Estate Planning & Probate

What is estate planning and why do we need to do that to protect our family?  According to Wikipedia, estate planning is the process of anticipating and arranging during a person's life, for the management and disposal of that person's estate during a person's life and at and after death, while minimizing gift, estate, generation skipping transfer and income tax.  Estate planning includes planning for incapacity as well as a process of reducing or eliminating uncertainties over the administration of a probate and maximizing the value of the estate by reducing taxes and other expenses. The ultimate goal of estate planning can be determined by the specific goals of the client, and may be as simple or complex as the client's needs dictate. Guardians are often designated for minor children and beneficiaries in incapacity. 

What is probate? From Wikipedia, probate is is the judicial process whereby a will is "proved" in a court and accepted as a valid public document that is the true last testament of the deceased.  There are good reasons why we should try to avoid probate.  First, that it can tie up the property for months, sometimes more than a year. Second, it is expensive. Attorney and court fees can take up to 5% of an estate's value. 

It is not hard to avoid probate. This can be avoided by setting up a living trust. Living trusts were invented to let people make an end-run around probate. The advantage of holding your valuable property in trust is that after your death, the trust property is not part of your probate estate. (It is, however, counted as part of your estate for federal estate tax purposes.) That's because a trustee -- not you as an individual -- owns the trust property. After your death, the trustee can easily and quickly transfer the trust property to the family or friends you left it to, without probate. You specify in the trust document, which is similar to a will, who you want to inherit the property.

For better example, see article from Legacy Shield:  Call me or email me for more info.

National Financial Literacy Month

National Financial Literacy Month is recognized in the United States in April in an effort to highlight the importance of financial literacy and teach Americans how to establish and maintain healthy financial habits.

Americans carry more than $2.4 trillion in consumer debt, which works out to be nearly $7,800 in debt for every man, woman and child that lives in the United States (Source: Federal Reserve).

Being “financially literate” means you have the knowledge, skills and habits to successfully manage your money. Such skills include using a budget or plan for monthly spending; regularly saving some of today’s money for tomorrow’s needs; managing your use of credit to avoid over-extending yourself; and investing funds to allow your money to grow.

We have a mission to educate 1M families by the year 2020, We are an avid fighter for our freedom but we really don't have freedom until we have financial freedom, Let us start now.

Come to our free workshop this Saturday (04/08/2017) at 10429 S 51st St Suite 215 Phoenix AZ from 10:00 am - 12:00 noon. Please RSVP by clicking on this link:https://goo.gl/forms/z4Fb39BoPqOjcHL32

Brexit Impact on US Economy

What is Brexit?  It is an abbreviation for "British Exit", which refers to the June 23, 2016 referendum by British voters to exit the European Union. Britain has already opted out of the EU's monetary union which means that they would be using pounds instead of Euro.

Per Stephen Pounds article published in Foxbusiness.com, June 29, 2016, he said that Chuck Fulkerson, director of education at Online Trading Academy, stated that it will have a short term impact on US economy. But Alan MacEachin, Navy Federal Credit Union economist stated otherwise.

"There could be a massive capital flight to safety, which implies a significant inflow of funds into the US Treasury securities which could drive interest rates lower in the US and also boost the value of the dollar", MacEachin says.

Patrick Gillespie of CNNMoney, June 24, 2016 stated that the chief of the US central bank and top monetary policy setting official, Janet Yellen, forewarned earlier this week that Brexit "wold negatively affect financial conditions and the US economy.

Volatile markets can slow down the US economy.  American consumers make up majority of the US economic activities.  If they don't spend, the economy will not grow.  Their spending usually depends on where the economy of their country is going.

It can also triggers a strong dollar.  A strong dollar will be good for American traveler since it will be a cheaper vacation for them but bad for businesses that sell products overseas. It makes their products more expensive overseas and less attractive to consumers.

In December, Federal Reserves projected that it will raise rates four times this year which will be a strong sign that the US economy has recovered from the recession.  But by June, several of their committee members were calling only one rate hike because of weak growth and slowing job gains.  As rates fall, it will be easier and cheaper for homebuyer to finance their home purchase. Steve Rick, chief economist for CUNA Mutual group said, " This would create yet another mini refinance mortgage boom at financial institutions as homeowners rush to lock in near historic low interest rates." This will be good for real estate industry.

