5 Common Estate Planning Mistakes To Avoid - Yahoo Finance (Business Insider)

Estate planning certainly isn't one of the sexiest ways to spend your day.

The idea of deciding how you'd like to die and who you'll leave your assets to can be overwhelming. 

That's why we like the idea of approaching estate planning like you would building a new home. Start with a solid foundation early enough in life, and then build it up one piece at a time. Once the roof is up and you've passed inspection, it's just a matter of trimming the hedges, changing a few light bulbs and renovating every once in a while. 

"There is no perfect estate plan," says CFP Nancy Anderson.  "We can’t plan for every contingency, but if we take some time to think about the major things, plan for them and double check that the right people are on the right documents, it can go a very long way in the end." 

Here are a few common estate planning mistakes to avoid: 

Thinking you're too young to make one. So, you're 33, fit as a fiddle and far too busy at your 9-to-5 to worry about something as dry as your estate plan — right? Don't kid yourself. You may not have many physical assets to your name yet, but a lot goes into estate planning besides deciding which of your siblings get first dibs on your vintage record collection. If you wind up in the hospital with no way to communicate, you'll wish you had designated a Power of Attorney to decide on treatment or at least jotted down how you'd prefer to be cared for at the end of your life.

Keeping your will a secret. Your life is not a Hollywood film. The idea that your family will pile into your attorney's office an hour after your funeral for the dramatic unveiling of your will is far from normal — or wise. In most cases, estate planners recommend telling your family exactly what they can expect before you pass away. Even if that means playing referee while your kids squabble over who gets your antique china set, it's worth dealing with the disagreements before it's too late for you to have a say.  "It's a double-edged sword; people don't want to communicate what property is going to be given because it could cause animosity," attorney Senen Garcia, founder of SG Law Group in Coconut Grove, Fla. told Bankrate.com. "It may cause animosity now, but you can deal with it. Later on, you have no control of it because you are gone."

Leaving too much cash to the wrong people. We'd all love to dump a pile of cash on our loved ones' laps after we pass away, but in some cases that's the worst possible way to leave a legacy. The key is to dole out money in a way that will improve their lives for the long-run. Using a trust fund can be a smart way to leave money to relatives, since it is administered by a trustee who must dole out the cash exactly how and when you tell them to. 

Forgetting about the blow from taxes. If you have considerable assets to leave behind, you'll need to carefully consider the estate taxes that will be levied against them. One way experts recommend getting around hefty estate taxes is to carefully plan ahead which assets you'll leave to certain family members and friends. You can "gift" them assets up to $13,000 per year while you're still alive under IRS guidelines before gift taxes kick in. 

Not editing your plan along the way. Life is far from predictable, which means your estate plan, like any financial plan, should be updated as your financial and personal circumstances change. Changes such as a birth, marriage, divorce, job loss, health condition, etc. all warrant factoring in to your estate plan. And beyond that, you'll have to seriously keep an eye on the ever-changing laws in both the state where your estate plan was drawn up and the country as a whole.

What are you waiting for? We recommend seeking a professional to help draft and review your estate plan. But don't just rely on one — both your financial advisor and your attorney (sometimes even in collaboration with each other) should be able to cover all the issues involved, making sure you've remembered to cross your T's and dot your I's.

Rookie mistakes to be avoided (DNA 16th Sep 13)

These are some of the recurring investment faux pas that most people still tend to make even in their 30s

