investors lose faith in the euro. At the same time, a crisis of confidence would imply big losses for equities (and by extension, the retirement savings accounts and portfolios of retail investors).

U.S. companies could be hurt by fewer exports to Europe. Right now, 19% of U.S. exports are shipped to EU nations. If a deep EU recession occurs, demand presumably lessens for those exports and that would hurt our factories. If institutional investors run from the euro, it would also make U.S. exports more costly for Europeans. Additionally, the EU is the top trading partner to both the U.S. and China; as Deutsche Bank notes, the EU accounts for 25% of global trade.2

Our recovery could be hindered. Picture higher gas prices, a markedly lower Dow, the jobless rate increasing again. In other words: a double dip.

 

In mid-May, economists polled by Reuters forecast 2.3% growth for the U.S. economy in 2012 and 2.4% growth in 2013. These economists also believe that were the fate of Greece not on the table, U.S. GDP might prove to be .1-.5% higher.2

If politicians play their cards right, we may see better outcomes. For example, Greece could elect a new government that decides to abide by the requested austerity cuts linked to EU/IMF bailout money. Greece could remain in the EU and banks in Spain, Italy, Germany and France could ride through the storm thanks to sufficient capital injections. Global stocks would be pressured, but maybe on the level of 2011 rather than 2008. (Maybe the impact wouldn’t even be that bad.)

 

In a rockier storyline, Greece becomes the brat of the EU – a newly radical government rejects the bailout terms set by the EU and IMF, Greece leaves the EU and starts printing drachmas again. The EU, IMF and maybe even the Federal Reserve act rapidly to stabilize the EU banking sector. Early firefighting by central banks results in containment of the crisis after several days of shock, with U.S. markets recovering in decent time (yet with investors still nervous about Italy and Spain).

  

Containment may be the key. If a Greek default can be averted or made orderly by the EU and the IMF, then the impact on Wall Street may not be as major as some analysts fear – and who knows, the U.S. markets might even end up pricing it in. Greece only represents 2% of eurozone GDP; our exports and credit exposure to Greece are minimal at this juncture. Our money market funds have mostly stopped investing in Europe. So with diplomacy and contingency planning afoot, a “Grexit” might do less damage to the world economy than some analysts believe.2

                                                                    

S. Brett Anderson may be reached at (832) 230-1896 or banderson@allsureinsurance.com.

www.allsureinsurance.com

 

Citations.

1 – www.csmonitor.com/USA/Latest-News-Wires/2012/0514/Greece-s-economic-woes-may-hurt-US [5/14/12]

2 – www.cnbc.com/id/47562567 [5/25/12]

Posted in Texas Life and Health Insurance | 0 Comment

Solo Retirement planning / Long Term Care

Posted on February 20, 2014 by

Things to think about when planning for a single retirement. 

Most retirement planning literature portrays a retirement transition in the context of a couple or a family – but what about those who retire alone? What particular challenges do they face, and how must their preparation for retirement differ?

 

Retiring alone presents unique challenges. Singles who retire may lack a spousal and familial support network other retirees count on. If a lone retiree faces sizable medical bills, he or she can’t draw on the financial resources of a spouse. Unmarried, childless retirees also lack adult sons and daughters who might be able to offer them financial help or serve as executors of their estates one day.

 

Singles must plan ahead for them. The earlier, the better: if you anticipate a solo retirement, it might be very wise to plan for it decades in advance.

 

A basic financial truth can’t be dismissed: single retirees will need to amass savings comparable to those of a retired couple.

 

Why? It is because many retirement costs are fixed. Hospitals, universities, banks, pharmacies, mechanics and home improvement specialists do not offer discounts to single parents or lone retirees. Usually, a couple can absorb these costs more effectively than an individual.

 

Some steps to consider. Those looking at the possibility of a solo retirement may want to think about these factors…

 

The need to save early & consistently. Sometimes young singles are bad with credit, or spend whole paychecks without regard to putting anything away. You are different, right? Think about increasing your savings rate. It is possible: look at how much parents save for their kids’ tuition, food, clothing and child care, in the face of economic pressures that may exceed your own.

 

The possibility of building wealth through real estate. Astute real estate investment may provide a single individual with a place to live, a steady income stream and the equity to pad retirement savings.

