It is a sad and sobering reality that scam artists intent on committing financial fraud or the outright stealing of money, property, or valuable information prey upon vulnerable senior citizens. The threats can take many forms, but the elderly and those watching out for them can have some measure of protection by taking a few basic precautions.
- Do your homework when selecting a professional advisor, even if the advisor comes highly recommended by a friend or family member. This means confirming that the person is registered or licensed and has not left a trail of mistreatment of other clients.
- Powers of attorney (POA) are helpful, maybe even essential, as age takes its toll on an individual’s capacity to handle financial matters. But the potential for misuse of a POA is great, since the appointed person generally has free rein to do whatever the elderly person could do on his or her own. The selected person must be trustworthy, and it is a good idea to have an attorney review the POA document.
- The array of account numbers, Social Security numbers, pins, passwords, and other such sensitive information that most of us accumulate over time can serve as a thief’s key for raiding your savings and investments. Guard this information carefully.
- It may be an after‑the‑fact measure, but check your credit card and bank account statements carefully for any unauthorized or suspicious transactions. If you see one, contact the financial institution right away.
- Reverse mortgages allow homeowners who are at least 62 years old to borrow money from the equity in their homes. This device has its place under the right set of circumstances, but a reverse mortgage can also become a device for scam artists. Be wary of deceptive, too-good-to-be-true offers and high-pressure tactics.
The travails of the housing market in recent years are well documented. The prevalent symbols of this downturn are the “underwater” homeowners, who owe more on their mortgages than their homes are worth. About 4.6 million such homeowners have mortgages backed by Fannie Mae or Freddie Mac, and fully 80% of those owners haven’t missed any mortgage payments. Continue reading
Nate Thoma is not a lawyer, but he is a soft-spoken, yet confident, small investor in Washington Mutual, the big bank that was seized by the federal government
in 2008 and ended up in bankruptcy. As for so many other investors, Nate’s stake in the bank was wiped out. Nate became something of a folk hero during that
tumultuous period when big banking institutions were failing and the little people always seemed to get the short end of the stick as the messes were being
Nate’s big moment came when, after he had spent untold hours analyzing the Washington Mutual case, the federal bankruptcy judge let him have his say–and at
some length–in a hearing that culminated in an investigation of trading by some very large hedge funds and in the rejection of a bankruptcy plan for the bank.
It is no secret that businesses generally, and small businesses in particular, have been through rough times, and those are not over yet. Still, there is some
assistance to be had as a small business owner if you know where to look. One prominent example is the Small Business Administration (SBA) and its
Guaranteed Loan Programs.
The Real Estate Settlement Procedures Act (RESPA) is a federal consumer protection law that regulates the real estate settlement process, including the servicing of loans and the assignment of those loans. RESPA places a number of duties on lenders and loan servicers, including requirements that borrowers be given notice by both a transferor and a transferee when their loan is transferred to a new lender or servicer, and that loan servicers respond promptly to borrowers’ written requests for information. Continue reading
Last summer, a law was enacted that raised the standard maximum deposit insurance amount (SMDIA) to $250,000. The law made permanent a previous temporary increase to $250,000 from the former maximum limit of $100,000. The new permanent maximum limit should especially benefit consumers who figure to have more than $100,000–such as in multi-year certificates of deposit–in their bank beginning in 2014, when the temporary hike in the maximum limit had been scheduled to expire.
It is important to bear in mind that the SMDIA does not mean that under no circumstances may a single individual have insurance on more than $250,000 in a single institution. The SMDIA applies per depositor, per insured depository institution, for each account ownership category. A person’s single account will be insured up to the new permanent maximum amount, but so will his or her share of all joint accounts, as well as any other of his or her accounts in other ownership categories.
Another legislative change, which went into effect on the last day of 2010, creates a new temporary insurance category that will fully insure all funds, regardless of the dollar amount, but only in checking accounts that pay no interest to the account holder. An example of a possible application of this new insurance is an account in which an individual who has just sold a home temporarily parks the large proceeds from the sale in that account, understanding that no interest will be earned. As the law now stands, this change is temporary, in that the new insurance account category is set to expire at the end of 2012.
Convinced that property values have finally bottomed out in your area, you decide to take the plunge and buy some real estate as an investment. As the saying goes, buy low and (hope to) sell high. In such ventures, one of the earliest and most important decisions concerns which type of ownership entity is best suited for raising capital and securing the financing to fund the acquisition or improvement of the property.
In October 2008, Congress increased the basic limit on federal deposit insurance coverage from $100,000 to $250,000. The limit is scheduled to return to $100,000 on January 1, 2014.
The temporary limit now in effect has not changed the fact that a customer has various means by which to effectively raise the applicable limit for the customer’s collection of deposits at any one institution. The basic limit applies separately to different ownership categories. A single account in one name is insured up to $250,000; a joint account for two or more people is insured up to the same limit, per owner; certain retirement accounts, such as IRAs, are covered up to the limit; and deposits meant to pass on to named beneficiaries on the death of the owner can be protected up to $250,000 for each named beneficiary. This last category of deposits is a revocable trust account.
There also are other recent changes that favor depositors in insured institutions. For example, it used to be that the only beneficiaries under a revocable trust account who qualified for additional deposit insurance coverage were the account owner’s spouse, child, grandchild, parent, or sibling. Now an account owner can name almost any beneficiary, such as a more distant relative, a friend, or a charitable organization, and each beneficiary will still benefit from the additional coverage.
It has become more common for employers to offer not only conventional 401 (k) retirement plans, but, since they became available in 2006, also Roth 401(k) plans.
For 2009, an employee can put away a total of up to $16,500 in a 401 (k) plan. If the employee is at least 50 years old or will be before the end of the year, the maximum contribution rises to $22,000 because of a “catch up” contribution of up to $5,500. The total contribution may be allocated between 401(k) and Roth 401(k) accounts. In fact, the prevailing view is that it is a good idea to have some money in both types of plans because doing so will yield benefits from a diversified exposure to taxes. Continue reading