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Celebrating
our 25th Anniversary
The lowdown on lending to family
As your business and financial success becomes apparent to others, your
relatives may view you as a source for financial aid. But lending money
outright to a family member or cosigning on a home or car loan for them
can be risky for you — from both an emotional and financial standpoint.
To protect yourself, specify the terms of your loan arrangement in
writing just as a professional lender would. If the loan amount is
substantial, make sure you’re informed of any legal and tax implications
in case one of you should die before the loan is settled. You may want
to ask for collateral to secure the loan or take out a life insurance
policy to cover the balance. And, if you forgive the loan, it could be
considered a taxable gift.
If you’ve cosigned on a loan and your relative defaults on the payments,
you are responsible for making the remaining payments. Before saying
“yes” to a family member’s request for a loan, prepare yourself for the
possibility of never seeing your money again or potentially damaging
family ties if the individual defaults on the loan.
Community
relations
To a certain extent, community property laws equalize a couple’s estates
automatically. By law, each spouse has the right to half of their
community property, even if the property is titled in the name of one
spouse. Community property generally consists of assets acquired during
your marriage and while residing in a community property state.
But even in community property states, one spouse may hold a substantial
amount of wealth as separate property. This may include wealth
accumulated before the marriage or property received by gift or
inheritance during the marriage and not commingled with community
property. If that’s the case, equalizing estates remains a valuable
estate planning strategy.
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Borrowing: It’s not all
it’s cracked up to be |
American consumers have been racking up debt in record
numbers. And while there’s nothing wrong with borrowing
money, it’s important to consider the impact of borrowing on
long-term financial goals. This article explains why
borrowing should be reserved for acquiring assets that will
pay a return on your investment, such as a home or a growing
business. Plus, it discusses three borrowing traps that
consumers often fall into. A sidebar offers tips on how to
protect yourself when lending to family members.
Read more
A cost segregation study can
increase current deductions
If you’ve recently purchased
or built a new building, or if you’ve substantially
remodeled an existing building, it would pay to have a cost
segregation study conducted on the property. Why? Property
that qualifies for faster write-offs, such as decorative
fixtures and carpeting, is often lumped in as part of the
building and depreciated over a longer time period. A cost
segregation study identifies these misclassified components,
allowing you to maximize your current depreciation
deductions. This article explains how this advantageous
study is conducted.
Read more
Making the most of the
home-sale exclusion
Changes over the last several
years have caused capital gains tax to be a bigger concern
for homeowners. If you’re planning to sell your home, you
can soften the impact by ensuring you deduct the cost of
improvements and other relevant expenses when figuring out
your gain. This article looks at why gain is a concern and
how to reduce it.
Read more
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Marriage of equals
To reduce estate taxes, share the wealth
It’s not unusual for one
spouse to own a disproportionate amount of a couple’s
wealth. But this type of fiscal imbalance can prove
costly when the estate tax bill arrives. Affluent
couples that “equalize” their estates can cut their
taxes considerably. This article explains how to
equalize your and your spouse’s estates.
Read more
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