Leonard's Estate Planning Report...2012/05/04  · Mortgage Off Early If you have the ability to do so, paying off your mortgage early can save you a substantial amount of interest

"News and Information To

Keep You Informed"Estate PlanningLeonard F. Berg

625 South Bellwood Drive East Alton, IL 62024P -(618) 258-4800F -(618) 258 7301

www.lbergelderlaw.com

In This IssueOpening Thoughts

Good News

A Word From Our Friends

Leonard's Estate Planning Report

Friday, May 4, 2012

Dear % %First Name % %,

Our weekly email is aimed at keeping you up to date on important topics and changes. We hope you find these weekly emails informative and enjoyable. Each week we will bring you important updates and useful information, in an easy to understand format. Enjoy!

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Our goal is to provide you with exceptional service. If there is anything we discuss in this week's email that you would like to visit about, or if there are any questions you have, please call our office and let us know. We're here to serve you.

Quote of the week:"A wise man should have money in his head, but not in his heart." Jonathan Swift

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Office Updates

Prescription Drug Take-Back Initiative -The Drug Enforcement Administration has scheduled National Prescription Drug Take Back Day on Saturday April 28, 2012, from 10:00 am -2:00 pm. To provide a safe way for unwanted and unused prescription drugs to be properly disposed of. According to Partnership for a Drug Free America, approximately 2,500 teens abuse prescription drugs for the first time each day. Studies show that teens are obtaining the drugs from, sometimes unknowing family and friends, often from the home medicine cabinet. This is your opportunity to safely dispose of expired or unwanted medications. Prescription drug abuse by any population requires access and opportunity. You can protect those you care about by thwarting access and removing opportunity. Check for unused medicines in your home and then take action and participate in the Drug Disposal National Take Back Initiative. Please visit the Drug Enforcement Administration website for new collection sites. http:// www.deadiversion.usdoj.gov/ drug_disposal/ takeback/ index.html. The Alton Police Department has a permanent

http:// www.deadiversion.usdoj.gov/ drug_disposal/ takeback/ index.html. The Alton Police Department has a permanent drop box in their entry lobby located at 1700 East Broadway.

Opening Thoughts...

In The Headlines

Banks Resist Federal Reserve Credit Limits In a letter put out recently by five banking trade groups, a decision made in December by the Federal Reserve was publicly opposed. The Fed proposed tougher standards of credit in order to supervise the nation’s largest banks that have seen a recent financial collapse, and could further jeopardize the economy. The standard set forth by the central bank put, “a limit of 10 percent for credit risk between a company considered systematically important and counterparty when each has more than $500 billion in total assets.” According to the letter, the Fed has no basis to determine that this dramatically low 10% limit would help prevent risks to the country’s financial stability. Further, the letter tells the Federal Reserve that, “a limit on their credit exposure is unnecessary and fundamentally flawed.” The banks are questioning the Fed’s decision to go straight to the 10% limit rather than trying the 25% limit that was established in the Dodd-Frank financial overhaul law. They say that the Fed has given no reason for this drastic change, but the Dodd-Frank act allows the Fed to make changes if it deems it necessary in order to mitigate risks to financial stability. The banks argue that the Fed should first attempt the 25% credit limit, and if that proves inadequate, the 10% limit can then be initiated. The signers of this letter include: the Clearing House, which represents JPMorgan, Citigroup Inc., and Bank of America Corp., the Financial Services Roundtable, the Securities Industry and Financial Markets Association, the Financial Services Form, and the American Bankers Association. Your Insurance Company May Owe You Money A provision in the health care reform law will result in millions of consumers receiving rebates from their insurers this summer. Insurers that fail to meet one of the guidelines of the Affordable Care Act by August 1st 2012, will have to issue rebates averaging $127 to certain policyholders, according to the Kaiser Family Foundation. In 2011, the Affordable Care Act began requiring health insurers to spend a certain percentage of the premium payments they receive on patient care – doctor’s visits, hospital stays, improvement activities such as discounted gym memberships – rather than

