Perhaps you’ve seen ads for a new “over 55″ luxury condominium development in your town. Or another winter of shoveling has finally convinced you that it’s time to move to a warmer climate. You’re looking forward to life in a retirement community, but with so many options, how do you choose the right one?
Beginning the search
The first step is to think about where you want to live, how you want to spend your retirement years, and what type of home you can realistically afford. All retirement communities are designed with the needs of older adults in mind, but they provide different living arrangements, activities, and services.
The American Taxpayer Relief Act of 2012 (ATRA), passed in early January, permanently extended a host of expiring tax provisions. It also largely set the rules for tax planning for 2013 and beyond. As you take stock of your tax situation this year, here are a few new wrinkles to keep in mind.
New top tax rate
The six tax brackets (10%, 15%, 25%, 28%, 33%, and 35%) that applied for the last several years have been made permanent for most individuals. That’s really good news, since it removes a great deal of uncertainty going forward (it’s always easier to plan when you know what the tax rates will be the following year).
Insuring a vacation home is different from insuring a primary residence. As a result, you’ll want to purchase insurance that is specifically geared to provide coverage for this type of property.
When insuring a vacation home, the type and cost of coverage will vary, depending upon the insurance company and the state in which your vacation home is located.
Most insurers offer at least some type of insurance that is specifically designed for second/vacation homes. Coverage under these types of policies can range from standard coverage that protects against certain named perils, to more comprehensive coverage that protects against all perils unless specifically excluded in a policy. Continue reading
It depends. While the types of coverage offered by standard homeowners insurance policies vary, windstorms are one of the basic perils that most standard homeowners insurance policies will cover. This means your policy should compensate you for loss/damage to your home that results from a hurricane or other windstorm (e.g., broken windows, torn roof, damage from fallen trees).
Keep in mind that if you live in an area of the country that is prone to hurricanes (e.g., the coastal region of Florida), an insurance company may exclude coverage for hurricane damage from a standard homeowners insurance policy. And even if an insurance company does provide coverage, homeowners insurance policies in states that are at a high risk for hurricanes often contain a separate, higher deductible for hurricane damage.
Transfers of property during life or at death are generally subject to federal gift or estate taxes. However, each taxpayer has an amount of property that can be sheltered from federal gift and estate taxes by the unified credit, called the “applicable exclusion amount.”
Prior to 2011, each spouse was entitled to his or her own applicable exclusion amount, and any amount that a spouse did not use would be lost; so special planning was often used to insure neither spouse’s exclusion was wasted.
In 2011 and later, the estate of the first spouse to die can elect to transfer any applicable exclusion amount that is not used to the surviving spouse. This is known as “portability.” The applicable exclusion amount is redefined as equal to the sum of the basic exclusion amount of the surviving spouse and the unused applicable exclusion amount of the predeceased spouse, and the basic exclusion amount is equal to $5 million as indexed for inflation each year ($5,250,000 in 2013). Continue reading