 

The possible need for long-term care coverage. According to NPR, only about 8 million of 313 million Americans have any long-term care insurance. The average private room accommodation in a nursing home is currently $87,000 a year. The 2012 Long-Term Care Insurance Price Index of the American Association for Long-Term Care Insurance (AALTCI) estimates that a single 55-year-old would pay an average of $1,720 a year for LTCI with an immediate value of $170,000 and a value of $354,000 at age 80 – a purchase that may very well be worth it given trends in American longevity. Many people investigate buying LTCI as they turn 50; you may want to take a look at it in your forties.1

 

The value of a social circle. “Family” has many different definitions today – and increasingly, single retirees are creating family-like bonds by moving in with one another, and saving household expenses as well. This can be good for the soul, and some solo retirees with few or no living relatives go so far as to assign power of attorney to a close friend in case of emergency.

 

What if you are divorcing without kids? A divorce earlier in life is often more bearable financially than a divorce later in life. In the financial aftermath of divorce, the key is whether the settlement reached is truly equitable. Not equal – equitable. While assets may be divided equally, the lesser-earning spouse may be left with less income and less potential to accumulate wealth in the future. (This is often the case if one spouse has helped the other build a business or a professional practice.) An equitable settlement considers and addresses these factors, especially in view of retirement savings needs.

 

These are all crucial factors to think about if you find yourself thinking that you may retire alone. Contemplate them, and consider planning accordingly.

 

S. Brett Anderson may be reached at (832) 230-1896 or banderson@allsureinsruance.com.

www.allsureinsurance.com

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or a recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – www.npr.org/2012/05/08/151970188/long-term-care-insurance-who-needs-it [5/8/12]

Posted in Texas Life and Health Insurance | 0 Comment

Texas Life Insurance Strategies

Posted on February 20, 2014 by

Why might the wealthy be directing more money into this middle-class bedrock?

For generations, American citizens have thought of life insurance as a midlife acquisition of the middle class. Today, that perception is less correct.

Wealthier Americans seem to be purchasing more life insurance. These individuals are recognizing what it may help to accomplish for their families and their corporations. They see the twofold taxation benefit offered by full life and universal life policies – the death benefit goes untaxed, and the policy has a chance to accumulate money value thru a tax-deferred savings or investment account.

As tax levels may rise before the end of the decade, money value life insurance may seem increasingly fascinating to those in the top tax brackets.

Here is some recent history to mull over:

 

  • 1. In 2007, a striking 55% of tax free investment gains universal life and whole life policies belonged to the wealthiest 10% of U.S. Families. In reality 22% of these assets belonged to the wealthiest 1% of American families. (That information comes from the Fed.)
  • In that same year, the life insurance industry research group LIMRA conducted a survey for the Wall Street Journal. It found that policies for $2 million and more made up almost 40% of the face price of entire life and universal life policies sold that year. In 1997, large policies made up just 10% of the life assurance market; in 1987, they made up 1% of it.
  • Prudential Financial Inc. Announces 31% of its life assurance policy sales in 2009 were made to homes with investable assets of more than $250,000. In 1999, that demographic accounted for just 19% of its life insurance polices in force.1

 

When you consider that households with changed gross incomes above $250,000 face a 0.9% income tax increase and a new 3.8% investment tax in 2013, you have one more factor that may make a contribution to the trend.2

An option to think about. Here in Texas, plenty of my clients see life insurance as an alternative investment in the current day’s market uncertainity. Whether you live in Austin, Dallas, Houston, San Antonio, or any of our great Texas towns, you may want to consider a life insurance policy as a resource to pay estate taxes or aid a buy-sell agreement with your company. This strategy may have merit as a complement to your retirement method particularly given the volatility of the stock market and the possibility of higher earnings taxes in the following couple of years.

Regards,

S. Brett Anderson

Allsure Insurance Advisors
Toll Free: (800) 373-8781

www.allsureinsurance.com

Citations.

http://online.wsj.com/article/SB10001424052748703435104575421411449555240.html

http://online.wsj.com/article/SB10001424052748703435104575421411449555240.html

2 http://online.wsj.com/article/SB10001424052748703890904575297351898565426.html.

S. Brett Anderson

Allsure Insurance Agency
http://www.allsureinsurance.com

Reasonable Life Insurance for Texas Home Business Owners and Families.