In 2011, the Affordable Care Act began requiring health insurers to spend a certain percentage of the premium payments they receive on patient care – doctor’s visits, hospital stays, improvement activities such as discounted gym memberships – rather than administrative and marketing costs. Under this law, large employer-sponsored plans must spend 85% of premiums this way, and insurance companies that cover individuals and small businesses must spend 80%. Any insurers that fail to meet this requirement must pay a refund. Kaiser says that these rebates will total $1.3 billion according to recent filings to the National Association of Insurance Commissioners. $426 million of this money will go to consumers who bought their own insurance – roughly 3.4 million people – and will receive the average rebate of $127. These rebates may come by check in the mail, or may be issued as a discount on future premiums. In Alaska and Maryland, among other states, the average rebate is estimated to be near $300. Those insured through private employers or state or local governments could see no rebates at all, with this money going mainly to the group policy-holder. These averages are based on early insurers’ estimates, and actual rebates will be based on the reports the insurance companies submit to the federal government later this summer. Mortgages Now on Sale at Costco In addition to bulk groceries and home goods, Costco shoppers can now purchase a mortgage at the warehouse retailer. After a year of testing, Costco is now rolling out a full-service mortgage lending program on its website with eleven different lending banks on board. The company’s partners have issued more than 10,000 mortgages to members under the program, and this number is expected to swell as [Costco] markets the service more aggressively to millions of members in its stores and in its weekly publication Connection,” according to Lauren Kutschka, Costco’s manager of financial services. On Costco’s website, the rates, closing costs, and terms of their mortgage services are listed up front. Costco customer Ray Sheets, a FedEx courier, said that the $2,500 closing costs were about 1/3 of what he would have had to pay through other lenders. One key difference with how Costco handles their mortgage services compared to other lenders is that even though the website, much like LendingTree, gathers quotes from various lenders, the Costco site only identifies the borrower’s identity after they select a lender. Other sites will reveal contact information immediately when searching for these quotes, which opens up the borrower to receiving endless marketing communications. Since Costco’s service is still fairly new, Keith Gumbinger of HSH.com recommends members do their homework and compare offers to ensure they are finding the right lender for their needs. Citations:http:// money.cnn.com/2012/04/26/ real_estate/ costco-mortgages/ index.htm? iid=SF_PF_Riverhttp:// www.bloomberg.com/ news/2012-04-27/ largest-u-s-banks-resist-federal-reserve-s-credit-limits.htmlhttp:// money.cnn.com/2012/04/26/ pf/ health-insurance-rebate/ index.htm? iid=SF_PF_River

Some Good News

Everywhere you look, you see nothing but doom and gloom in the headlines. So let's see if we can find any good news out there...Here are a few bits of information...

The Dow Jones Industrial Average finally regained all of its losses for the month. Climbing 23.69 points to 13,228.31, the index is back in the black, and sits 16 points higher than where it started the month.

The U.S. labor market showed continuing signs of improvement in April, as payrolls increased by 165,000 workers following a 120,000 gain in March. The jobless rate held at 8.2 percent, displaying further proof of a stabilizing workforce.

Amazon.com Inc., the world’s largest Internet retailer, beat analysts’ first-quarter earnings estimates on demand for the Kindle e-reader and other e-commerce services. The company’s shares climbed the most in more than two years, and sales rose 34% to $13.2 billion.

Citations:http:// www.bloomberg.com/ news/2012-04-26/ amazon-s-first-quarter-revenue-tops-estimates-on-kindle-sales.htmlhttp:// www.bloomberg.com/ news/2012-04-29/ employment-probably-picked-up-in-april-u-s-economy-preview.htmlhttp:// www.seattlepi.com/ news/ article/ Dow-regains-ground-it-lost-in-April-Amazon-surges-3515186.php

Don't you ever wonder why the media can't spend more time focusing on the good news that happens?

A Word From Our Friends...

