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Steps to valuing an estate

FOUR STEPS TO VALUING AN ESTATE

Determining the value of an estate is a fundamental first step in estate management and a critical requirement for settling a decedent’s estate.¹

How to Assess the Value of an Estate

Select the date of calculation. Because values move up and down, you need to set a specific date for a valuation. For a living person, you are free to pick any date. If you’re assessing the value of a decedent’s estate, you may choose either the date of death, or the date six months after death (the “alternate valuation date”). If you use the alternate valuation date, any asset sold or distributed during the first six months following the death must be valued as of the date of sale or distribution.²

Determine the assets comprising the estate. This asset list should include everything an individual owns or has ownership interests in.
Gather all financial statements as of the date of calculation. If an account is owned individually, the entire value should be calculated in the estate. If owned jointly with a spouse with rights of survivorship, then 50 percent of the value should be included. Remember to;
Deduct any outstanding mortgage balance, and
Include life insurance when the policy owner is the deceased individual or the beneficiary is the decedent’s estate.³

Calculate deductions. Subtract any debts from the total value of assets. For the decedent this may also include any regular bills that may be due (e.g., utilities, medical expenses, etc.), charitable gifts, and state tax obligations.
Assessing the precise value of an estate can be complicated, especially when settling an estate. Please consult a professional with estate expertise regarding your individual situation.

The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.

The article assumes the deceased has a valid will and has named an executor who is responsible for carrying out the directions of the will. If a person dies intestate, it means that a valid will has not been executed. Without a valid will, a person’s property will be distributed to the heirs as defined by the state law.

Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by Exceedia Consulting Ltd to provide information on a topic that may be of interest. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2018 Exceedia Consulting Ltd.

The most overlooked item of any home improvement

If you are like most homeowners, you love selecting the fixtures, fabrics, and paint colors of your home improvement project. But there is one very important item that you may overlook—making certain you are properly insured.

Why Proper Property & Casualty Insurance Matters

You may need to review your insurance before beginning any home improvement project since it can expose you to additional financial risks.

If you choose to act as your own general contractor (in other words, you organize and order supplies while hiring sub-contractors to do the work), you may be opening up yourself to additional liability (such as an injury to a worker or third party) that may not be fully covered by your current homeowners insurance policy.¹

Whether it’s an extra room or an updated bathroom, many home improvement projects will increase the value of your home. However, too many homeowners fail to review the policy’s replacement value limits, which may no longer be high enough to cover any losses that occur after your home improvement.

Obtaining additional coverage shouldn’t wait until you’ve completed the remodelling. After all, at any point in the process, you will have supplies and completed work that may not be covered under your existing policy.

To ensure that you are properly covered, meet with your insurance agent about your projects and discuss with him or her any need for modifying your current insurance coverage.

The information in this material is not intended as legal advice. Please consult legal or insurance professionals for specific information regarding your individual situation.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. Exceedia Consulting Ltd is not licensed to offer General Insurance. This material was developed and produced by Exceedia Consulting Ltd to provide information on a topic that may be of interest. The opinions expressed, and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2018 Exceedia Consulting Ltd

Lesser known investment risks

Lesser known investment risks

THE INVESTMENT RISKS NO ONE’S EVER HEARD OF

Knowledgeable investors are aware that investing in the capital markets presents any number of risks—interest-rate risk, company risk, and market risk. Risk is an inseparable companion to the potential for long-term growth. Some of the investment risks we face can be mitigated through diversification.¹

As an investor, you face another, less-known risk for which the market does not compensate you, nor can it be easily reduced through diversification. Yet it may be the biggest challenge to the sustainability of your retirement income.

This risk is called the sequence of returns risk.

The sequence of returns risk refers to the uncertainty of the order of returns an investor will receive over an extended period of time. As Milton Friedman once observed, you should, “Never try to walk across a river just because it has an average depth of four feet.”²

Sequence of Returns

Mr. Freidman’s point was that averages may hide dangerous possibilities. This is especially true with the stock market. You may be comfortable that the market will deliver its historical average return over the long-term, but you can never know when you will be receiving the varying positive and negative returns that comprise the average. The order in which you receive these returns can make a big difference.

For instance, a hypothetical market decline of 30% is not to be unexpected. However, would you rather experience this decline when you have relatively small retirement savings, or at the moment you are ready to retire — when your savings may never be more valuable? Without a doubt, the former scenario is preferable, but the timing of that large potential decline is out of your control.

Timing, Timing, Timing

The sequence of returns risk is especially problematic while you are in retirement. Down years, in combination with portfolio withdrawals taken to provide retirement income, have the potential to seriously damage the ability of your savings to recover sufficiently, even as the markets fully rebound.

If you are nearing retirement, or already in retirement, it’s time to give serious consideration to the “sequence of returns risk” and ask questions about how you can better manage your portfolio.

Diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if security prices decline.

Quotefancy.com, 2017

Have questions about this topic? Reach out to our knowledgeable advisors at Exceedia Consulting Ltd to help understand how these risks can impact your retirement strategy.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by Exceedia Consulting Ltd to provide information on a topic that may be of interest. The opinions expressed, and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2018 Exceedia Consulting Ltd.

Monitor your household finances with monthly meetings

Communication is the process through which we transfer information to each other. Although modern forms of communication have increased (emails, texts, letters, social media), connecting with each other is still at the foundation of our humanity. We just have to talk.

