Planning for Trouble: Money and Estate Tips for Every Age

Planning for death, disability, or other personal tragedies is the last thing you may want to think about. Yet notplanning for those contingencies can leave families dealing with highly tense issues at times when they're least able to handle the additional stress.

Many people put off doing estate planning on the grounds that it's too complicated. But it's not that difficult, and the right moves can save both you and your family a lot of trouble down the road.

Here are things to keep in mind for various stages in life.





On Your Own

Even if you're single and don't have any dependents, some basic planning will still make your parents' lives easier if something happens to you. Giving them -- or some other trusted person -- power of attorney for your health care means someone will be able to make decisions about your medical care if you're ever unable to do so. Similarly, setting up bank accounts and other assets either as joint accounts or with chosen beneficiaries to receive your property after your death could help your loved ones avoid a costly probate proceeding.

Coupling Up

Once you're part of a couple, you'll want to consider changes to recognize your significant other. If you're married, then certain legal protections are automatic, although formalizing them with appropriate documents is still smart. If you're not married, though, drafting wills or trusts, as well as financial and health-care powers of attorney to help others take care of your affairs if you're incapacitated, are musts.

Parenthood

Regardless of whether you're part of a couple or a single parent, updating your planning documents to reflect your offspring is vital. Some states automatically give a child a piece of your estate after you die, so it's always worth checking to make sure nothing surprising will happen under your state's laws.

Two things are most important, though. First, you'll want to change your will to name a guardian for your child in case you die. Second, in order to avoid court supervision of your child's assets if something happens to you, putting in provisions for a trust to receive the child's inheritance from your estate ensures that someone of your choice will take responsibility for managing inherited assets on the child's behalf.

Parenthood, the Sequel

If you later have more children, all the same issues apply, but the big new question you have to answer is how you want to treat them. Many families prefer to treat all their children equally. But in some cases, such as when one child has special needs, such an arrangement doesn't really make sense.

State law typically puts all children on an equal footing in estate-planning documents, so you'll want to be explicit about any special provisions you may make for one child over another. Whether you use a simple strategy like setting up a separate account with additional funds for a particular child or set up a specialized trust to reflect your wishes, the right documents can minimize unnecessary squabbles later.

When Your Kids Are Grown

Once your children reach adulthood, they're legally able to hold assets in their own names. But some parents prefer not to leave lump-sum inheritances for their kids, instead setting up trusts to pay out certain amounts at various ages or for specific purposes. Such trusts serve two main purposes: They keep your kids from spending too much too quickly, and they can help protect assets from potential claims if your child goes through a divorce.

Having Grandchildren

If your kids have children of their own, it introduces a new set of opportunities and pitfalls from the standpoint of family dynamics. You may want to provide for your grandkids, but you also don't want to step on your children's toes in their parental role.

From tax-free educational gifts to outright bequests, there are plenty of ways you can provide for grandkids. However you choose to set things up, the key is communicating openly with your family to make sure they understand what you're doing and can give feedback. In the end, the decision is yours, but by taking their thoughts into account, you can do your best to come up with a solution that works for everyone.

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Estrategia Investimentos S.A.

Bank of America sued for alleged mortgage fraud

NEW YORK (CNNMoney) -- The Justice Department is seeking $1 billion from Bank of America, alleging the bank committed fraud by selling defective mortgages from a program it says was known within the bank as "the Hustle."
Those mortgages were purchased by government-backed mortgage finance firms Fannie Mae and Freddie Mac, resulting in over $1 billion in losses for taxpayers and countless foreclosures, according to the complaint announced Wednesday by the U.S. Attorney for the Southern District of New York.


The suit alleges that "the Hustle" was a nickname for the bank's "High-Speed Swim Lane," or HSSL program, designed to streamline the mortgage origination process. But the government alleges it was "intentionally designed to process loans at high speed and without quality checkpoints, and generated thousands of fraudulent and otherwise defective residential mortgage loans."
The government says the program was started by mortgage lender Countrywide Financial, but continued after it was purchased by Bank of America in 2008. It ran through 2009, according to the suit.
"For the sixth time in less than 18 months, this office has been compelled to sue a major U.S. bank for reckless mortgage practices in the lead-up to the financial crisis," said U.S. Attorney Preet Bharara in a statement. "The fraudulent conduct alleged in today's complaint was spectacularly brazen in scope."

