Cava Faulkner

Buying a second home can provide you with a place to relax, unwind, and escape from it all. It can also provide you with substantial savings if you take advantage of these tax benefits of buying a second home.

Mortgage interest paid on up to $1.1 million in debt on your first and second homes is fully deductible. Typically, this rule only applies if you treat your second home as a home and not a rental property. But some mortgage interest may still be deductible if you occasionally rent out your second home. To benefit from this deduction, you must use the property for 14 days or more than 10% of the number of days you rent it out a year, whichever is longer.

Retirement planning is one of life’s most important financial goals. Indeed, funding retirement is one of the primary reasons many people put money aside in the first place. Yet many of us put more effort into planning for our vacations than we do to prepare for a time when we may no longer earn an income.

Whether you’ve put off planning for retirement altogether or failed to create a truly comprehensive plan, you’re putting yourself at risk for a future of poverty, penny pinching, and dependence. The stakes could hardly be higher.

When preparing for your final years, it’s not enough to simply hope for the best. You should treat retirement planning as if your life depended on it—because it does. To this end, even well thought-out plans can contain fatal flaws you might not be aware of until it’s too late.

Have you committed any of the following three deadly sins of retirement planning?

Even if you’ve been diligent about saving for retirement, without a detailed, goal-oriented plan, you’ll have no clear idea whether your savings strategies are working adequately or not. And such plans aren’t just about calculating a retirement savings number, funding your 401(k), and then setting things on auto-pilot.

Once you know how much you’ll need for retirement, you have to plan for exactly how you’ll accumulate that money and monitor your success. The plan should include clear-cut methods for increasing income, reducing spending, maximizing tax savings, and managing investments when and where needed.

What’s more, you should regularly review and update your asset allocation, investment performance, and savings goals to ensure you’re still on track to hit your target figure. With each new decade of your life (at least), you should adjust your savings strategies to match the specific needs of your new income level and age.

The plan should also take into consideration unforeseen contingencies, such as downturns in the economy, health emergencies, layoffs, and inflation.

Failing to plan, as they say, is planning to fail.

One way or another, the money you put aside for retirement is going to be taxed. However, by investing in tax-saving retirement accounts, you can significantly reduce the amount of taxes you’ll pay.

Depending on your employment and financial situation, there are numerous different plans available. From traditional IRAs and 401(k)s to Roth IRAs and SEP Plans, you should consider using one or more of these investment vehicles to ensure you achieve the most tax savings possible.

What’s more, many employers will match your contributions to these accounts, which is basically free money. If your employer offers matching funds, you should not only use these accounts, but contribute the maximum amount allowed—and do so as early as possible.

Since figuring out which of these plans will offer the most tax savings can be tricky—and because tax laws are constantly changing—you should consult with us and a professional financial advisor to find the one(s) best suited for your particular situation. Paying taxes is unavoidable, but there’s no reason you should pay any more than you absolutely have to.

One of the most frequent mistakes people make when planning for retirement is assuming that things will always stay the same. Whether it’s tax laws, inflation, market conditions, or marital status, if you don’t carefully consider how your circumstances might change with time, you’re putting yourself and your savings at serious risk.

While many such contingencies are mere possibilities, the one thing that’s certain to change with time is your body and mind. It’s an inescapable fact that our health naturally declines with age, so one of the most risky things you can do is not plan for increased health-care expenses.

With many employers eliminating retiree health-care coverage, Medicare premiums rising, and the extremely volatile nature of health insurance law, planning for your future health-care expenses is absolutely critical. And it’s even more important seeing that we’re now living longer than ever before.

Plus, these considerations are assuming that you don’t fall victim to a catastrophic illness or accident. The natural aging process is expensive enough to manage, but a serious health-care emergency can wipe out even the most financially well off.

But with so many unknowns, how can you possibly prepare for every possible scenario?

The truth is, you can’t. That said, you should take advantage of every available precaution within your means. This might mean delaying retirement, purchasing supplemental insurance, investing in long-term care insurance, opening a Health Savings Account, or some combination of these options. We can advise you on precautions that are right for you and your family.

The best way to maximize your retirement funding is to start planning (and saving) as soon as possible. In fact, your retirement savings can be exponentially increased simply by starting to plan at an early age.

We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge. Schedule online today.

If you’ve watched TV lately, you’ve likely seen ads touting the benefits of reverse mortgages. The spots typically feature famous actors like Henry “Fonzie” Winkler, Robert Wagner, and former U.S. Senator Fred Thompson telling elderly homeowners how they can dramatically improve their retirement with a reverse mortgage.