Vijay Pandya

In your early twenties, it seems the money you earn is never enough to last the month. Saving seems to be an impossible concept, unless if a strict parent imposes restrictions on spending and forces you to do it. The mid-twenties is when future goals become clearer and saving for them starts off in earnest. The crucial difference between saving and investing usually gets highlighted in your early thirties. However, having over a decade of experience doesn’t help much. Managing money and managing investments are two totally different tasks, requiring an entirely different approach and set of skills. Making money earn money is the key factor here that tends to be missed out. Earning less Saving enough money to pay three to six months of living expenses in case of job loss concerns is a good idea, but then keeping that amount for a rainy day in your savings account is just plain stupid. Invest it in fixed deposits instead and keep rolling them over instead of encashing on maturity, its that simple. Unbalanced portfolio Similarly, while equities do give a good rate of return, the risks are equally great. Maintain a balanced portfolio so that volatile markets do not completely deplete your net worth overnight. Diversify across instruments and sectors even while dealing with ‘safe’ options like mutual funds. Unclear goals Do you want to live in a spacious 2BHK flat or opt for a 1BHK and send your child abroad for higher studies? Buy an entry-level hatchback or top-end SUV? Party every weekend or once in a few months? Vacation abroad twice a year or once in two years? Unless if you are clear about your projected spends, it will be impossible to plan your investments in sync with them. Unexpected inflows Diverting your Diwali bonus for an outstanding credit card payment gets you out of a financial crunch but did you learn anything from the experience? They say those who do not learn from history are condemned to repeat it and you may just exemplify that adage next year. Unexpected inflows should be invested and reinvested, not spent. Stopgap solutions Taking a personal loan to bridge the gap and buy a bigger house solves an immediate need but adds a high-cost liability that will offset whatever returns your current investments are making. Instead, ‘break’ a few fixed deposits before their maturity. Losing projected interest for a few months is better than paying it multiple times over for years on end. Following friends What works for your office colleague, school buddy or train friends may not necessarily be applicable to your financial situation. Blindly investing where others do without understanding your own financial potential, abailities and constraints, is strictly avoidable. Top 5 Problems And Solutions 1 Uncontrolled spending One way to control and monitor your spending is to open a separate bank account and designate it as a spending account. Both husband and wife need to spend only from it. As soon as you receive your salary, transfer the budgeted amount, say Rs 25000 to your spending account. Then spend your monthly expenses from it. This account is for all your expenses. Investments or EMI will not be mingled with it. Whenever you check it, you will be able to make out how much has been spent so far. End of the month you will have a complete history. Now you can analyse and control your spending. At the beginning of the month, your mind knows the balance is 25000 and the countdown starts. It starts thinking how we can run the show for the rest of the month with this balance. 2 Credit card trap The simple and successful way to use credit card is to pay the 100% due amount on the due date. Minimum balance payment, EMI purchase through credit card, balance transfer from one credit card to the other will slowly take you to the debt trap. 3 Money compatibility Couples often don’t work on their money compatibility. This is a serious problem. Check how compatible you and your spouse in money management. You may be conservative and your spouse may be aggressive. You may think that the best place to invest is stock market and your spouse may think bank FDs. You should communicate your money management style to your spouse as well as you need to understand the money management style of your spouse. Both of you need to analyse the merits and demerits of money management style of each other and their own. Then you need to create a mutually agreed combined money management style.This will be vital to you both throughout your married life to help minimise stress from disagreements about money. 4 Not having a plan If you are not having a financial plan, then things will not be under your control. A financial plan tells you what is your potential and what are all the things possible with that. This gives you clarity and confidence. 5 Poor risk management Life cover, health cover, property insurance and having emergency reserve: These 4 items are more discussed and less practiced.

Documents to check before buying a house (ET Wealth 3rd Dec 12)

If you do not conduct due diligence, you could end up losing the property and face a financial disaster.

SAKINA BABWANI 

Buying your own home may be a cherished dream, but it doesn’t take much for it to turn into a nightmare. 