Estrategia Investimentos S.A.

How to invest from $20 to any amount of money.

Got only $20 to put away right now?

It may not sound like much, but you can use it to buy shares in Intel. Or Johnson & Johnson. Or Harley-Davidson (you rebel). And those are just a few of more than 1,000 options available. What if you've got $100 -- or $1,000? Your options are even greater.

We're not here to tell you where to invest your money. We won't lay out a handful of stocks on a "buy" list. But what we can tell you is how you can invest your money -- the mechanics of investing small, large, and medium amounts of cash. We can even help you choose a broker.

How to invest $20
Let's start with $20. We're going to assume that you've already paid off any high-interest debt and that you have some money stashed in a safe place (like a savings or money market account) that you can get to quickly in case of an emergency expense. Now you find yourself with a little extra dough, and you want to begin investing for your future.

Is it even worth it to invest such a pittance?

Heck yeah it is! One of the best ways to invest small amounts of money cheaply is through Dividend Reinvestment Plans (DRPs), also known as Drips. They and their cousins, Direct Stock Purchase Plans (DSPs), allow you to bypass brokers (and their commissions) by buying stock directly from the companies or their agents.

More than 1,000 major corporations offer these types of stock plans, many of them free, or with fees low enough to make it worthwhile to invest as little as $20 or $30 at a time. Drips are ideal for those who are starting out with small amounts to invest and want to make frequent purchases (dollar-cost averaging). Once you're in the plan, you can set up an automatic payment plan, and you don't even have to buy a full share each time you make a contribution.

Drips may be one of the surest, steadiest ways to build wealth over your lifetime (just make sure you keep good records for tax purposes). For more details on Drips, see "What if I can only invest small amounts of money every month?"

How to invest a couple of hundred bucks 
So you've weeded out all the wooden nickels from your spare-change jar and have tallied up a few hundred bucks. Instead of blowing it on snack food and Elvis memorabilia, consider investing it in an index fund (the only kind of mutual fund Fools like). An index fund that tracks the S&P 500 is your ticket to an investment that has traditionally returned about 10% per year.

Some index funds require as little as $250 for you to call yourself an owner. This low minimum is usually restricted to IRAs (Individual Retirement Accounts). After your initial investment, you can add as much money as you like, as frequently as you like, with no additional costs or commissions. You purchase index funds directly from mutual fund companies, so there are no commissions to pay to a middleman.

If you have a few hundred dollars to start with, then this is a great, low-cost way to establish an instant, widely diversified (500 companies!) portfolio.

How to invest $500 
Once you're up to $500, your investment options open up a bit more. You can still buy an index fund, and now you'll have your pick of fund companies that require higher initial investments. This freedom will enable you to shop around for a fund with the lowest expense ratio.

You should also seriously consider opening a discount brokerage account. You'll want to focus on the account option that best serves your needs; some accounts require a minimum initial deposit, and some don't. That means you can open up an account with whatever investing money you have available, and start researching and perhaps purchasing individual companies. (Or, if you're enamored of index investing, you can easily invest in Spiders, a stock-like investment that mimics the performance of the S&P 500.)

The key here is to keep your costs of investing (including brokerage fees) to less than 2% of the transaction value. So if you're planning to add to your position in stocks a few times a month, a Drip or an index fund may still be the way to go.

How to invest $1,000-plus 
What can you do with a grand? Obviously, with $1,000 you can open up a discount brokerage account, but look at the rewards if you can scrape up an additional $1,000 a year to add to your original investment.

Say you've got 40 years to retirement. If you start with $1,000 and invest an additional $1,000 each year, and your money earns 10% annually, then when you're ready to retire at age 65, you'll have $532,111.07. That seems worth it to us. If you have earned income, you can set up a Roth IRA, and you won't even pay any taxes on that $532K when you withdraw it. (As always, your mileage may vary.)

Again, even at this level, the key is to keep fees from eating up your earnings. So make sure that the costs of investing (including brokerage commissions, stamps to mail in checks, and books that help you learn to invest) are less than 2% of your account's overall worth. With small accounts, that can be a challenge, but with such low commissions being offered by discount brokers, it's definitely doable.

Information taken from: http://www.fool.com/

Estrategia Investimentos S.A.