But what the ads don’t show is that reverse mortgages have actually caused heartbreak and financial devastation for thousands of elderly homeowners and their families. In fact, a USA TODAY review of government foreclosure data between 2013 and 2017 found that nearly 100,000 reverse mortgages failed during the years following the recession.

As a result, thousands of elderly citizens ended up losing homes that had been in their families for generations. In other cases, adult children, who expected to inherit the family home, were forced to sell the property (often below market value) or sign it over to the lender a few months after their parent’s death.

To make matters worse, the hardest hit have been low-income homeowners, targeted by shady lenders who dramatically underemphasized the risks of the loans and oversold their benefits. In particular, USA TODAY found that reverse mortgages were six times more likely to end in foreclosure in predominantly black neighborhoods than in neighborhoods that are 80% white.

While the Department of Housing and Urban Development (HUD) and the Consumer Financial Protection Bureau (CFPB) have recently enacted new laws to better protect seniors, reverse mortgages are still heavily marketed as an easy way to access extra money in retirement. Given this, seniors and their families should exercise extreme caution when considering reverse mortgages—and in most cases, avoid them entirely.

A reverse mortgage is a complex loan that allows homeowners 62 and older to convert some of the equity they have in their primary residence into cash. The amount of equity required to obtain a reverse mortgage depends on your age. Younger borrowers need about 60% equity in their homes to qualify, while those over 80 may need just 45%.

Once approved, you can receive the money in one of three ways: as a lump sum, as monthly installments, or as a line of credit. Because you receive payments from the lender, your home’s equity decreases over time, while the loan balance gets larger, thus the term “reverse” mortgage.

With a reverse mortgage, you no longer have to make monthly mortgage payments, and you can stay in your home as long as you keep up with property taxes, pay insurance premiums, and keep the home in good repair. Lenders make money through origination fees, mortgage insurance, and interest on the loan balance, all of which can exceed $10,000 to $15,000.

Although you often have to read the fine print to learn this, the reverse mortgage loan (plus interest and fees) becomes due and must be repaid in full when any of the following events occur:

●       Your death
●       You are out of the home for 12 consecutive months or more, such as in the case of needing nursing home care
●       You sell the home or transfer title
●       You default on the loan by failing to keep up with insurance premiums, property taxes, or by letting the home fall into disrepair

While reverse mortgages may seem like a good deal (and they can be for those with ample financial resources) the surge in foreclosures occurred mainly among low-income homeowners—the very demographic most likely to default. These seniors were aggressively targeted by lenders after the recession, when money was tight and credit was less accessible.

Homeowners were attracted by flashy ads claiming reverse mortgages were a way to “eliminate monthly payments permanently,” with “a risk-free way of being able to access home equity.” Other ads promised “you can remain in your home as long as you wish” and “you can’t be forced to leave.” Other times, the sales pitches came directly to seniors’ doorsteps vial mailers, door hangers, and door-to-door salesmen.

Some consumer advocates believe the upswing in reverse mortgages was a result of predatory lenders, who simply switched from selling risky subprime mortgages to selling reverse mortgages after the real-estate crash. Whatever the case may be, those who fell prey to these tactics eventually defaulted on their loans for a variety of reasons.

Some people fell behind on their property taxes after their tax rates went up. Some took the lump sum payment, spent the money too quickly, and then left with nothing to live on. Others defaulted after having to move into a long-term care facility or after their finances were depleted by a medical emergency.

Some of the saddest cases involved spouses who were not listed on the reverse mortgage because they were too young to qualify when the loan was taken out by their older spouse. Younger spouses can be listed as co-borrowers, but they have to be at least 62. These widows and widowers were tragically forced from their homes upon their spouse’s death, after they were unable to pay back the balance of the loan.

In 2014, HUD developed new policies to better protect at least some surviving spouses. Under the rules, if a married couple with one spouse under age 62 wants to take out a reverse mortgage, they may list the underage spouse as a “non-borrowing spouse.”

If the older spouse dies, the non-borrowing spouse may remain in the home. But he or she cannot access the remaining loan balance and must continue to meet the loan requirements like paying property taxes and insurance premiums. While this may delay things, these surviving spouses are still likely to be foreclosed on down the road.

In 2011, the CFPB cracked down on some of the most misleading ads. All reverse mortgage advertisers are now required to disclose that the loans must be repaid after death or upon move-out. Additionally, the ads can no longer claim the loans are a “government benefit” or “risk free.”

