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WEEKLY QUOTE “You can’t judge right from looking at what’s wrong.” – Bo Diddley WEEKLY TIP A tax refund is nice, but it also means that you’ve given the IRS an interest-free loan. You may want to adjust your W-4 form so less is withheld from your paycheck. Maybe that extra money could be put to better use throughout the year - in your IRA or 401(k) for example. WEEKLY RIDDLE What nation has current and former capital cities whose names are anagrams of each other? (Hint: it is a major player in the world economy.) Last week’s riddle: The Cage family has a mother, father and six sons and each son has one sister. So how many people are in this family? Last week’s answer: 9 people. As each son has only one sister, there are two parents, six sons and one daughter. | January 31, 2011 4Q HUGE JUMP IN NEW HOME SALES The pace of new home sales improved by 17.5% last month, according to the Census Bureau. In year-over-year terms, sales were down 7.6% while sale prices were 9.1% better. For the record, fewer new homes were built in 2010 than in any year since the government started keeping records in 1963. In other housing news, the National Association of Realtors reported that pending home sales were up for the fifth time in the last six months in December (+2.0%), and Freddie Mac reported that the average interest rate on a 30-year conventional mortgage has risen to 4.80%.2,3 DISSIMILAR FINDINGS FROM CONFIDENCE POLLSWhile the Conference Board’s January poll showed U.S. consumer confidence at an 8-month peak (60.6), the final January Reuters/University of Michigan survey showed a slight decline to 74.2 from 74.5 in December.4,5 DURABLE GOODS ORDERS DOWN 2.5%There was a silver lining in the Commerce Department’s December report: with aircraft orders factored out, durable goods orders were up 0.5% last month.6 FEARS, EARNINGS REPORTS STAGGER STOCKS Unrest in Egypt (and subpar 4Q results from Ford, Amazon and Microsoft) led to a lot of selling Friday and took the DJIA, S&P 500 and NASDAQ lower for the week. The Dow’s eight-week winning streak was snapped; it did top 12,000 in intraday trading Friday. Weekly performances were as follows: DJIA, -0.41% to 11,823.70; S&P 500, -0.55% to 1,276.34; NASDAQ, -0.10% to 2,686.89. The CBOE VIX gained 8.50% last week.7 THIS WEEK: Monday brings a new consumer spending report and earnings from ExxonMobil and Chrysler. Tuesday, we have the January ISM manufacturing report and earnings from BP, Pfizer, UPS and Broadcom. Wednesday we get 4Q results from Yum Brands, Visa and Mattel. Thursday brings new initial and continuing claims data, a new ISM service sector report, December factory orders data, and 4Q results from Merck, Sony and Unilever and Ben Bernanke speaking to the National Press Club. Friday, we have the January jobs report and
Source: cnbc.com, bigcharts.com, treasury.gov, treasurydirect.gov - 1/28/117,8,9,10 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. | ||||||||||||||||||||||||||||||
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This material was prepared by Citations. 1 - blogs.forbes.com/afontevecchia/2011/01/28/inflation-wary-consumers-help-economy-grow-3-2-in-q4/ [1/28/11] 2 - latimes.com/business/realestate/la-fi-home-sales-20110127,0,3555076.story [1/27/11] 3 - usatoday.com/money/economy/housing/2011-01-27-pending-home-sales_N.htm [1/27/11] 4 - latimesblogs.latimes.com/money_co/2011/01/consumer-confidence-index-rises-job-market-outlook.html [1/25/11] 5 - marketwatch.com/story/us-consumers-sentiment-dips-in-january-2011-01-28 [1/28/11] 6 - abcnews.go.com/Business/wireStory?id=12779327 [1/27/11] 7 - cnbc.com/id/41317519 [1/28/11] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=1%2F28%2F10&x=0&y=0 [1/28/11] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=1%2F28%2F10&x=0&y=0 [1/28/11] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=1%2F28%2F10&x=0&y=0 [1/28/11] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=1%2F27%2F06&x=0&y=0 [1/28/11] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=1%2F27%2F06&x=0&y=0 [1/28/11] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=1%2F27%2F06&x=0&y=0 [1/28/11] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=1%2F7%29F01&x=0&y=0 [1/28/11] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=1%2F7%29F01&x=0&y=0 [1/28/11] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=1%2F7%29F01&x=0&y=0 [1/28/11] 9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [1/28/11] 9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [1/28/11] 10 - treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01] 11 - montoyaregistry.com/Financial-Market.aspx?financial-market=an-introduction-to-the-stock-market&category=29 [1/29/11] | |||||||||||||||||||||||||||||||
Monday, January 31, 2011
Weekly Economic Update - January 31, 2011
Saturday, January 29, 2011
AN ESTATE PLANNING CHECKLIST - January 29, 2011
AN ESTATE PLANNING CHECKLIST
Things to check and double-check before you leave this world.