Tips for Paying Your Mortgage Off Early

If you have the ability to do so, paying off your mortgage early can save you a substantial amount of interest compared to sticking with the 15-or 30-year payment plan of your loan. As with any other debt, paying it off as soon as possible frees up money for other expenses, allowing you to cross one major payment off your list! Granted, you will still be responsible for your homeowners insurance, property taxes, and any repairs and maintenance, but you’ll no longer have the mortgage payment

If you have the ability to do so, paying off your mortgage early can save you a substantial amount of interest compared to sticking with the 15-or 30-year payment plan of your loan. As with any other debt, paying it off as soon as possible frees up money for other expenses, allowing you to cross one major payment off your list! Granted, you will still be responsible for your homeowners insurance, property taxes, and any repairs and maintenance, but you’ll no longer have the mortgage payment hanging over your head. Ronit Rogoszinski, a wealth advisor at Arch Financial Group in New York, says that, “Once that money can remain in your pocket, you control that money… It’s yours. It’s not going to someone else.” This alone is a good reason to try to pay off your mortgage as soon as possible – saving on interest payments means you are saving that money instead of giving it to your bank. Here are 5 tips for paying down your mortgage quickly: 1. Make higher monthly payments. If you can manage your finances in a way that you can afford to pay more on your mortgage each month, this will free up money in the long run sooner rather than later. The amount doesn’t really matter, as long as you are making sure you’re paying toward your principal rather than interest or your escrow account. You may be able to add enough to your payment each month to make one extra house payment per year. Depending on when you might start this new payment routine, you slash a significant amount of time off of your home loan in the end. The math for this is easy: Divide one payment by 12 or multiply one payment by 10%, and add that amount to each monthly payment. This will ensure that you are making one extra payment per year. 2. Make extra payments. This tip has the same effect as paying more on your loan each month. If you are able to make one or two extra payments throughout the year, perhaps when you get your tax return or a bonus at work, you will be knocking your home loan out in no time. Similarly, consider making payments every two weeks, rather than every month. You will end up making 26 half payments instead of 12 full payments, which can knock approximately 6 years off of a 30-year loan, as long as you make sure those extra amounts are applied to the principal. 3. Pay a lump sum. One thing you can do to lower your loan term quickly is to make large payments toward your principal whenever you have the extra money to work with. This strategy works best if you don’t have other, more costly debt such as auto loans, credit cards, private student loans, etc. Rogoszinski says, “You really want to pay off the most expensive debt you have as fast as possible,” so if you do have some of those higher interest rate debts, putting lump sums toward your home may not be the best idea. One option you may want to consider if you do come across a larger sum of money, say from an inheritance or gift, is to deposit it into a savings account and set up automatic payments from that account to your mortgage. That way, you can have the money available for use in an interest-bearing bank account, but can also be using it to paying down your mortgage at the same time. 4. Refinance your loan. This should go without saying, but if you qualify for a new home loan, refinancing can be a great way to pay off your mortgage sooner. By refinancing you can obtain a lower monthly payment, which would free up extra money for you to put toward your principal. Unfortunately, there can be a couple hurdles

This should go without saying, but if you qualify for a new home loan, refinancing can be a great way to pay off your mortgage sooner. By refinancing you can obtain a lower monthly payment, which would free up extra money for you to put toward your principal. Unfortunately, there can be a couple hurdles with this option. One is that it you have to qualify for the new home loan and two is that declining home values can throw off your loan-to-value ratio, which could result in an appraisal that’s too low to support your loan amount or trigger a need for mortgage insurance. These downfalls would make your new payment more costly and would make refinancing less appealing. To maximize the benefit of your refinance, shorten the term of your new loan. If you’ve paid off 10 years out of a 30-year loan, refinance for a 15-year mortgage rather than another 30-year loan. 5. Shrink your housing costs. Although it may seem like a dramatic way to tackle your mortgage, selling your home for a more affordable one would definitely do the trick! If downsizing makes sense – you now have an empty nest, for example – consider selling the home you no longer have a need for and finding something more suitable to your current lifestyle or budget. Citation:http:// money.msn.com/ home-loans/ pay-off-your-mortgage-in-2012-bankrate.aspx? page=2

Your Team

Thank you for taking the time to read this week's issue of "Leonard's Estate Planning Report." We hope you found it to be insightful as well as entertaining. Please remember that our goal is to provide you with impeccable service. Please feel free to contact anyone on our team should you have questions or would like to discuss your goals or concerns.

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Leonard F. Berg

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