Rent VS Buy

A nationwide buy versus rent index is moving deeper into the “buy” territory, indicating that housing markets across the country are strong. This study by Florida Atlantic University and Florida International University also shows that home prices rose 5.4 percent in the first quarter.

“This appears to be driven by a steady but strengthening job market, rising rents relative to rising ownership costs and recent slower growth in traditional financial portfolios consisting of stocks and bonds,” says Ken Johnson, a real estate economist and one of the index’s authors.

The index looked at the relationship between buying a property and building wealth through a buildup of equity versus renting a comparable property and investing in a portfolio of stocks and bonds, and concluded that “In terms of wealth creation, the U.S. housing market, when considered as a whole, has swung marginally more in favor of home ownership over renting a comparable property and investing monthly rent savings in a portfolio of stocks and bonds."

The index also revealed that 16 of the 23 metro markets examined moved in the “buy” territory direction.

The metro areas remaining solidly in the “buy” territory include Boston, Chicago, Cincinnati, Cleveland, Detroit, Milwaukee, Minneapolis, New York, Philadelphia, and St. Louis.

“These cities should have room for price growth without much worry of overheating,” says Eli Beracha, co-author of the index and assistant professor in the T&S Hollo School of Real Estate at FIU. “This is especially true for Chicago, Cincinnati, Cleveland and Detroit.”

 On the other hand, index authors say cities like Honolulu, Kansas City, Los Angeles, Miami, Pittsburgh, Portland, San Diego, San Francisco, and Seattle are near an “indifference point” between buying versus renting. In nearly all of these metro markets, the index score for the quarter moved in the direction of ownership.

“This movement suggests that most consumers in these markets appear to have learned from the real estate crash and now understand that residential property prices can get too high,” Beracha says. “This is a good sign for future housing price stability in these markets.”

 Houston, meanwhile, is deep in the “rent” territory. Also, two other housing markets – Dallas and Denver – moved deeper into the “rent” territory, but at a slower rate than previous quarters, the authors note.

“Strong economic support within these two markets should make for a soft landing in terms of slowing property price growth, increased marketing time for properties and lower probabilities that sellers will actually transact and close during a given marketing effort of their property,” Johnson says.

Source: Florida Atlantic University

Indexed Universal Life Insurance Policy and Retirement

An indexed universal life insurance policy is a permanent insurance that offers great flexibility for premiums and adjustments for face amount. The indexed accounts are credited with interest based on the growth in one or more indexes and there is a guaranteed growth rate within the policy. Life insurance is designed to protect your loved ones if there is a premature death in your family.

What I like best about an indexed universal life insurance policy is the fact that the cash value within the policy can be utilized as a way to generate tax free income for retirement. In other words, this type of policy serves two purposes.

** The face amount provides protection for your family in the case of a premature death.
** The cash value growth over the years can generate tax-free income during retirement.

Source: Excerpt from Investopedia

President's Day

Presidents’ Day is an American holiday celebrated on the third Monday in February. Originally established in 1885 in recognition of President George Washington, it is still officially called “Washington’s Birthday” by the federal government. Traditionally celebrated on February 22—Washington’s actual day of birth—the holiday became popularly known as Presidents’ Day after it was moved as part of 1971’s Uniform Monday Holiday Act, an attempt to create more three-day weekends for the nation’s workers. While several states still have individual holidays honoring the birthdays of Washington, Abraham Lincoln and other figures, Presidents’ Day is now popularly viewed as a day to celebrate all U.S. presidents past and present. #PresidentsDay

Source: History.com

Thanksgiving History

In 1621, the Plymouth colonists and Wampanoag Indians shared an autumn harvest feast that is acknowledged today as one of the first Thanksgiving celebrations in the colonies. For more than two centuries, days of thanksgiving were celebrated by individual colonies and states. It wasn’t until 1863, in the midst of the Civil War, that President Abraham Lincoln proclaimed a national Thanksgiving Day to be held each November.

Source: History.com