Presented by Kip A. Hoover
Estate planning is a task that people tend to put off, as any discussion of “the end” tends to be off-putting. However, those who leave this world without their financial affairs in good order risk leaving their heirs some significant problems along with their legacies.
No matter what your age, here are some things you may want to accomplish this year with regard to estate planning.
Create a will if you don’t have one. Who doesn’t have a will? You might be surprised. Some tremendously wealthy people have passed away without leaving a valid will. For example, Pablo Picasso and even Howard Hughes!
It is startling how many people never get around to this, even to the point of buying a will-in-a-box at a stationery store or setting one up online. A recent Lawyers.com survey of 1,022 Americans found that just 35% had wills. (For that matter, only 18% had some kind of trust.)1
A solid will drafted with the guidance of an estate planning attorney may cost you more than the will-in-a-box, but may prove to be some of the best money you ever spend. A valid will may save your heirs from some expensive headaches linked to probate and ambiguity.
Complement your will with related documents. Depending on your estate planning needs, this could include some kind of trust (or multiple trusts), durable financial and medical powers of attorney, a living will and other items.
You should know that a living will is not the same thing as a durable medical power of attorney. A living will makes your wishes known when it comes to life-prolonging medical treatments, and it takes the form of a directive. A durable medical power of attorney authorizes another party to make medical decisions for you (including end-of-life decisions) if you become incapacitated or otherwise unable to make these decisions.
Review your beneficiary designations. Who is the beneficiary of your IRA? How about your 401(k)? How about your annuity or life insurance policy? If your answer is along the lines of “Mm … you know … I’m pretty sure it’s…” or “It’s been a while since …”, then be sure to check the documents and verify who the designated beneficiary is.
When it comes to retirement accounts and life insurance, many people don’t know that beneficiary designations take priority over bequests made in wills and living trusts. If you long ago named a child now estranged from you as the beneficiary of your life insurance policy, he or she will receive the death benefit when you die - regardless of what your will states.2
Time has a way of altering our beneficiary decisions. This is why some estate planners recommend that you review your beneficiaries every two years.
In some states, you can authorize transfer-on-death designations. This is a tactic against probate: TOD designations may permit the ownership transfer of securities (and in a few states, forms of real property, vehicles and other assets) immediately at your death to the person designated. TOD designations are sometimes referred to as “will substitutes” but they usually pertain only to securities.3
Create asset and debt lists. Does this sound like a lot of work? It may not be. You should provide your heirs with an asset and debt “map” they can follow should you pass away, so that they will be aware of the little details of your wealth.
- One list should detail your real property and personal property assets. It should list any real estate you own, and its worth; it should also list personal property items in your home, garage, backyard, warehouse, storage unit or small business that have notable monetary worth.
- Another list should detail your bank and brokerage accounts, your retirement accounts, and any other forms of investment plus any insurance policies.
- A third list should detail your credit card debts, your mortgage and/or HELOC, and any other outstanding consumer loans.
Think about consolidating your “stray” IRAs and bank accounts. This could make one of your lists a little shorter. Consolidation means fewer account statements, less paperwork for your heirs and fewer administrative fees to bear.
Let your heirs know the causes and charities that mean the most to you. Have you ever seen the phrase, “In lieu of flowers, donations may be made to …” Well, perhaps you would like to suggest donations to this or that charity when you pass. Write down the associations you belong to and the organizations you support. Some non-profits do offer accidental life insurance benefits to heirs of members.
Select a reliable executor. Who have you chosen to administer your estate when the time comes? The choice may seem obvious, but consider a few factors. Is there a stark possibility that your named executor might die before you do? How well does he or she comprehend financial matters or the basic principles of estate law? What if you change your mind about the way you want your assets distributed – can you easily communicate those wishes to that person?
Your executor should have copies of your will, forms of power of attorney, any kind of healthcare proxy or living will, and any trusts you create. In fact, any of your loved ones referenced in these documents should also receive copies of them.
Talk to the professionals. Do-it-yourself estate planning is not recommended, especially if your estate is complex enough to trigger financial, legal and emotional issues among your heirs upon your passing.
Many people have the idea that they don’t need an estate plan because their net worth is less than X dollars. Keep in mind, money isn’t the only reason for an estate plan. You may not be a multimillionaire yet, but if you own a business, have a blended family, have kids with special needs, worry about dementia, or can’t stand the thought of probate delays plus probate fees whittling away at assets you have amassed … well, these are all good reasons to create and maintain an estate planning strategy.
Kip A. Hoover may be reached at 440-729-0036 or kip.hoover@lpl.com.
