Tax Advantages of IRA's (Traditional and Roth) and 401(k)'s

I remember working in the banking industry over a decade ago when the Roth IRA was first introduced. For months after the Roth came out I was approached by clients about how the Roth worked and whether they should roll their money into the Roth from their traditional IRA's. Although brand new at the time, it was clear to me that the Roth might work well for my younger clients, but not necessarily for those nearing retirement age.

As the Roth v. Traditional IRA issue has recently come up with a client of mine, I thought I would take a moment to briefly outline the tax advantages of each.

Traditional IRA Tax Advantages
The real benefit to a Traditional IRA is that any money you deposit into the IRA each year (up to the legal limit) can be deducted from your taxes.

Five Methods for Avoiding Probate

There are numerous ways a person can avoid having his or her property probated.  The following are some of the most common methods for avoiding probate:

POD Accounts and the Uniform Transfers to Minors Act (UTMA)

It is common for adults to want minor children to inherit money from a bank account without having to go through the probate process.  The most common way to do this is by using a Pay on Death bank account and naming a "P.O.D. Payee" to receive the money once the account owner passes away.  If the minor child is about to turn 18 or the amount of money in the bank account is never intended to be more than a few thousand dollars, the account owner may just name the minor child as the P.O.D. Payee. 

But when the minor child is not yet ready to assume responsiblity for his or her finances it would be better for an adult to be appointed to manage the minor child's finances.

Four Reasons To Avoid Probate

Probate proceedings consist of five basic steps: 

(1) submitting a deceased person's will to probate court, 

(2) proving the will is authentic and properly executed, 

(3) inventorying and appraising the deceased's assets, 

(4) notifying creditors and relatives of the probate proceedings, and 

(5) publishing notice of the proceedings in a local newspaper.

While these steps may appear simple and easy, the following are four reasons to avoid having your estate probated:

Bankruptcy For The Individual Under The Newly Revised Bankruptcy Code

An individual person can currently file bankruptcy under one of two Federal Bankruptcy Chapters: Chapter 7 (clean slate/start over) and Chapter 13 (restructure of indebtedness). Chapter 7 Bankruptcy is used to discharge the individual from his or her debts. Chapter 13 Bankruptcy is used to restructure a person’s debts and allow him or her to keep certain assets under a revised payment plan.

Recent Changes in the Bankruptcy Code
Until a few years ago just about everyone who had not filed bankruptcy within the preceding six years and had no disposable income to pay the bills was eligible for Chapter 7 bankruptcy.

Special Warranty Deeds on Foreclosed Homes

In a standard “arms-length” real estate purchase, the Seller of the property executes a General Warranty Deed to the Buyer. The General Warranty Deed warrants (or insures) that title to the property is clear and unencumbered and that if a problem with the title arises in the future the Seller will pay the attorneys fees or other costs required to clear up the title problems. The General Warranty Deed insures the title going back to the beginning of time.

An “arms-length” purchase is a purchase where there are no special deals between the two parties like those that often occur between relatives or other close friends where the “quit claim deed” is often the deed of choice.

What is a Short Sale?

A Short Sale is when the owner of a home sells the home for less than what he owes on his mortgage.  To do this, the owner is required to get permission from the mortgage holder (usually a bank) to sell the home at a loss to the bank.  Since 2008, Short Sales have become more common as the value of houses have dropped in the United States.

Why Would a Bank Agree to a Short Sale?
Banks have a strong incentive to agree to a Short Sale when (1) it has become clear to the bank that the current owner of the home can no longer make his mortgage payments; and (2) foreclosing on the home and selling it at auction will likely bring less for the home than the proposed Short Sale.

DUI and Illegal Police Searches

If you have been arrested for DUI as a result of a DUI checkpoint stop, you may be able to attack the resulting DUI charges based on your Fourth Amendment rights against illegal searches and seizures.  Under the Fourth Amendment, any evidence seized as a result of an illegal search may not be used against you.  The reasoning behind this is that police should not be able to benefit from violating your Constitutional rights.

Deed of Trust

A "Deed of Trust" is a legal instrument that grants a Lender a Security Interest in real estate.  The Security Interest creates a lien on the property on behalf of the Lender and gives the Lender the right to foreclose on the property should the Grantor of the Deed of Trust fail to satisfy the terms of the loan.  A Deed of Trust and a Mortgage are similar in the rights they grant the Lender.

Deed of Release

A Deed of Release (also known as a Deed of Reconveyance) is a legal instrument executed by a lien holder (Lender) to release a lien on real property. A Lender holding a lien on real property in the form of a Mortgage or Deed of Trust must execute a Deed of Release once the Lender has been paid in full by the Grantor of the Deed of Trust. In most states, Lenders are required to execute a Deed of Release within a certain time period after the loan is paid off.