Given that real estate is among our most expensive purchases, landing a lemon can prove to be a financial disaster. The only way to avoid such a situation is to take time out to conduct due diligence before finalising any property deal. Of course, a reliable shortcut is to buy into a project that is backed by financial intermediaries like banks. “Seldom would they hand out loans to projects where due diligence throws up pending mandatory clearances,” explains Shveta Jain, executive director, residential services, Cushman & Wakefield, India. 
You can also engage a lawyer to carry out due diligence, but as a smart buyer, it’s best to pore through the documents yourself. Here is a checklist of documents that you should peruse before signing on the dotted line. 
Projects under construction The first thing one should do in the case of projects that are still under construction is to make sure that the builder has all the necessary approvals in place, without which it would be considered illegal. “We have often come across cases where projects have been stalled midway due to lack of proper approvals. Even finished projects have been razed for the same reason. Hence, I would never advise to go for a booking unless you have taken a close look at the key documents,” says Ramesh Vaidyanathan, partner, Advaya Legal, a Mumbai-based commercial law firm. 
The first of these is the permission to develop land into a residential complex. Builders need to get government approval to convert agricultural land or even land specially designated for industrial purposes into a residential area. If the builder has gone ahead without securing this approval, the entire project is illegal. In addition, there are environmental and municipal clearances to factor in. For instance, the builder has to ensure that his project does not interfere with the urban and town planning, and that it has unrestricted road access. 
Next, you need to find out if the builder has the authority to transfer the undivided share of land to each flat owner and the entire plot to the society, on completion of the project. A Knight Frank research report on ‘Parameters for Buying a Home’ mentions that you should also ensure the builder does not reserve any right on your portion of the apartment, such as balconies or terraces. 
Lastly, never forget that there’s many a slip between the blueprint and the final product. The developers tend to charge a premium for additional features, such as a swimming pool or designer furniture. However, unless you ask the builder to incorporate all the promised features in the agreement and make provisions for penalty in case of non-fulfilment, you stand on shaky ground. Any sample flat that was shown to you would be demolished long before you obtain the possession of your house, leaving you with little evidence if you decide to drag the developer to court. Also, watch out for the fine print: builders may slip in a clause in the agreement, stating that they reserve the right to alter any of the promised features. To be safe, take a look at the approved construction plans and ensure if they match what has been promised to you. Ask the builder to show you the requisite permits from the concerned authorities. While the approved construction plans have to be mandatorily displayed at the construction site at all times, all the important approvals should be available at the builder’s office. Under the Transfer of Property Act and Maharashtra Ownership Flats Act, a seller is required to disclose all facts relating to the property, which includes the various permissions secured by him. In case a builder refuses to do so, a prospective buyer has recourse under the same Acts. “However, if any of these documents is missing or the builder refuses to show them to you, it is best to stay away from the project,” warns Vaidyanathan. In addition to these documents, you should also take a look at the Commencement Certificate for projects in Mumbai. As the name suggests, this certificate is given to the builder to begin construction only after he has obtained all the requisite clearances. 

Independent home owner “As a primary rule, check and verify if the seller owns the property and has a right to dispose it of,” says Jain. In case he is a joint owner, he cannot sell the property without the consent of the other owner(s). 
One way to be sure of ownership is to go through the house agreement. If you are purchasing a flat in a housing society, ask for the original share certificates. To double check, you can peruse the telephone and electricity bills as they are always issued in the name of the legal owner. Alternatively, you can check the housing society maintenance bill, which contains the owner’s name and property tax details. This will also highlight any pending charges that are due for the flat you want to buy. This is crucial because if the owner sells a flat without paying his dues, the society mayrecover it from the new owner. To avoid such hassles, ask the society to issue a no-due certificate as well as a no-objection certificate. Though this is not mandatory, you should insist on it, advises Vaidyanathan. 
Any pending litigation on the property should also be a signal to hightail it. This is because you are bound by the result of the suit, and if the court establishes that the seller was not the rightful owner, you will have to hand over the property to the winning litigant. To check for pending litigation, go through the lis pendens registry at the sub-registrar’s office, as it will contain the owner’s name if there is pending suit. 
Mortgaged properties are the other lemons you need to watch out for. In such cases, the original documents are sure to be with the lending institution. So, if the seller fails to show you the originals, it’s reason enough to be on an alert. If the seller claims he has cleared all debts, ask him to show you the bank’s original discharge letter. 
Some experts are of the view that a clear title is not assurance enough and one should consider contacting past owners to rule out fraud. As a safety measure, publish an advertisement in the newspaper stating that you wish to buy the property and inviting objections. 

After the deal... 1 After the agreement is drawn, have it whetted by a lawyer to spot loopholes. 
2 Do not delay registration of the sale deed after signing it. 
3 Ask for the issuance of share certificates after a society is formed. 
4 If you are paying an advance without getting possession, document it in the form of an agreement or a memorandum of understanding. 
5 Contact a tax consultant to explain your tax liabilities to you.