This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal advice. The publisher is not engaged in rendering legal, accounting or other professional services. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. If assistance or further information is needed, the reader is advised to engage the services of a competent professional.
Citations.
1 financial-planning.com/news/Schenkman-lawyers-estate-2665998-1.html [3/1/10]
2 sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/11/02/investopedia6151.DTL [11/2/10]
3 raymondjames.com/branches/c2c/35C/oxleygrouprja/articles/distribution/tod_will_substitutes.pdf [2006]
4 www.montoyaregistry.com/Financial-Market.aspx?financial-market=reasons-not-to-write-your-own-will&category=30 [1/23/11]
Wednesday, January 26, 2011
Weekly Economic Update - January 24, 2011
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WEEKLY QUOTE “Success is the sum of details.” – Harvey Firestone WEEKLY TIP If a major financial or life event is coming up on your calendar, talk to a financial or tax professional about it now. If you wait until after the event, you may pay an opportunity cost or find yourself with a higher tax bill. WEEKLY RIDDLE The Cage family has a mother, father and six sons, and each son has one sister. So how many people are in this family? Last week’s riddle: An interesting occurrence happened about 25 minutes on the clock and months and years on the calendar. What was this numerically interesting moment? Last week’s answer: Early on that afternoon, the time and date read 12:34 on 5/6/78. | January 24, 2011 TIME FOR OPTIMISM IN THE HOUSING MARKET?Existing home sales have improved in five of the past six months. In December, they rose 12.3%. While December’s sales pace was still 2.9% below year-ago levels, the National Association of Realtors also noted that the glut of unsold homes had been reduced to 8.1 months of supply compared to 9.5 months’ worth in November. The median existing home sale price fell 1.0% last month to $168,800.1,2 LEI INDEX SHOWS MORE IMPROVMENTThe Conference Board’s Leading Economic Indicators index rose 1.0% in December. Pair that with its 1.1% ascent in November and you have the two best months since it rose 1.4% in March. The building permits indicator showed the most improvement.3 HOUSING STARTS DOWN, GOLD & OIL TURN LOWEROptimism about the global economy seems to have increased appetites for risk, and last week you also had the fear that DOW ADVANCES AGAIN The DJIA posted its eighth straight weekly gain, rising 0.72% across four market days to settle at 11,871.84 Friday. The S&P 500 (-0.76% to 1,283.35) and the NASDAQ (-2.39% to 2,689.54) saw weekly retreats.6 THIS WEEK: Monday brings earnings reports from McDonald’s, Halliburton, Amgen and American Express. Tuesday, we have the Conference Board’s latest consumer confidence index, the November Case-Shiller home price index and earnings from 3M, US Steel and Verizon. Wednesday brings an FOMC meeting and December new home sales figures plus earnings from Boeing, Netflix and Xerox. Thursday gives us weekly jobless claims figures, December durable goods orders and November pending home sales plus earnings from AT&T and Caterpillar. Friday offers earnings from Chevron and Honeywell, the final January University of Michigan consumer sentiment survey, and the first 4Q 2010 GDP estimate.
Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov - 1/21/116,7,8,9 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. | |||||||||||||||||||||||||||||||
«RepresentativeDisclosure» This material was prepared by The fast price swings of commodities will result in significant volatility in an investors holdings Citations. 1 - marketwatch.com/story/existing-home-sales-jump-12-in-december-2011-01-20?dist=beforebell [1/20/11] 2 - philly.com/inquirer/business/20110121_Existing-home_sales_continue_to_climb.html [1/21/11] 3 - npr.org/2011/01/20/133083073/leading-indicators-rise-pointing-to-stronger-growth [1/20/11] 4 - theatlantic.com/business/archive/2011/01/housing-starts-sink-as-permits-soar-in-december/69759/ [1/19/11] 5 - blogs.wsj.com/marketbeat/2011/01/21/data-points-energy-metals-444/ [1/21/11] 6 - cnbc.com/id/41198149 [1/21/11] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=1%2F21%2F10&x=0&y=0 [1/21/11] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=1%2F21%2F10&x=0&y=0 [1/21/11] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=1%2F21%2F10&x=0&y=0 [1/21/11] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=1%2F20%2F06&x=0&y=0 [1/21/11] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=1%2F20%2F06&x=0&y=0 [1/21/11] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=1%2F20%2F06&x=0&y=0 [1/21/11] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=1%2F7%22F01&x=0&y=0 [1/21/11] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=1%2F7%22F01&x=0&y=0 [1/21/11] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=1%2F7%22F01&x=0&y=0 [1/21/11] 8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [1/21/11] 8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [1/21/11] 9 - treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01] | |||||||||||||||||||||||||||||||
Saturday, January 22, 2011
IRA Changes for 2011
IRA CHanges for 2011
Little details you need to know about.
