Monday, August 27, 2012

Common Misconceptions About Probate

As you know, probate is necessary when an individual dies without the proper estate planning documents and his/her assets exceed $100,000. What you pay is based on the estate’s gross asset value, which means all that you own, not just what you owe. For example, if your home is worth $800,000 and your mortgage is $790,000, the gross asset value is $800,000.


This chart shows the minimum probate costs set by California law and do not include any special fees such as the sale of assets, tax preparation and litigation.


Gross Asset Value of Entire Estate
Probate Fees without Estate Planning
$400,000
$22,000
$500,000
$26,000
$750,000
$36,000
$1,000,000
$46,000
$2,000,000
$66,000
$3,000,000
$86,000
$4,000,000
$106,000

Did you know…?
  • A will is different from a trust.
  • If you have recently refinanced your home you have to put it back into your trust.
  • Without an Advanced Care Health Directive your family may not be able to manage your medical care.
  • Joint Tenancy, the way many couples hold property, does not avoid probate.
  • Joint tenancy may cost the second-to-die thousands of dollars in capital gains tax.
  • The inheritance tax exemption allowed by the IRS may be lowered from $7,000,000 to $1,000,000 in 2013.

THIS IS NOT THE TIME SKIMP, hire a professional estate planner! Allied Brokers can recommend several experts that we work with. You have been in control and protected your family your whole life, why stop now? MAKE SURE THE FRUITS OF YOUR LABOR GO WHERE YOU WANT IT GO- SMOOTHLY, PRIVATELY AND INEXPENSIVELY. Avoid a family fight by taking care of your business before you die.

Call Allied Brokers to learn about ways you can control the distribution of your assets from beyond the grave. We can help you estimate your estate tax liability and fund the tax debt for less than 5% of the amount you would have paid. What better investment can you make for your family?

Visit our website at www.alliedbrokers.com for information about all the types of insurance we offer. Or call 1-888-505-7988 for a free rate quote.

Demystifying Car Rental Insurance

Car rental insurance sometimes feels like a shake-down. You think your auto policy covers it, but you’ve never read the fine print and you really don’t want to end up in a Mexican jail, so you buy it anyway and drive away feeling like you’ve wasted money. Have you? Here’s what you need to know:

Domestic car rental:  Most personal auto insurance policies will extend the liability limits of your policy to protect you when you drive a car you own or when you drive a car you don’t own; (like a rental car or a friend’s car you borrow) when you drive in the US and Canada. Insurance in Mexico is a special problem and to play it safe we are recommending that you buy Mexican Auto insurance before you enter that country.

Foreign car rental:  If you rent a car in a foreign country, your US policy will NOT cover you for:
-          Liability
-          Comprehensive and collision
-          Medical
-         Uninsured and underinsured motorist coverage.

A client once emailed me from London to tell me that he had crashed his rental car. He hadn’t purchased insurance from the rental car company and wanted to know if he was covered by his US auto policy for collision coverage. He was NOT.

There are only a few companies that offer worldwide coverage; whereas this type of coverage may be right for the international business traveler, it’s expensive for those of us who seldom take a vacation abroad. For the infrequent foreign traveler, we recommend you buy complete insurance from the rental company you use and make sure it covers any and all drivers.

Credit Cards Most credit card companies provide domestic and worldwide coverage for damage to rental cars- IF YOU USE THEIR CARD TO PAY FOR THE RENTAL CAR. Luckily for my client in London, he had paid for his rental with his American Express card and they paid for the majority of the claim.

Credit card coverage has many restrictions, so READ THE FINE PRINT:

  •  Many countries are excluded, i.e.: My client was covered in England but not Ireland.
  •  If you get a DUI, your insurance may be invalidated.
  •  There are usually many restrictions regarding accidents.
  •  Platinum cards are important; the better the card, the better the coverage.
  • Credit card coverage usually excludes liability for injury to the other driver and damage to his car.

Before you plan a trip, call Allied Brokers. We can review your auto policy, answer your questions and make sure you are covered. We are here to help you solve all your insurance problems!

Wednesday, August 22, 2012

4 Business Insurance Pitfalls to Avoid

Business interruption insurance
More than 50% of businesses never reopen after a fire because fire insurance does not cover income downtime". It also does not cover temporary relocation, salaries for key employees, or the additional costs involved in rebuilding. “Business interruption” is optional coverage that you should seriously consider adding if your business will be destroyed by being closed. Most business income policies only pay for 12 months of lost income but longer terms are available.

Actual cash value versus replacement cost
Most business policies cover a fire loss with “actual cash value” instead of “replacement cost”. Not good. Actual cash value pays the amount of the property less depreciation. This can be devastating if your business relies upon high value equipment that has a long life, but would be prohibitively expensive to replace. Replacement coverage, on the other hand, pays whatever the lost property’s replacement cost is today.

Coverage to rebuild according to current building code
Many businesses work in structures that are older than current building codes. In some cases, the structures are "grandfathered" and do not have to comply with current modern standards. When a fire occurs, however, the new construction must meet those standards and the extra cost is not covered. If you have a historic building, make sure you buy a rider to cover the cost to rebuild to current codes.

