Get Financially Fit!
Asset Protection
Review and Dispute Your Credit Report
Oct 16th
I recently had the opportunity to speak with Bill Cloyd, a leading expert in credit restoration. During our discussion, I learned a few techniques that helped me further improve my credit score.
Before I share those techniques, I want to share several free resources that all consumers should be aware of. First, all consumers are entitled to receive a free copy of their credit report from all credit bureaus once per year through AnnualCreditReport.com.
Second, check out the Federal Trade Commission’s articles on consumer credit.
Assuming you are already familiar with these resources, here are some of the tips I learned from Bill.
- It’s a good idea to check your credit periodically. Each person should decide the appropriate check-up frequency, but I typically review my information 2-3 times per year. After ordering my free credit report, I’ll use a service like Equifax’s 3-in-1 credit report to review my credit core.
- Never submit a credit dispute online. Bill suggests disputing inaccuracies through a letter similar to the sample letter on the FTC’s website. Submitting your dispute online increases the chance the claim will be processed automatically. Who wants a machine processing matters related to sensitive personal financial information?!
- As it pertains to credit scores, women are unfairly penalized for having a department credit card. Why? Credit bureaus, through statistical models, have determined that there is a correlation between gender, home improvement or discretionary spending, and department store credit cards. A similar analogy is how young male drivers are statistically more likely to be involved in an accident than a woman who is the same age and has the same driving record. Therefore, the insurance premiums are higher for men than women.
- Make sure the credit card or cards you carry in your wallet are top companies such as Citibank, Chase, American Express, etc. Some companies that shall remain unnamed can actually lower your credit score because they have a lower Standard and Poors credit rating.
- Consumers with high credit scores need to be constatly vigilant and protect their credit history as if it was one of the most valuable assets. Why? With identity theft on the rise, regular check-ups are one of the best preventative measures one can take to protect his/her identity. In addition, you are responsible for catching mistakes on your credit report.
Bill’s advice helped me take a “do-it yourself” approach to clearing up some inaccuracies on my own personal credit history as well as helping me improve my score a few more points.
5 ways to protect yourself against pretexting
Sep 13th
By Jeanne Sahadi, CNNMoney.com senior writer
That HP investigators got personal phone records of others without their consent shows how anyone pretending to be you can get access to your valuable personal information.
Tips to Help Prevent Identity Theft
Sep 1st
by Brion Lau
On May 1st, Eric Heckman wrote a blog article called, http://www.financialfitnesspro.com/blog/?p=26“>Protect Yourself from Identity Theft.” Recently, I came across another article that was published by Consumer Reports back in Oct 2003. The key portion of the article I’d like to share with you are Consumer Report’s fourteen tips to reduce your chances of becoming a victim.
- Check your financial statements promptly and report potential errors immediately. This applies to your banking, brokerage, and credit card statements.
- Review your credit reports regularly. As I mentioned earlier, you are entitled to get a copy of your free credit report annually from http://www.annualcreditreport.com.
- Protect your personal information such as social security number, birth date, and mother’s maiden name.
- Opt out of all information sharing at your financial institution; check your company’s financial privacy notice, which is mailed annually and usually posted on their companhy website. Also opt out of pre-approved credit offers by calling the Credit Reporting Industry Pre-Screening Opt-Out Number at (888) 567-8688.
- Don’t carry ID that contains sensitive data when traveling unless absolutely necessary.
- Lock up your personal belongings in desks, cabinets, and safes at work and at home.
- Shred and destroy sensitive information with a cross-cut shredder. Also use hard-drive shredding software or remove and destroy your hard drive before discarding a computer since deleting files does not provide adequate protection.
- Guard your mail using a separate P.O. Box or install a locked mailbox at home.
- Always keep your eye on your credit card at retail locations to avoid “skimming”. Thieves can use a handheld card reader to copy the information from your card’s magnetic strip.
- Avoid using private or strange-looking automated teller machines (ATMs).
- Watch out for “shoulder surfers” when using pay phones or accessing the Internet in public. Also, don’t use cordless phones to conduct sensitive financial or medical business as your converation may be picked up on other phones (or by using eavesdropping equipment).
- Install firewall, virus-detection, and spyware programs on your personal and work computer.
- Quit your browser and log off after using the Internet in public locations. Don’t pay bills, bank, or conduct any financial transactions on public computers.
- Deal only with reputable websites and check their priavcy / security policies before making purchases, trading stocks, or banking online. Don’t respond to unsolicited emails requesting personal information.
- Create strong passwords with at least eight characters (alphanumeric).
- Finally, ask how your empoyer safeguards your records.
Although these tips were written almost three years ago, they still hold true and will help ensure your financial fitness!