Provided by Kip A. Hoover
What’s new? Every year brings changes in tax law, and some of these revisions always seem to affect IRAs. Here is a look at some of the new wrinkles for 2011.
You can’t defer income resulting from a Roth IRA conversion in 2011. If you converted a traditional IRA to a Roth IRA in 2010, you could opt to divide the income resulting from the conversion between your 2011 and 2012 federal tax returns. (If you did go Roth in 2010, you have until October 17, 2011 to choose this income deferral option.) You don’t have this choice in 2011 - the income can’t be deferred to a future tax year.1
The IRA charitable rollover is back. In 2011, IRA owners aged 70½ or older can again donate IRA proceeds to charity tax-free. The Tax Relief Act of 2010 brought back the opportunity, at least for this year.2
A charitable IRA rollover lets an IRA owner gift up to a total of $100,000 in IRA assets to one or more qualified charities or non-profit organizations. The distribution has to go directly from the IRA custodian to the charity. You don’t get a tax deduction for the move, but you could use this qualified charitable distribution to fulfill some or all of your 2010 RMD.2
The Tax Relief Act also gives IRA owners until January 31, 2011 to make 2010 charitable IRA donations. So you could transfer up to $100,000 from your IRA to a charity in January and have it retroactively count as a 2010 distribution, then transfer another donation of up to $100,000 to the charity later this year.3
Here’s the irritating asterisk on all this: if you took your 2010 RMD assuming that you couldn’t make a charitable IRA donation in 2010, there is no do-over available. You can’t put back your 2010 RMD into your IRA and redirect those assets toward charity. The IRS issued a statement on January 5 citing existing language in IRS Publication 590, explaining that “required minimum distributions (RMD) from an IRA received by a taxpayer cannot be rolled over to an IRA.”4
You have three extra days to make your 2010 IRA contribution. The District of Columbia
You may have a chance to go Roth with your 401(k) or 403(b) in 2011. As a result of the Small Business Jobs Act of 2010, some employer-sponsored retirement plans are now allowing in-plan Roth conversions, i.e., the chance to “convert” a percentage of the pre-tax dollars you have saved to after-tax dollars without the necessity of a rollover to a Roth IRA. However, there are criteria to meet.
- Your employer’s retirement plan document has to permit after-tax Roth contributions.
- You must be older than 59½, or you have to have assets in a 401(k) or 403(b) account at a past employer that could potentially be rolled over to your current employer’s plan.7,8
Roth IRA phase-outs have been set higher for 2011. While anyone can convert a traditional IRA to a Roth IRA, not everyone can contribute to a Roth IRA because of MAGI limits. For 2011, those phase-out limits have increased by $2,000 for joint and single filers. The phase-out range for joint filers and qualifying widows this year is $169,000-179,000. For single filers, it is $107,000-122,000.6
Traditional IRA deduction phase-outs are also higher for 2011. If you own an IRA and participate in an employer-sponsored retirement plan, your IRA contributions may or may not be deductible, depending on your MAGI. In 2011, the MAGI phase-out ranges are bumped up slightly to $90,000-110,000 for joint filers and qualifying widows and $56,000-66,000 for single filers and heads of households.6
One thing that hasn’t changed… With minimal inflation for 2010, there was no COLA to send the annual IRA contribution limit higher. You may contribute up to $5,000 to your IRA in 2011, $6,000 if you are 50 or older. If you have more than one IRA, your total 2011 IRA contributions to your IRAs cannot exceed the above limits.9
Kip A. Hoover may be reached at 888-434-0027 or kip.hoover@lpl.com.
This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal advice. The publisher is not engaged in rendering legal, accounting or other professional services. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. If assistance or further information is needed, the reader is advised to engage the services of a competent professional.
Citations
1 – online.wsj.com/article/SB10001424052748703675904576063903166546250.html [1/8/11]
2 – online.wsj.com/article/SB10001424052748703395904576025610771041244.html [12/18/10]
3 - blogs.forbes.com/ashleaebeling/2011/01/06/taxwise-giving-from-your-ira-the-january-do-over/ [1/6/11]
4 – online.wsj.com/article/SB10001424052748703730704576065931348238132.html [1/7/11]
5 – irs.gov/newsroom/article/0,,id=233910,00.html [1/14/11]
6 – irs.gov/publications/p17/ch17.html#en_US_2010_publink1000252730 [1/14/11]
7 - bankrate.com/financing/retirement/converting-to-a-roth-401k/ [11/4/10]
8 - sibson.com/publications-and-resources/compliance-alert/archives/?id=1534 [10/27/10]
9 - irs.gov/retirement/article/0,,id=202510,00.html [11/1/10]
10 - montoyaregistry.com/Financial-Market.aspx?financial-market=required-ira-distributions&category=1 [1/16/11]
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