In the course of my work, you might think that I get a little “burned out” by all the thinking ahead and planning which my business requires.

Not so. Especially when I want to “get away” from that work. I’m a planner … and I’ve long ago stopped fighting against this impulse, including when it comes to planning for vacations.

So, take it from my personal experience: the last thing you want to do when traveling is worry about any financial loss that might occur as a result of a missed flight, an injury or illness, lost baggage, or any other unforeseen incident. To ensure your peace of mind while away from home, many companies provide several different types of traveler’s protection plans to help ease the burden.

Without insurance, you can lose nonrefundable deposits and prepayments that can add up to hundreds, or even thousands, of dollars. But a good, comprehensive travel insurance plan will often reimburse you for all pre-paid, nonrefundable expenses for a covered loss.

For this reason, though some advise against using these sorts of services (and many reject them in a knee-jerk fashion), I’ve always found that having peace-of-mind — especially when it comes to VACATION, when peace is what we’re after! — is worth the extra investment.

So, here are some worthy options, as you hold on to that peace-of-mind this summer…

Travel Arrangement Protection – This covers you in case of trip cancellation, interruption, or travel delays (these can include inclement weather, lost or stolen passports, quarantine, hijacking or natural disaster).

Medical Protection – Despite having health insurance at home, the moment you set foot on foreign soil or even set sail on a cruise, many health plans are considered null and void, so be sure you get travel medical protection to cover emergency medical expenses, such as illness and accident expenses, and emergency medical transportation to the nearest medical facility.

Baggage Protection – Not only do you want coverage for lost, stolen or damaged baggage, but many plans offer reimbursement for the purchase of essential items if baggage is delayed.

Worldwide Emergency Assistance – If traveling outside of the country, make sure you purchase a policy that covers international emergencies. This can include emergency cash transfer assistance, legal assistance, and lost travel documents assistance.

The cost of travel insurance is based, in most cases, on the value of the trip and the age of the traveler. Typically, the cost is 5-7 percent of the trip cost. Like most every other type of insurance, be it automobile, medical, or homeowner’s, you hope you never need to use it. But it can be a relief to have it when you do need it.

The bottom line is: Before embarking on your next trip, do your homework! Talk to your insurance agent – or call me for a recommendation – and learn more about all the different insurance options available to you, so you can make the best choice for your peace of mind!

Financial Advisor Richmond
Financial Planner Richmond
Financial Planners Virginia

In a recent note, I wrote about these common myths–still held by the majority of Americans.

In fact, as of this writing, it’s a fact that almost 60% of Americans don’t have a basic will, and that’s a big problem.

Much of the reason for this is because of misconceptions about estate planning, and I dealt with two already:

Myth 1. Only rich people prepare estate plans.
Myth 2. Everything goes to your spouse, if something happens.

Well, I’ve got three more for you to chew on, and dispense with.

Myth 3. After I create my will or living trust, there’s nothing else to think about.

Well, if you follow this line of thinking, it could lead to a lot of problems. For instance, once you set up a trust, you need to re-title the assets you want to transfer to the trust. Otherwise, the trust doesn’t help a thing.

On top of that, families need to periodically update their will or trust to reflect major life events, such as a divorce or the birth of a child. You’ll also want to revisit your estate plan if you move to another state.

In fact, it’s a good idea to meet with us every 3 or 4 years to make sure your plan is fully up-to-date. (Which, incidentally, we provide free to certain clients. Ask us about that.)

Myth 4. If I have a will, my estate automatically won’t go through probate.

Well, again–that’s not the case. In fact, ALL wills are subject to “probate”. This is a process in which a court determines whether the document is actually valid and ensures that relatives and creditors are notified. This process can take several months and drain thousands of dollars from your estate.

So here’s one way to avoid that entirely–create that living trust. Essentially, a living trust is a legal document you create which holds property (such as brokerage accounts and real estate). When you die or are incapacitated, the property is smoothly transferred to your beneficiaries. This transfer occurs outside of the probate process, which saves a TON of hassle.

Not everyone needs one of these documents, but it’s something which you can’t paint over with a broad brush. Which is why it’s important to walk with a competent guide on these matters.

By the way, if you own property in more than one state, a living trust is a no-brainer. Going through probate in multiple states is a nightmare.

Another advantage to a living trust is privacy. A will is a public document, and anyone can come to the probate hearing to see if any fights break out. Living trusts aren’t published in any courthouse, so people can’t gain easy access to them. That’s quite nice.

Myth 5. I could be held responsible for a deceased parent’s debts.

No, you’re not responsible for credit card debts from your parents.

In general, children aren’t responsible for a deceased parent’s debts, and in some cases spouses are often exempt as well. Again…you can’t paint it with a broad brush. But as a general rule, the estate is responsible for paying debts. If there isn’t enough in the estate to cover the amount owed, the debts usually go unpaid.

Financial Advisor Richmond
Financial Planner Richmond
Financial Planners Virginia

Alright, brace yourself … this could get slightly complicated.

But it’s very do-able — as are MANY things like this in the tax code (which you’d never believe). But I’m going to do my best to cut through the tax jargon, and give you the bottom line.

Here we go.

If …

1) Your child is younger than 13 and
2) He/she wants to go to DAY camp (overnight doesn’t count!)
3) You are both working (and/or “looking for work”)

… Cha- ching.

You then have a choice — you can pay for it using an FSA (Flexible Savings Account) OR it can give you a child care tax CREDIT (better than a deduction).

With both the FSA and the child care credit, other eligible expenses include the cost of day care or preschool, before-school care or after-school care, and a nanny or other babysitter while you work.