Allsure Insurance Agency is a nationwide broker concentrating on Life, Health, and Annuites for smaller businesses, people, and famlies. We believe its our job to supply up to date information not only for our clients , but for the people in Texas that are looking for cheaper choices for a life insurance policy. . You can follow us on our blog page at http://www.allsureinsurance.com/blog/or you may visit our website athttp://www.allsureinsurance.com

Posted in Texas Life and Health Insurance | 0 Comment

Buy Life Insurance Before Your Next Half-Birthday

Posted on February 20, 2014 by

Here’s a little-known fact that may help you save money on life insurance: when it comes to underwriting, insurance carriers typically rate clients to their closest birthday.

What does that mean? It means that if you are 39 years and 5 months old, you will be rated as a 39-year-old. If you are 39 years and 6 months old, you will be rated as a 40-year-old. And so on.

So if you are looking to lower the cost of life insurance, one way to potentially save some money is to buy it before you are within 6 months of your next birthday – especially one of those “milestone” birthdays at which you enter a new rate bracket.

New marriage, new baby, new job, or just the desire to put things in good order for your family – these are all reasons to buy, upgrade or change your life insurance coverage. Additionally, there is so much that life insurance can potentially accomplish for a business owner, a couple or a family.

I invite you to learn more – and I urge you to review or look into life insurance coverage before another 6 months pass with the real possibility of premiums going up. So, please call me at 800-373-8781 or email me at banderson@allsureinsurance.com. I’d like to help you save some money!

Posted in Texas Life and Health Insurance | 0 Comment

Texas Life Insurance

Posted on February 20, 2014 by

Why get a life insurance policy if you live in Texas?

Its simple. There no other better investment for your folk than a tax free life insurance policy. In Texas, folks that purchase a plan for the following reasons:

1. Purchasing a home.

2. Sending you kids to college.

3. Starting up a business.

4. Estate planning.

5. Leaving a tax free benefit for your surviving family

How do I find the best life insurance policy at an inexpensive rate?

I’m aware That I am being biased but being life insurance broker with over 30 A rated life insurance carriers to choose between, I suspect I have the money tools available for highest rated carrier and the minimum price. We review each client as an individual and then identify which company is the best fit.

How do I determine how much life insurance do I actually need?

The simpliest approach will be to take your annual salary and multiple that by 7-10 times your revenues. Example, if you earn $50,000 each year, you would need a life insurance policy benefit of $350,000 to $500,000. We review each case individually to pinpoint the right life assurance benefit amount so you can sleep at night knowing you are protected.

Should I buy a Term life policy or should I purchase a Permanant Life Insurance policy?

We think that 95% of Americans should purchase a Term Life Policy. A Term Life policy is the least dear compared with a Permanant Policy (Whole Life/Universal Life) and most term life policies supply a conversion to a complete life and/or universal life if you need to increase your life insurance policy period. This usually occurs when the insured is nearing the expiration period of their term life insurance policy and either they have become uninsurable due to medical issues. An advantage of the conversion is that you are going to not have to retake your medical exam but your rates will increase due to your age.

I would like to review my life insurance rates but I’d like to go to a website that offers free quotes without caring about multiple agents calling me!

We at Allsure Insurance utterly understand!! That explains why our quote engine is personal and we are not lead generation or advertising company. In reality all that you need to do is enter your state, date of birth, benefit amount you want, and the term period, Instantly you will see all of the smoker and non smoker rates. If you interested in applying, then you would press our “application request” tab, enter your private info, and then we’ll contact you. Its that easy.

If you are interested in researching your life insurance, you can go to our website: http://www.allsureinsurance.com and press our life insurance tab to kick off the process of shielding your family and business.

S. Brett Anderson

Allsure Insuranc e Agency/www.allsureinsurance.com

Reasonable Life Insurance for Texas Home Business Owners and Families.

Allsure Insurance Agency is a nationwide broker concentrating on Life, Health, and Annuites for smaller businesses, people, and famlies. We believe its our job to supply up to date information not only for our clients , but for the people in Texas that are looking for cheaper choices for a life insurance policy. . You can follow us on our blog page at http://www.allsureinsurance.com/blog/or you may visit our website at http://www.allsureinsurance.com

Posted in Texas Life and Health Insurance | 0 Comment