Check Your Cheque Status, only Those in New Format will be Honoured from Jan 1

Preeti Kulkarni describes the features of new cheques and explains what you need to do before the year ends

Add one more item — get a new cheque book — to your list of ‘things to do’ before the New Year. You may not be able to use your old cheques from next year with the implementation of the new Cheque Truncation System (CTS-2010), which will eliminate physical movement of cheques for clearing. Instead, only their electronic images, along with key information, will be captured and transmitted. It will make the clearing process more efficient, secure and quicker; but for that, you must switch to new cheques with prescribed standard features before December 31. 
“Customers need not worry about the impending CTS implementation. I am sure they will not be inconvenienced due to the migration process. Some transitory period, from January 1 to March 31, could be given during which both types of cheques will be accepted. Banks are sending messages to customers now so that they comprehend the urgency and act upon it,” says AC Mahajan, chairman, Banking Codes and Standards Board of India (BCSBI).

CHECK YOUR CHEQUE’S STATUS If you have ordered your cheque books recently, say, a month ago, you may already have the new cheque leaves with you. Since most banks have already migrated to the new system, chances are that your bank would have sent you CTScompliant cheque leaves. However, if you have received the cheque book more than two or three months ago, you need to run a status check. For instance, the compliant ones will have the new rupee symbol (. ) inscribed near the numerical ‘amount’ field. 
“Visibly, there will only be the following difference: “Please sign above” is mentioned on the cheque leaf on right had side bottom; and, void pantograph (wave-like design) is embossed on 
left hand side of the CTS cheque leaf,” explains Anindya Mitra, senior vice-president, retail liabilities group, HDFC Bank. 

GET YOUR OLD CHEQUE BOOKS REPLACED If you haven’t received the new form of cheque books already, speak to your bank as early as you can. “Banks could adopt two methods to replace the old cheques. One is to send new cheque books by registered post and ask users to cancel the old ones. Customers may be asked to show proof of the same to the bank. They may also ask customers to surrender the older ones. Or, the customers can visit the bank branch themselves to surrender the old cheques and receive the CTS-compliant ones,” says Mahajan. Banks will not charge any fee for replacing the old cheque leaves. 

ISSUE NEW POST-DATED CHEQUES FOR EMIS If you have issued post-dated cheques (PDCs) for your home or auto loan EMIs, you will have to issue fresh cheques. “RBI’s guidelines to NBFCs state that if they have accepted post-dated cheques from their customers for future EMI payments, they should get them replaced with CTS-2010 standard compliant cheques before December 31, 2012. This will be applicable to banks as well,” explains VN Kulkarni, chief credit counsellor with the Bank of India-backed Abhay Credit Counselling Centre. “Most of our customers have opted for the ECS (electronic clearing system) mode for their EMI payments. So, the new system will not impact them. Only a small percentage of borrowers pay their EMIs through post-dated cheques. We are asking them to give us new cheques and accept their older cheques back,” says Abhijeet Bose, head, retail assets and strategic alliances, Development Credit Bank. Not all banks will return your older cheques, though. You needn’t be concerned about it as these cheques will be non-compliant with CTS standards and hence not be valid. To avoid these hassles, you can simply switch to the ECS mode, where the EMI amount is debited from your account every month. It will also save you the trouble of altering the amount on PDCs in case of any change in EMIs. 

ENCASH ANY OLD CHEQUES NOW This tip is mainly for procrastinators. For instance, if you have received a cheque on December 1 that does not conform to CTS 2010, you should not delay its encashment. 
“As per RBI mandate, the same (old format cheques) are to be accepted till December 31, 2012. RBI instructions on whether the same will be permitted after December 31 are awaited,” says Mitra. It is better to present it for payment immediately rather than risking its dishonour after December 31. 

EXERCISE CAUTION WHILE WRITING CTS CHEQUES You have to be careful while writing the new cheques. For instance, cheques with alterations in crucial fields like payee’s name and amount in figures or words will not be processed under the new system. 
“In case of any corrections, a new cheque will have to be issued. The ones with alterations will not be accepted even if the drawer puts his full signature authenticating the changes. 
Such cheques will be returned,” adds Kulkarni. “Also, it is important to use image-friendlycoloured-inks while writing the cheques.” As per RBI guidelines, you should use dark-coloured inks for the purpose.

