The general school of thought is that a codicil should suffice if you want to make minor changes. Examples of minor changes could be things such as: Adding or deleting specific bequests Changing who will serve as your personal representative Updating the name of a beneficiary or your personal representative due to their marriage or divorce. How Does a Codicil Work? A codicil is almost like a legal “P.S.” at the end of your will....
Find out more about how construction mortgages work, the two main types, and what you’ll need to qualify for one. Definition and Examples of a Construction Mortgage A construction mortgage is a specific kind of short-term home loan program that funds the cost of building a home. It can convert into a regular mortgage after a set amount of time, or it can be a construction-only loan that comes due once the project is complete....
Learn more about how a directed share program works. We’ll cover how you can invest in one if you’re given the opportunity as well as some factors to consider. Definition and Examples of a Directed Share Program When a company holds an initial public offering (IPO), its shares become available to the public for purchase, typically on a stock exchange. A directed share program allows the company to set aside part of those shares for employees, family, friends, and other stakeholders....
Alternate name: home equity line of credit repayment period For example, if you took out a 20-year HELOC with a 10-year draw period, you would be required to make interest payments during the first 10 years. The repayment period spans the next 10 years when you’ll make payments toward both the principal and interest. How Does the HELOC Repayment Period Work? For the first few years after opening a HELOC—the draw period—you’re only required to make minimum or interest-only payments....
This article discusses the partner-as-manager position, with details on duties, taxes, and liability. The Managing Partner Explained A partnership is a business that has several owners who are usually professionals in the same trade or business. Like any other type of business, a partnership must have someone to manage the day-to-day operations, making decisions for the business. The partnership may decide to management the partnership as a group, but it’s difficult to get consensus if the group is large, and management duties take away from primary duties of partners to get clients and provide services....
However, if the property is over 30 years old and showing extreme signs of wear and tear, your lender may amortize the loan sooner. In fact, according to the Office of the Comptroller of the Currency, “prudent” lenders generally consider 30 years to be a reasonable maximum life of a loan for real estate. Below, we’ll take a look at how a permanent loan works and outline the pros and cons to help you determine if it’s right for you....
In general, you can choose to receive your payments one of four ways: One lump-sumInstallments at a fixed amount or over a certain period of timeInstallments for the rest of your lifeInterest-only payouts Life insurers developed the retained asset account at least two decades ago as an alternative to a lump-sum payment made via a bank check. This type of account can be useful when a survivor is too distraught at the death of a family member to make financial decisions....
Find out more about a spend-and-save account, how it works, and the pros and cons of having one so you can make an informed decision about whether it’s a good option for you and your goals for your child’s financial education. Definition and Example of a Spend-and-Save Account A spend-and-save account refers to an account that allows you to automatically stash away small amounts of cash as you consume goods and services....
Alternate names for A trust: Marital trust, QTIP trust, marital deduction trustAlternate names for B trust: Bypass trust, credit shelter trust, family trust After one spouse dies, their property is split into two trusts. The surviving spouse has assets in one trust (trust A) that they can use as they like, and that trust will be passed on to beneficiaries when they die. The remaining assets, or the deceased’s portion of the property, are placed into another trust, or a bypass trust (trust B), which is an irrevocable trust that will be also passed onto beneficiaries once the surviving spouse dies....
AVS is used by major credit card companies Visa, American Express, MasterCard, and Discover. If you’re a small business owner getting ready to enter the online arena, it helps to understand how this process works and how it helps you as a merchant. As a consumer, it’s important to know how your information is being used and verified. Definition and Example of an Address Verification Service (AVS) AVS is a fraud-prevention system designed to limit credit card fraud and potential chargebacks....
Alternate names: Auto premium quote, car insurance quote, auto quote You can collect quotes from different auto insurers through agents or through websites before you decide which insurance is right for you―and they are free. You might even get more than one quote from an insurer for different coverage amounts or types of insurance. So, if you want both auto liability coverage and comprehensive and collision coverage for your 2020 Honda Civic, an insurer will provide you with an estimate....
The inclusion amount for passenger automobiles is triggered by the fair market value of the vehicle exceeding a certain amount set by the IRS on the date it was leased. The inclusion amount for listed property other than passenger automobiles is triggered by the business-use percentage of the property being 50% or less for the tax year. How an Inclusion Amounts Works for Leased Passenger Automobiles Generally, if you lease a vehicle for business, you are eligible to deduct either of the following:...
The independent contractor is a separate business entity and is not considered an employee. Independent contractors can work in a variety of roles, such as consultants, agents, or brokers. Others might be creative professionals or technical/IT types. Most employees don’t have a written employment contract unless they work under a union contract or are highly-paid executives, but an independent contractor should always have a contract. It’s a good idea to get a written contract from each person or business you work for because it defines when the work period is over, what happens if one party wants out, and what happens if one party can’t fulfill its obligations....
Alternate names: Insurance company or insurance provider While you may have a great rapport with your insurance agent, what if you need to file a claim? In that case, your carrier’s customer service and financial resources will matter most. Your agent can help you through the details, but it’s ultimately the carrier that decides the amount of coverage you will receive. How an Insurance Carrier Works While an agent or broker will sell you an insurance policy, an insurance carrier may have one or more central offices for handling claims....
Property tax is an ad valorem tax, which is Latin for “according to value.” The assessed value of a property is based on a number of factors, but it is not an official appraisal like the one you might get when you’re buying or selling a home. How Assessed Value Works The tax assessor for your local municipality is responsible for calculating the assessed value of properties within that municipality....
Alternate names: Comprehensive general liability insurance, commercial general liability insurance General liability insurance, or commercial general liability insurance, protects small businesses from a number of claims that can cause significant expenses, such as claims of property damage, bodily injury, or personal injury from libel or slander. Example of General Liability Insurance To illustrate how general liability insurance works, say you purchased a policy that costs $88 per month. As long as you make those payments on time, the coverage is in effect....
Technology continues to touch nearly every aspect of our lives every day, and banking is no exception. That’s why understanding the many different aspects of home banking and how it works can help you make the right decision for your financial needs. Definition and Examples of Home Banking Home banking refers to the process of accessing banking services without needing to visit a physical branch location in person. Home banking lets you conveniently manage many of your personal finances remotely....
A special power of attorney can be a better option than a general power of attorney in some situations such as single transactions—learn why and how it works. Definition and Example of Special Power of Attorney When a legal adult (“the principal”) wants to give another adult (“agent” or “attorney-in-fact”) the right to act on their behalf, they must sign a power of attorney legal document. However, the type of power of attorney used will depend on the situation....
The core inflation rate is synonymous to core CPI and Consumer Price Index (CPI) Less Food and Energy. This exclusion makes the core inflation rate more accurate than the headline inflation rate in measuring underlying inflation trends. This accuracy is why central banks prefer using the core inflation rate when setting monetary policy. What Core Inflation Means for You Although regular inflation—the increase of all items including food and energy products—could certainly have an impact on your day-to-day life by forcing you to tighten your budget, core inflation is the preferred indicator of inflation to the Federal Reserve....
Americans invest in real estate more than they do the stock market, making homeownership one of the key contributors to household wealth. It’s also a way that families build generational wealth, a wealth that hasn’t always been easily accessible to women and people of color. And studies find that people who own affordable homes have more discretionary income for important goals such as paying off debt, saving for education, or starting a business....