Family communication, in particular, melds us together in profound and lasting ways. Without it, the family would inevitably disintegrate.

Communications simple secrets.
Effective family communication requires every member to pay attention to what others are saying, how they’re saying it, and to identify the feelings behind words and gestures. Genuine listening is the most overlooked aspect of good communication. It’s the part that makes communication two-way.

Talking about money.
Every household has a budget of sorts. It may be a rigid, tightly structured, highly detailed plan or a more carefree, open-ended, and vague financial construct that gets little oversight or review. Or, more likely, it’s something somewhere in between. While budgets or financial strategies are often assembled based on personalities and preferences, they do require mutual input from family members.
An appropriate division of labor that designates who manages the budget or who pays the bills is important. But an arrangement where one partner or family member oversees the finances while the others are kept in the dark is unproductive and unhealthy.

Communication (and consensus) is necessary to bring vitality and direction to families and finances.
While simply discussing family finances is good, budget meetings become even more effective when they’re done with regularity. Holding monthly (or more frequent) meetings will help coalesce your visions and shape the goals of your family.

Here are nine steps for a successful family financial meeting:

1. Schedule it. Put the meeting on your calendar. It should not be spontaneous. Hold it at a mutually convenient and appropriate time.

2. Set the timer. You’re not running a marathon or a congressional hearing. Make it short—30 minutes or so—and sweet.

3. Eliminate distractions. Turn off the TV. Put your phone away. Make sure the chores are done. Make your meeting an investment of time.

4. Include some delicious distractions. We’re talking snacks, which make meetings more enticing.

5. Go prepared. Bring pens, papers, or whatever other tools you’ll need to develop and monitor your family budget and finances. You can use online budgeting tools or apps.

6. Order in the court. Or the budget meeting. Follow a progressive meeting plan, such as listing income first. Then proceed by dividing and segmenting money into individual categories: donations, utilities, debt, fun stuff.

7. Allow for objections. You’re trying to create a team plan to financial management. You may have other priorities and preferences than other participants in the meetings. Discuss them and reach an agreement. Find ways to compromise.

8. Watch the clock. If you’re having trouble or facing challenges, consider addressing contentious matters at another meeting. Stick to your allotted time.

9. Rules of engagement. Budgets are wonderful tools to reach your goal, but without a way to track spending, it’s just a piece of paper or online platform. Put your budget to work for you by making sure you plug in income and spending numbers regularly and consistently

If you would like to discuss your current financial plans or budgeting strategies, we’re happy to talk.

Exceedia.

Because things worth building are worth protecting.

How to fund a startup

You have a great concept. You’ve developed your business plan. Everything is set, except for one thing.

Funding Your Startup

There are several ways to fund a start-up that involve varying degrees of risk and effort. When choosing a path, it is important to know your options and evaluate which one is most suited to your needs and tolerance for risk.

To help you get started, here are eight possible sources of capital to fund a start-up business.

1. Fund It Yourself

Most start-ups, at least in the beginning, are self-financed. This may involve using your savings, borrowing against a retirement account, or taking out a home-equity loan. This is a good thing if your venture succeeds, as you retain all of the ownership. But if things don’t go so well, you must consider and weigh the risks you’re taking.

2. Friends and Family

People closest to you may be a good source of initial start-up funding. After all, they already know you, your background, and your integrity. They may be less concerned about your business plan and more willing to invest or lend based on the strength of your character.

But there are risks that are different than from other funding sources. Personal relationships can be at stake if problems or misunderstandings arise.

3. Initiate a Crowd-Funding Campaign

In crowd-funding campaigns on sites like Kickstarter, anyone can make online pledges to help fund your start-up. This usually involves pre-ordering a product, or receiving rewards. This is an innovative way to fund a smaller start-up.

4. Join a Start-up Incubator Group

What is an incubator group? An incubator group is a start-up accelerator often associated with universities or large organizations. Their purpose is to spur innovation. Most provide access to resources such as office space, but some also provide seed funding.

5. Apply for a Small Business Grant

There are lots of untapped government grants out there. Seek them out and you could potentially walk away with a safe and reliable source of money for your start-up.

6. Apply for a Line of Credit or Loan

If your tolerance for risk is low, talk to your bank or credit union about applying for a low-fee line of credit or personal loan. Your banker may also be able to help you with an SBA loan.

Keep in mind, though, you will have to make monthly payments right off the bat.

7. Seek Help from Angel Investors

Most cities have groups of high-net-worth individuals who are looking to invest in interesting business opportunities in their communities. If you’ve seen the television program, “Shark Tank,” these are examples of angel investors. They often want to see at least some track record of success, but some will entertain start-ups. The downside is that you may be giving up a considerable stake—often 10 to 50 percent—of your company for the ange funding. On the other hand, you may gain valuable expertise and contacts from someone who is motivated to help your venture succeed.

8. Go After Venture Capital Investors

Venture capital investors are professional investors who look for big ideas. For the majority of new start-ups, this isn’t a viable alternative, as VCs fund only about one or two percent of all business plans they review. But for those with the right combination of concept and team resumes – usually worth a few million dollars and supported by a team of proven individuals – they can be a great resource. VCs can scale capital needs quickly for fast-growing companies.

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