Planning for estate tax vs. planning for income tax

Traditionally, the federal estate tax was extremely burdensome to wealthier individuals, and the bulk of estate planning involved finding ways to minimize this federal tax.

In the last few years, though, the federal estate tax rates and exemption amounts have changed and become much less of a problem. On the other hand, federal income taxes, capital gains taxes and other investment taxes have gone way up. And many states have increased their income, estate and inheritance taxes.

As a result, these days smart estate planning involves looking at all the different possible taxes that heirs might be facing, and figuring out how best to reduce the overall tax burden.

Here’s one example: Let’s say Linda owns some stock that she bought years ago for $30,000, and it’s now worth $100,000. She thinks it will continue to increase in value, and at some point she wants it to go to Adam. [Read more…]

Professional, knowledgeable and thorough

I have recently worked with Marco on Estate Planning matters and found him to be very professional, knowledgeable and thorough. Estate planning can be very complicated and confusing, but Marco has been able to reduce things down to understandable terms so that I know what to do to preserve and manage my mother’s financial affairs. He presented us with all options available so we could assess and weigh our options and move in the right direction. Marco has a calm and assuring demeanor that makes you feel comfortable. The presentation of the final materials speak volumes to the level of attention to detail that Marco puts into his work. My mother says he is “the man who knows everything!”

Carol Lynn

What you need to know about easements on your property

An “easement” is a legal right of someone who doesn’t own a piece of property to use the property for a particular reason. Many properties have easements on them, so it’s important to know about them if you’re considering buying real estate.

An easement permits a third party (such as a neighbor) to use part or all of a property for a specific purpose. For instance, someone may have a right to walk or drive over part of the property to access their home, or to go hunting or fishing there.

The most common type of easement is a utility easement, which says that a utility company can access part of a property to maintain its services. This is generally no big deal – but if a utility truck shows up on your land one day and begins excavating a lot of dirt to upgrade a gas line, it can be very disruptive.

Another type of easement is a right of way – someone else’s right to use your property to get somewhere. This is common where two properties share a common driveway, for instance; one property owner might hold title to the driveway, but the other has a legal right to use it. [Read more…]

Fannie Mae will continue to back larger mortgages

Fannie Mae and Freddie Mac, the quasi-government entities that insure or repurchase a high percentage of mortgages in the U.S., will continue to back mortgages as large as $417,000 – and as large as $625,500 in some high-value areas.

That’s the word from the new director of the Federal Housing Finance Agency, which oversees the two mortgage giants.

This is good news for buyers who want to take out larger mortgages. Mortgages of more than Fannie and Freddie’s maximum amounts are usually considered “jumbo” loans, and borrowers typically have to meet much higher standards and face many more restrictions.

The agency had planned last year to reduce the largest Fannie and Freddie-backed loans to $400,000 (and $600,000 in the most expensive locales), but it now says that continuing to insure larger loans will help the country’s housing recovery.

Above my expectations

I had some work done with Marco and I was very satisfied..Marco is a great person to work with and the results were above my expectations. I highly recommended his service.

Andreia O.

What will happen to your online accounts if you pass away?

As more and more people live their lives online, the question of what happens to online assets and records after someone dies is becoming more important – and confusing.

Consider all the things that you might “own” on the Internet – thousands of photos and e-mails, Facebook and other social media accounts, music libraries, blogs, genealogy records, domain names, and much more.

Then consider how many financial accounts you have or manage online – including PayPal and other accounts with credit balances, as well as online accounts with detailed financial records, automatic bill-paying processes, etc.

If you haven’t given any thought to what will become of these things – and who will manage them after you’re gone – it’s probably a good time to do so.

Increasingly, executors are being faced with very difficult questions about what to do with these online assets. How can they access them? To whom do they belong? What would the deceased loved one have wanted? [Read more…]

How to buy a vacation home with friends or family

Sales of vacation homes have been rising sharply lately. Across the country, the number of vacation homes sold last year was up 30% from the year before, according to the National Association of Realtors.

Vacation homes now account for 13% of all home sales. The median price last year was $168,700. Interestingly, most vacation home buyers are under age 45.

Many people have long dreamed of owning a second home, but buying one can seem like a big stretch. One solution is to join forces with friends or family and purchase a home together.

This can be an ideal solution – you get to use the home for part of the year, just as you planned, but you can also share the cost, the maintenance work and the expenses with others.

But before you take the leap, it’s important to think through everything that will be involved, and what will happen if something goes wrong. You’ll want to have a frank conversation with your partners and draw up an agreement that covers all the bases – a kind of “real estate prenup.” [Read more…]

‘No down payment’ mortgages are back

Remember “no down payment” mortgages? These were the kinds of loans that often led to foreclosures during the real estate bust a few years ago. They’re making a comeback – but in a different form.

In their new incarnation, home buyers put up their home and a portion of their investments as collateral. The amount of a portfolio that must be pledged depends in part on the nature of the investments – a larger amount must be pledged if they consist of stocks rather than bonds, for instance. The homeowner keeps ownership of the investments, although there are some restrictions imposed by the lender, and typically the investment account must be held at the lender’s institution.

The advantages for buyers are that they (1) don’t have to sell appreciated stocks and pay capital gains taxes to fund a down payment, (2) may get a larger mortgage interest deduction, and (3) may come out ahead if their investments return more than the mortgage interest rate.

Of course, there are dangers, too, since homeowners will have put their personal assets as well as their home at risk if anything goes wrong.

Rents for apartments and businesses are continuing to climb

Apartment rents rose 3.2% in the first quarter of 2014 compared to the same period of last year, according to a study by research firm Reis Inc.

Rents are up 13% across the country on average since 2009.

And there’s reason to think that rents will continue to increase. For one thing, both home prices and interest rates have risen recently, pricing many would-be homeowners out of the market for now. And there’s not a lot of surplus apartment space – the vacancy rate was only 4% in the first quarter, down from 4.2% in the previous quarter and 8% back in 2009.

Retail rents are also increasing. Average rent for space in a strip mall hit $19.42 per square foot in the first quarter, and average rent in a large regional mall hit $40.15. Average rents have increased for 12 consecutive quarters and are now at the highest level since 2008.

A lack of new construction of retail space appears to be responsible for pushing up the rent levels for existing space.

Average urban office rent was $29.28 per square foot, a small increase over previous quarters. The amount of occupied office space has been growing, but not as quickly as it did before the recession a few years ago.

Want to build a second home next to your current one?

Many cities have liberalized their zoning laws in recent years to allow people who live in single-family homes to add a second home on their property. They can do this by creating a basement apartment, building an “add-on” apartment to the house, or even constructing a separate cottage in the backyard.

Cities are responding to requests from homeowners, many of whom are middle-aged couples whose children can’t afford to find their own apartment and want to live with them. Other owners want a nearby space to take care of aging parents who can no longer live on their own, or simply want to rent space to bring in extra income.

Laws have changed recently in Seattle; Vancouver; Salt Lake City; Silicon Valley; Missoula, Montana; and many other places.

Of course, these changes can be controversial, since nearby homeowners may worry that their neighborhoods will become more crowded and experience problems with noise and traffic.