The size of the credit depends on your income and the number of children you have who are younger than 13. You can count up to $3,000 in child care expenses for one child or up to $6,000 for two or more children.

BUT, the size of the credit gradually decreases as income increases. Families earning less than $15,000 can claim a credit for up to 35% of those eligible expenses; families earning more than $43,000 can claim a credit for up to 20% of eligible costs.

All told, it’s a good deal which you should be leveraging, if you qualify.

For most people, it’s a better deal to use the money from the FSA than to claim the child care credit (I won’t go into all the geekery right now, as to why).

But if you have two or more children and your child care expenses exceed $5,000 for the year, you can benefit a bit from both accounts. Here’s how…

You can set aside up to $5,000 in pretax money in your FSA for child care costs, then claim the child care credit for up to $1,000 in additional expenses

By the way, just counting $1,000 toward the child care credit could cut your tax bill by at least $200.

I hope this helps. And know that this is just the tip of the iceberg. There really are two tax systems in our country–one for those who know this stuff (and use it) and another, much harsher one for those who don’t.

Financial Advisor Richmond
Financial Planner Richmond
Financial Planners Virginia

As of this writing, it’s a fact that almost 60% of Americans don’t have a basic will, and that’s a big problem.

One of the big reasons that most families don’t yet have this in place is because of some incorrect thinking about whether it’s right for them, or if it’s even necessary. And sure, some people just haven’t gotten around to creating a will or trust. Others think they don’t need an estate plan because they’re not rich. I’ve even heard from people that they don’t want to put it in place because when they do, it’s sending some sort of death wish into the universe (or some such).

Well, I’ll start by busting THAT myth: Preparing a plan for your succession will not speed your demise. Easy enough.

But here’s the problem–if you continue without an estate plan, you could leave a legacy of bad feelings and attorneys’ fees.

But, I’ll move off of that easy one, and speak to some of the more common misconceptions out there. I’ll start with two this week, and address three more in a future Note.

Marshall MythBusting #1: Only rich people prepare estate plans.

Do you own ANYTHING? Because if so, you need a will. You see, a will allows you to designate who will receive your property should anything happen. Continuing without one ensures that your assets will be distributed under the terms of your state’s “intestate succession” laws. That means your money and property could end up with family members you haven’t spoken to in years, instead of who you’d really like to see control your assets.

I won’t go into all of the different components of a will, trust, health care directive etc., as my purpose here is to emphasize that failing to plan is simply a decision to trust your assets to government bureaucrats.

Even if you think your situation is pretty straightforward, you may feel more comfortable hiring a lawyer to guide you through the process.

Marshall MythBusting #2: Everything goes to your spouse, if something happens.

Unfortunately, that’s not always the case. We deal with clients from different states around the country, and state laws vary. In fact, in most states, if you continue without a will (intestate), your inheritance will be divided among your spouse and your children. In New York, for example, when someone dies intestate, the spouse gets the first $50,000 of the estate and what’s left is divided 50-50 among the spouse and the children.

You can imagine how this could create all kinds of problems, particularly if your spouse was financially dependent on you or you have children from a previous marriage.

I’ll send a few more in the weeks ahead, but I hope you can already see that things are not always as we “think”.

I hope this helps. To your family’s financial and emotional peace…

Financial Advisor Richmond
Financial Planner Richmond
Financial Planners Virginia

We pay attention to these things so you don’t have to.

This is an election year, so things can always change (though, it’s a good planning principle to realize that Congress doesn’t usually like to rock the boat during presidential election years) … but I wanted to make sure you had the rates and numbers for the 2012 tax preparation season.

Why am I sharing these with you now?

Two reasons: 1. So you can plan ahead (and more about that in a moment) and 2. so you can take advantage NOW of favorable conditions for 2012 which seem likely to change in the years ahead. And, so you can see some not-so-favorable news for this year…

First, the 2012 Tax Rates:
For 2012, there will be six tax rates:
10% on taxable income from $0 to $8,700
15% on taxable income over $8,700 to $35,350
25% on taxable income over $35,350 to $85,650
28% on taxable income over $85,650 to $178,650
33% on taxable income over $178,650 to $388,350
35% on taxable income over $388,350

The tax rates for 2013 are scheduled to change as follows: the 10% rate will be collapsed into the 15% rate; the 25% rate will become 28%; the 28% rate will become 31%; the 33% rate will become 36%; and the 35% rate will become 39.6%. These tax rate changes will take effect beginning in 2013 absent further legislation.

Ouch.

The “Dreaded AMT” (Alternative Minimum Tax)
The Alternative Minimum Tax, or AMT, is a parallel tax system. Every taxpayer is responsible for paying the higher of the regular tax or the minimum tax. In 2012, the thresholds will be significantly lowered, and more people will face this alternative system, without proper advice and planning.

AMT Exemption Amounts for 2011
Legislated as part of the 2010 Tax Relief Act:
$48,450 for single and head of household filers,
$74,450 for married people filing jointly and for qualifying widows or widowers, and
$37,225 for married people filing separately.

AMT Exemption Amounts for 2012
The alternative minimum tax exemption amounts for 2012 are scheduled to revert to the following levels:
$33,750 for single and head of household filers,
$45,000 for married people filing jointly and for qualifying widows or widowers, and
$22,500 for married people filing separately.
Source: Code Section 55(d)(1). Lower exemption levels mean that more taxpayers will be subject to the alternative minimum tax calculations.

So, here’s a good summary: navigating these two different issues without proper planning NOW could end up costing you and your family significantly.

There is no guarantee that you will save by speaking to us in advance. But this I CAN guarantee: If you don’t speak with us, we won’t be able to save you a dime.

Financial Advisor Richmond
Financial Planner Richmond
Financial Planners Virginia