In spite of these new restrictions, the number of  ads for reverse mortgages hasn’t seemed to decline in any significant way, with more seniors and their families likely to fall for them.

Next week, we’ll continue with part two in this series on the dangers of reverse mortgages, focusing on how these loans can negatively affect your family and estate plan.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

Globalization and digital technology have made the world seem like a much smaller place. And though the enhanced ability to reach international markets can be a major advantage for your business, it also opens up new complications with intellectual property rights.

This is especially true when it comes to foreign trademark infringement. Trademarks are used to protect a word, phrase, symbol, design, or other distinguishing feature that identifies your product or service. Trademarks allow you to exclude others from using the same—or highly similar—branding as yours.

By registering your trademark with the U.S. Patent and Trademark Office (USPTO), you can protect your brand within the borders of the United States. However, having an American trademark will do little to stop competitors and scammers in foreign countries. Indeed, a federally registered U.S. trademark does not entitle you to sue a Chinese company in a Chinese court, even if it used your exact name and/or logo.

So what can you do to prevent your company’s trademark from being infringed upon in other countries? Big-name companies have lawyers around the globe policing against such violations, but if you have a smaller business, you still have ways to protect the branding—and customer goodwill—you’ve worked so hard to cultivate.

One way you can protect your brand is by registering your trademark abroad. You can contact the intellectual property offices in each country where you’re seeking protection to learn how to apply for trademark protection there.

However, a much easier way to achieve protection in many of the largest countries is to register your mark with the International Bureau of the World Property Intellectual Organization (WIPO). WIPO currently has 117 member countries, who have all joined the Madrid Protocol, one of the largest treaty schemes governing trademark rights in the world.

Once you’ve registered your trademark with the USPTO, you can file for an international trademark with the WIPO. Such registration provides protection in each of the member countries who’ve agreed to enforce trademark rights across their borders.

Though it’s certainly important to stop others from infringing on your trademark in foreign countries, you might face a greater threat from foreign counterfeiters who import their fake goods into the U.S.

You’ve undoubtedly heard the stories about Rolex watches being counterfeited and sold on the black market in the U.S. But you might be surprised at the number of other knock-off products that enter our borders every year.

In order to help prevent counterfeit versions of your goods from hitting the streets, you should register your trademark with the U.S. Customs and Border Protection (CBP). If you have a valid U.S. trademark, you can register it on the CBP’s Intellectual Property Rights e-Recordation Website.

By doing so, you’ll qualify for trademark enforcement from the CBP, which is tasked with stopping the importation of counterfeit merchandise. If any obviously infringing imports are discovered, the CBP will seize the shipment and notify you of the confiscation.

One final way you can fight foreign trademark infringement is by bringing a lawsuit in U.S. Federal Court under the Lanham Act. The Lanham Act is a federal trademark statute that creates a civil cause of action for trademark infringement.

Although the jurisdiction of the U.S. Federal Courts are limited, the extraterritorial arm of the Lanham Act has been increasingly applied to protect trademarks from infringement that occurs almost entirely in other countries. This makes the Lanham Act a highly effective method to combat foreign trademark infringement here in the U.S., rather trying to navigate the laws and courts of a foreign country.

For the Lanham Act to apply, the infringement must have some connection to U.S. commerce. However, this can be something as simple as the infringer shipping products or materials through the U.S. or even exporting products from the United States. Plus, the Lanham Act has statutory penalties, so fines can be imposed—up to $100,000 for each infringing act—even if there are no actual damages.

The courts use a variety of tests to determine if the protections afforded by the Lanham Act apply, so if you think your trademark is being infringed upon in another country, contact us to see if any action can be taken in American courts.

Of course, enforcing your trademark doesn’t necessarily mean taking the infringing party to court. Litigation, especially international litigation, is quite time consuming and expensive, so unless your business is being seriously impacted by foreign infringement, you’ll probably want keep litigation a last resort.

Fortunately, there are many other options for enforcement, from sending a polite cease and desist letter to allowing the offender to pay a nominal licensing fee. And you never know when what seems like a negative event can turn into a positive. Indeed, we often write letters for our clients that not only fix the problem, but also motivate the infringer to work with them in a joint venture. And we can do this for you, too.

If you’ve put substantial time and money into your branding, you should carefully consider all the ways you can protect your investment. We can help you find the most effective and efficient methods for safeguarding your intellectual property both in the U.S. and abroad.

We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule. Or, schedule online.