Passing On Your Legacy
Jul 12th
by Eric Heckman
Have you thought about your plan to pass on your legacy to your children, grandchildren and beyond? Putting a legacy plan together requires much more than guesswork and simply jotting down a few notes in a journal expressing our wishes. For many, passing along a legacy involves heirlooms, antiques, traditions, morals and values. It also involves passing along your wealth.
There are many errors people make when it comes to passing along their legacy. If you’re thinking of passing on investments to your heirs, you need to be aware there is a possibility that those investments could be taxed.
Also, passing on your legacy is different from multiplying your legacy. That involves doubling the value of your legacy, protecting it from creditors and growing it without being subject to estate taxes.
Here are five steps to an effective plan.
1. Goal Evaluation – The first step is determining who you want to inherit your assets and how you want your property distributed. Do you want your money to go to your children’s education or to charity? Who would be a good candidate to serve as your personal representative and as a guardian of your children, if they are still minors at the time of your death? You can start this process by drafting a Personal Legacy Statement, which is a letter from you to your loved ones, sharing with them your love, your values and your life’s experiences.
2. Estate Inventory – Your next step is to inventory all of your assets. Once you create a listing of all your holdings, you’ll want to note how they are owned and place a fair market value on each asset. Lastly, you’ll subtract the sum of your debts from the value of your assets to determine your gross estate.
3. Will and/or Trust Preparation – You need to consider the tax ramifications of your plan and how to minimize liability. In addition, you need to know how to avoid excess administrative fees. Then you must determine the best vehicles to carry out your plan. Your will, or a trust, is the cornerstone of your legacy plan and will determine who will receive your assets and how those assets will be distributed.
4. Family Gifts – Lifetime gifts to your family can reduce your taxable estate and provide personal satisfaction. An individual may give up to $11,000 per person, per year, without reporting the gift to the IRS. If a couple makes a gift, the amount doubles to $22,000 per recipient.
5. Charitable Giving – You can make tax-free contributions to a qualified charity that may reduce estate taxes and result in a current income tax deduction.
There’s nothing that can be done after you’re gone to relieve your estate from taxes or to carry out your specific wishes. You’ll want to work with a trusted professional to make sure what you leave behind gets to your heirs the way you want it to.
Ways to Avoid Probate
May 9th
by Eric Heckman
If you’re like most people, you’ve worked hard to accumulate assets, and expect to live your retirement years in comfort while leaving the balance of your estate to your heirs. If this is true, then legacy planning is vital for you.
When many first consider legacy planning, they immediately think of preparing a last will and testament. While wills have their advantages, they also have some drawbacks, such as probate. The probate process includes proving the authenticity of a person’s will, appointing an executor, identifying and inventorying a person’s property, paying debts and taxes, identifying heirs and distributing property.
There are alternatives to probate known as will substitutes. If you would rather be the judge of what happens to your estate, read on about substitutes and how they can avoid probate.
1. Assets held in a revocable living trust. The property you transfer into the trust passes directly to the trust beneficiaries after you die, without court involvement.
2. Balances of retirement accounts. When you open a retirement account, such as a traditional or Roth IRA, you are asked to name a beneficiary. Your beneficiary needs to provide identification and proof of your death to claim the funds.
3. Balances of tax-deferred annuities. The death benefit of an annuity passes the account value to a named beneficiary. Although the death benefit avoids probate, the value of the annuity is generally included in your estate for estate tax valuation purposes. Your named beneficiaries can choose to receive the funds as monthly income or a lump-sum payment and may be subject to ordinary income tax on the earnings portion of the proceeds.
4. Proceeds of an insurance policy where beneficiaries are named other than your estate. A policy owner contracts with the life insurance company to pay out a death benefit to a designated beneficiary.
5. Balances of payable-on-death bank accounts. Your financial institution will provide you with a form to name who you want to inherit the account(s). When you die, your beneficiary will need to provide identification and proof of your death.
6. Securities registered as transfer-on-death. Most states have adopted the Uniform Transfer-on-Death Security Registration Act that allows you to have someone inherit your stocks, bonds or brokerage accounts without probate.
7. Assets held jointly with your surviving spouse or with another person as joint tenants with a right of survivorship. Through right of survivorship, the surviving joint tenant immediately succeeds full ownership of the property upon the death of the other joint tenant.
Your loved ones will have enough to deal with emotionally and it’s wise to do what you can to make the inheritance process as simple and painless as possible.
About Eric Heckman
Eric Heckman is president of Heckman Financial & Ins. Services, Inc. Eric is a CFP®, ChFC, CLU brings a wealth of knowledge and over 13 years of experience to the field of financial planning. You can contact him at (408) 297-9800.