Always insure for 100% of your business value
If your business is insured for less than it’s worth, and a loss occurs, a penalty is applied to the settlement amount. This penalty will almost always exceed the amount of money you saved on premiums and will come at a very bad time. Have an independent appraiser evaluate your business each year and adjust coverage as necessary.

Could you rebuild your business if it burned to the ground? Come into Allied Brokers for a review of your current policy. We’ll point out gaps that could put you out of business for good.

Visit our website at www.alliedbrokers.com for information about all the types of insurance we offer. Or call 1-888-505-7988 for a free rate quote.

Tuesday, August 21, 2012

Triple Tax Whammy Looms for Business Owners

Small business owners face a potential triple-whammy in 2013 if Congress doesn’t renew the Bush-era cuts. The first smack is the estate tax exemption which is scheduled to drop from $5,120,000 in 2012 to $3,500,000 in 2013, and the estate tax rate is scheduled to jump from 35% to 45%. Similarly, the current lifetime gift tax exemption will drop from $5,120,000 to only $1,000,000.

If your estate planner tells you that this is a good year to die, it’s no joke; starting in 2013 your heirs may have to sell the family business you’ve left them in order to pay estate taxes.

The second punch is the Affordable Care Act’s 3.8% tax individuals who make more than $200,000 per year and couples, $250,000 per year. Add that to the proposed capital gains tax increase from 15% to 23.8% for those with incomes over $250,000, and business owners are really kicked where it hurts. (Capital gains are defined as income from sources other than wages, such as business income, bonds, dividends and interest.)

To push more people into “top 2%”, Obama is taking aim at estate planners. Currently, the law treats a grantor and a trust as the same person when it comes to paying income tax. If there are transfers between the two, no income tax is paid. In addition, some grantor trusts are considered to be separate from the person who created the trust, so there is no estate tax on the trust assets when the creator of the trust dies. All this will change if Obama is successful in merging income tax rules and estate tax rules.

Over the years, more and more people will be caught by the new taxes because the adjusted gross income level that triggers them doesn't rise with inflation. What can you do? First, meet with a professional estate planner to learn how the new laws might affect you. If you don’t know any, Allied Brokers can refer one.

Then call Allied Brokers to learn about insurance options that can protect your heirs from both capital gains and inheritance taxes after you die. For example, there is inheritance tax insurance that pays back your family trust the amount it loses to the IRS when you die. Let us help you control the distribution of your assets from beyond the grave.

Visit our website at www.alliedbrokers.com for information about all the types of insurance we offer. Or call 1-888-505-7988 for a free rate quote.

Monday, August 20, 2012

Protect Your Business with the Right Insurance

Having the right kind of insurance is critical to your business and multiple policies should be in place before you even open your doors. These policies should also be reviewed every year or whenever a business change occurs, like a move or a new product.

Allied Brokers offers all of the following kinds of business insurance:

Commercial Business Insurance

Commercial Property Insurance policies protect your office and its contents from damage caused by natural disasters, fires, or vandalism. They are either all- inclusive or risk specific.

Product Liability Insurance is necessary if you manufacture or sell products- it safeguards you if a product defect injures someone.

For protection against lawsuits related to negligence claims, you need to consider both General Liability Insurance and Professional Liability Insurance.

Other types of insurance your business might need include:

  • Coverage that protects Directors and Officers from personal liability
  • Key Executive Life Insurance
  • Business Interruption (covers lost profits and expenses)
  • Commercial Vehicle Insurance
  • Website Insurance (protects you from legal claims)

Employer-Related Insurance

Workers' Compensation Insurance and Unemployment Insurance (under certain conditions) are mandatory. California also requires employers to provide Disability Insurance to employees who are unable to work because of illness or injury. Some tips to make sure you get the correct insurance for your business:
  • Don't under-insure, but don't over-insure either.
  • Assess your liability risk honestly and thoroughly.
  • Ask your lawyer for advice.
  • Get quotes from several companies.
  • Ask how you can minimize risk and premiums.
Allied Brokers is your ally if you encounter legal problems because of an accident or injury that happens to someone on your property, to an employee doing business for you, or if a service you provide causes harm to someone. Avoid lawsuits- come in and let us help figure out the best kind of insurance to protect your business!  

Visit our website at www.alliedbrokers.com for information about all the types of insurance we offer. Or call 1-888-505-7988 for a free rate quote.  

Information for this article was provided courtesy of Orlando, Mitts, Moore & Company financial planners: 408 278-0300

Thursday, August 2, 2012

Covered or Not Covered...?

State Farm Insurance recently filed a lawsuit against former Penn State assistant football coach Jerry Sandusky. Sandusky, the convicted child molester, had asked the insurer to pay for the legal costs of his criminal defense.

State Farm said NO WAY! They argued that although homeowners’ insurance can offer coverage for claims arising from the insured’s negligent acts, it does not cover intentional ones. The lawsuit is still under litigation but it’s pretty clear that Sandusky doesn’t have a chance with State Farm. The outcome is a little murkier for Federal Insurance, the second insurer Sandusky asked to pay for his defense costs.

Federal had issued a directors-and-officers liability and employment practices liability policy to The Second Mile, a youth charity group founded by Sandusky. The challenge here will be defining exactly at what point, and in what situation, negligence become intention. Isn’t directors-and-officers liability insurance all about bad behavior, like sexual harassment? And isn’t all bad behavior intentional? Surely hairs will be split.