How to get an online EPF Pass book (Yahoo Finance 20th Nov 2012)

Employees Provident Fund (EPF), generally known as PF is a retirement benefit scheme available to the salaried class in India, wherein both the employer and employee contribute an equal amount towards the fund. This year, the EPFO (Employees Provident Fund Organization) has introduced an e-passbook facility for members, which enables them to check their PF account online.

What is an EPF e-passbook?

The EPF e-passbook is an online version of the employee’s provident fund account. Transactions are recorded date-wise and these can be tracked easily by the member. You can check your EPF balance online anytime you wish to.

How to register online?

Registration on the EPFO website is necessary to avail the e-passbook facility. The following steps need to be followed to register online -

1.      Visit the EPFO members site - http://members.epfoservices.in/

2.      Click on the “Register” at the bottom of the page or “Click here to Register” button under the Login area.

3.      You will reach the registration page, where you will have to enter your mobile number mandatorily. You will also need to enter your date of birth, email id and select one of the eight documents (PAN number, Aadhar (UID), NPR (National Population Register), bank account number, voter ID card, driving license, passport number or ration card number) along with its unique number and your name as it is in the document. On entering a six digit unique text character, you will have to click “GET PIN” to get a four digit authorization PIN on your mobile.

4.      Once you receive the PIN on your mobile, you will have to enter this PIN in the box provided at the bottom of the page. Check the “I agree” box and click on “Submit” button.

5.      After clicking on “Submit”, your registration will be complete and you will get a confirmation message on your mobile.
This completes the registration process on the EPFO member website.

How to generate e-passbook?     

After successful registration, you will need to login to your account in the member login area to generate the e-passbook. The following steps need to be followed.

1.      Log in to your account by selecting your document, entering the document number and your mobile number that you entered on the Registration page and click on the “Sign In” button.

2.      When you successfully login, you will see your name on the right hand side of the page. This is the page on which you can edit your personal details and also download your EPF e-passbook.

3.      When you click on “Download E Passbook” link, you will be prompted to select the state under which your establishment is covered.

4.      On selecting the state, you will be asked to choose the EPFO office. If you are unaware about the EPFO to which you belong, you can use the establishment search facility to get these details.

5.      When you have selected the EPFO office, you should now enter your EPF account number. The next step is to enter your name, which should exactly match EPF records.

6.      Click on “Get PIN” to receive the PIN on your mobile and email. Do not close this page till you receive the PIN on your mobile/email.

7.      When you receive the authorization PIN, you will need to enter this in the “Enter Authorization PIN” box, check the “I Agree” button and then click on “Get Detail”.

8.      You will then be able to download the PDF.

Points to remember while using EPFO’s e-passbook facility:

1.      Only one mobile number can be used for one registration. However, your mobile number details can be edited subsequently.

2.      You can view details of only one EPF account under one establishment. If you wish to view details of all your EPF accounts under a single establishment, then you will have to first transfer one EPF to another.

3.      You can view a total of 10 EPF accounts under different establishments. You can view your accounts any number of times and transfer old EPF accounts to existing ones too.

4.      You will not be able to view details of inoperative accounts and also EPF accounts which have been settled.

5.      If you have left your job before March 2012, then you will not be able to see details online. However, you can place a request for the same on the website and it will be uploaded in a few days.

6.      For logging into your account you just need your mobile number, document name and document number.

7.      You can use multiple ids to register by using different document types.

The EPFO’s e-Passbook facility is a welcome move which will enable employees in managing their EPF accounts in a better manner. The success of this facility depends on the efficiency of the EPFO in managing the website and handling requests from the members.

Explore loan against collateral like gold, shares to raise money at softer interest rates (ET 2nd Oct 2012)

Many of us opt for personal loans — when we can't (or don't want to) turn to friends or relatives for a soft loan — to tide over unseen shortfall in funds.

Sadly, most of us don't even consider other options available like loan against assets, shares, gold, property and so on. It is strange considering goldfinance companies have been on an overdrive in the last few years. Even moneywise, it makes perfect sense to take a close look at asset-backed loans.

Compared to the interest rate of 16% to 24% on personal loans, loans against assets come much cheaper at 12% to 14.5%. But the problem is you can't club all these asset-backed loans in one bracket. "Each one of these asset-backed loan has its own advantages and disadvantages.

