California Probate Changes

Some good news for those of us who live in California and have to deal with the dreadful probate laws and expenses.  California is one of the most expensive probate states in the Union.

Effective January 1, 2012 a beneficiary can collect up to $150,000 (formerly $100,000) as an heir and not have to go thru probate.  As long as these assets are titled in the decedent's name alone.  For example, if I have a savings account with a $150,000 in my name only, my beneficiary can transfer these assets to her name with out having to go thru probate.  It is a much simplified affidavit procedure.

In addition, real estate transfers up to $50,000 (formerly $20,000) can occur at a much simplified procedure in the court without excessive expenses and time to transfer.  This is especially useful for small parcels of land, timeshares etc....

And the last good news is that a surviving spouse or domestic partner can collect via affidavit salary owed to a deceased person up to a maximum of $15,000 (formerly $5,000)

However, if you have a Trust, make sure that you still title all your non retirement assets in the name of the Trust.  After all, why have a Trust in the first place? 

Thanks California for giving our heirs a break! 

Jazzy January Financial Resolutions

OK, folks, 2012 is here and my plan is to give you some financial "must do's" for each month of the year.  By the time December, 2012 rolls around, you will be well on your way to having your financial house in order. 

January is a good time to do the following:

1.  Check your credit score. 
Since 2005, consumers have had the right by law to get a free annual credit report from the credit reporting bureaus. To do this, go to AnnualCreditReport.com. While there are other websites that may promise to provide your credit report, this is the official website, supported by the free credit report law. In other words, it’s been sanctioned by the US government.

When you arrive at AnnualCreditReport.com, you’ll find that you have three options: Equifax, Experian, and TransUnion. Each of these represents a different credit reporting bureau, and each has to give you a free credit report once a year.

If this is your first time checking your credit report, we advise you to check all three now. A 2004 study found that 25% of all credit reports had some mistakes, so it’s critical to make sure that all of your credit reports are accurate

2.  Consider Refinancing
Mortgage interest rates are ridiculously low right now--I can not imagine them descending any lower.  If you have not taken advantage of these low rates, then seriously consider refinancing.  But only if you plan on remaining in your house for at least 4 or more years.  And only if you can refinance for no more than 80% of the value of your home.  Lock into a 30 year fixed and then pat yourself on the back for making a really smart financial move.

3.  Organize Tax Records
Start collecting and organizing all your tax records.  It is amazing the money you can save on taxes if you take the time to organize!  Your tax preparer will LOVE you if you have all your records together. 

4.  Set Realistic Goals
This is a good month to set some financial goals.  Maybe you need to save for a car, or set up an emergency savings fund or more aggressively save for retirement.  Write down your goals and create an action plan.  The best and most effective way to save has always been to "pay yourself first."  This means setting up automatic transfers from either your payroll or your checking account to the savings plan of choice.  There is no other way to do this.  If you wait till the end of the month, you will have more month left than money.

Here's wishing each of my readers a year of financial prosperity and abundance and a heart to share. 

Renting versus Buying

We have all been sold the "American Dream" which is to own our own home.  And while there are some great buying opportunities in the market right now coupled with ridiculously low interest rates, it may not make sense for you to buy but rather to rent.

• If you have substantial credit card debt, you should work towards paying this off first
• Not having the 10-20% for a down payment means that you are not ready to buy
• If you plan on moving in the next 5 years or are unsure that you will remain in the house it makes sense to rent.  Selling a house is expensive with realtor fees and closing costs.
• Run the numbers and sometimes it makes much more sense to rent than buy.  There are online calculators that let you input all the data and make an informed decision.
• If you are unsure about the responsibilities of being a homeowner such as deferred maintenance on the house, landscaping, repairs, upkeep etc...  then just rent! 

The "American Dream: is not for everyone.  Make sure you weigh all the pros and cons before jumping in and buying a house especially when some realtor tells you "it's the steal of the century."