You have to choose one of them only after analysing your needs in detail," says Satish Mehta, co-founder and director, Credexpert, a credit counselling entity. And the needs could be — the purpose of the loan, documentation requirement, time you have and how much money you want to raise.

PURPOSE OF THE LOAN

Loan against gold and securities work for relatively smaller amounts that you would like to pay off within a short timeframe. For example, if you are keen on a loan to fund your holiday, you may be better off borrowing against gold or securities.

But for larger expenditures, like a marriage, loan against property works better. Typically, repayment tenure is longer for a loan against property compared to a loan against gold, which helps fund larger expenditures.

For an average individual, market value of movable assets such as gold and securities is generally lower than the market value of the property. Hence in most cases large expenses are funded using loans against property. You can choose to take an overdraft facility against your house, where the bank approves the borrowing limit against a house.

If you plan it well, you can use this facility to meet any contingency, too. This works for those who do not have much of free cash flow each month and cannot maintain emergency funds. Though you may not use the overdraft, still you may have to pay the processing fee of around 1% of the overdraft limit.



DOCUMENTATION REQUIRED

Bankers differentiate between loans against movable and easily realisable assets, such as gold and securities, and loans against immovable and illiquid assets, like property. "In case of gold loans, lenders will be keen on 'know your customer' requirements than documentation pertaining to loan repayment ability," says Harsh Roongta, CEO, apanapaisa.com.

All you need to know about 'rental agreements' - Outlook Money

By Pankaj Anup Toppo

Once you have zeroed in on the person, you wish to rent out your property to, you are expected to hand over possession of the property to him/her only after the mutually agreed terms and conditions under which the property is given on rent is put before each other. This document is called the ‘rent agreement’ or the ‘lease agreement’. Typically, the rent agreement is prepared by the real estate agent hired by you and your tenant. To validate the agreement, both you and your tenant ought to sign the agreement in the presence of two people who are non-beneficiaries of your property and will sign on the agreement as witnesses. In most cases the real estate agent doubles as one of the witnesses.

To give more teeth to the rent agreement, rather than just getting it notarised you should insist on getting the same registered by paying the necessary stamp duty. However, for that you will need to pay the necessary stamp duty and most real estate agents, who are well versed in the business are adept at making a registered agreement which is way simpler than a sale agreement running into two or three  pages. However, here are a few things to consider.

Duration of lease. Make sure that the duration of the lease is clearly mentioned in the agreement. It must have the start date and the end date of the rental term period. Typically, most rent agreements of the residential property market are for a period of 11 months. Also a clear mention of the terms and conditions under which the agreement can be renewed after it expires should be incorporated in it at the outset.
Further, you must include a clause clearly stating the process in which this agreement can be terminated before the mandatory 11 months. The clause should clearly state both your (lessor) rights as well as the rights of your tenant/lessee to avoid any confusion.

Date of rent payment. A clear mention of the date, on or before which the rent has to be paid must be mentioned in the agreement. However, a practice prevalent today is accepting post-dated cheques for the entire duration of the lease, but there must be a mention of the cheque numbers handed over to you in the agreement and the repercussions if the cheque/cheques bounced.

Regular maintenance. A clause clearly stating who will be responsible for regular repairs of the property must also be incorporated in your agreement. Typically, minor repairs of the property are taken care of by the tenant. But it is your responsibility to ensure that the property is handed over for possession in good shape. This would mean that all electrical and water connections are in working condition, the electricity meter and water motor are in running condition.

Previous bills. While utility bills like those for water, electricity and so on will be taken care of by the tenant, on your part you will need to ensure that all bills generated before the new tenant has moved in have been cleared. Most often, duration of the bill generation may not match with the occupancy period of your new tenant; so there must be a clear understanding of how that short duration bill will be cleared. 
Draft an agreement according to your needs. Remember, this is the single most important document that will protect not only your rights as a lessor but your property.

IN BRIEF
When accepting post-dated cheques for the entire duration of the lease, mention the cheque numbers 
handed over in the agreement and the repercussions if these are dishonoured.

The Anatomy of a Job Interview - ET Wealth (30th July 2012)