The Story of Trust Deeds

A couple are looking into purchasing their first property together. One of them already has a nest egg ready to put into getting on to the housing ladder… and the other? Well, he or she has tried to scrimp and save but just can’t resist the lure of decent wines/holidays/nice clothes/Xbox credits. You get my point. Buying a house together might seem like the perfect way to cement a loving relationship but it is undoubtedly a financial risk if, like many relationships, the financial elements of the union are anything but equal. In this scenario, it can be wise to look at having trust deeds drawn up.

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Although not the most romantic concept, a trust deed can protect both parties when looking to purchase property. Commonly referred to as a ‘declaration of trust and cohabitation’ or ‘co-ownership agreement’, a trust deed is a legal agreement between two joint owners which can specify the amount of capital each party contributed to the purchase, the agreed shares of ownership and exactly what should happen if one of the parties dies. A depressing thought. However, assuming you have years of cohabitation ahead of you, a trust deed can also provide legal protection if one of the owners leaves the home or starts a dispute over such things as building extra rooms or adding a conservatory. Basically, a trust deed can cover any potential outcome and could prove invaluable in the event of changing circumstances.

If, like our couple, one of you has invested more money into climbing onto the housing ladder, you might each agree that it is fairer to have this reflected in your share of the property. Let’s say you put in 80% of the funds needed and your other half managed to scrimp together the remainder. Surely you would want this reflected in bricks and mortar? A trust deed will ensure this happens by apportioning your interest in the property accordingly meaning that, if you ever went your separate ways and the house had to be sold, you would get your fair share back.

Of course, you and your partner may well live together forever in harmony. However, it makes sound financial sense to consider distinctly unromantic elements before buying a house with a loved one. As anyone who has been burned by a greedy ex will tell you, a trust deed can ultimately negate a great deal of heartache.

What You Need to Know About Debt Consolidation

Debt consolidation is a term you hear often, but what is it? How does it work? Is it a good thing? Should I be consolidating my debt? Here are some details that everyone should know when considering debt consolidation:

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What is Debt Consolidation?

Debt consolidation is when you take out a loan to pay off many others. It is often done to secure a lower or fixed interest rate or for the convenience of only having one loan to pay each month.  You can do it on your own or you can choose to have a company consolidate your debt on your behalf. When you use a consolidation company they can arrange contact with all of your bill collectors to make payments for you. To do this they would need to know your monthly income and bills that may not be in collections. They then will set up a budget so that all of your bills that may be harming your credit score can be paid down a little at a time with one payment to the debt consolidation company each month.

The best type of debt consolidation is one that would allow you to make only one payment per month because they have paid off all your collectors completely; this also means that your credit score can begin to recover. When you make this payment the consolidation company will split it up between your bills. Usually a debt consolidation will charge you a start-up price then a monthly payment that is a percentage of interest on your total debt.

How long will it take me to get out of debt?

The length of the term on your loan would be dependent on two things: your income and the amount of debt that you have. To pay of the loan you will have to take charge on your payments and pay more than the minimum, when you only pay minimum a great deal of it is only paying off interest with little actually going towards your debt.

If you choose to work with a debt consolidation company they will help you to make a plan that will let you know how long the process while maintaining a standard of living that is acceptable. The average goal is to get you out of debt in 5 years.

Does debt consolidation work?

Ideally, yes. If executed properly debt consolidation can eliminate all of your debt and you can live without ever having a financial problem ever again. Some people can move on from their past mistakes and do this. Just be honest with your consolidation councilor and do not withhold any of your financial information, this will only come back to hurt your chances of managing your debts.

You also must not use debt consolidation as a bandaid. If you do not stop making bad financial decisions you will continue to have problems paying your bills. Stop overspending and live within your means, once you have your debt paid off do you really want to be in the same boat again?

How do I find a Debt Consolidation Company?

There are many companies which can help you make the right financial decisions. It may take some time to find the est company for your financial situation. It’s a good idea to make a list of questions to ask each company and to write down all their answers. You want to know things like how they will protect your privacy, what their fees are, how they charge for services, what are their policies on late payments, etc. A lot of this information may be available online as well.

Debt consolidation works only when you are dedicated to getting out of debt. It can be the best thing you ever did, but only when you understand it correctly and learn from your past mistakes. The best way to stay out of debt is to never get into debt in the first place.

In a Damaged Economy, Can I Lose My 401(k) if My Company Files Bankruptcy?

For quite some time now, the state of the economy has been a cause for concern on a variety of fronts, but one of the biggest concerns voiced was for the future of many individual’s 401(k) plans. After all, the vitality of these funds depends heavily upon the company’s performance that it is tied to, as well as the individuals association with that company—with so many being laid off, how could concern not flow freely?

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Photo by Tax Credits on Flickr

One of the best cures for concern, fear, and every emotion of its kind, though, is knowledge. The best thing that you can do to protect yourself, as well as your 401(k), is to be prepared and to know your options.

In order to assist in this endeavor, below is a list of commonly asked questions about this concern for you to consider, with answers you can add to your knowledge-base. If you want to find out more about how you may be affected, you can check out the Suncorp superannuation calculator.

Q: What happens to my 401(k) if my employer goes bankrupt?
A:
The answer to this question largely depends upon what kind of bankruptcy your employer has filed; it will either be a Chapter 11 or a Chapter 7 bankruptcy. Both will render different results.

Q: What happens as a result of a Chapter 11 bankruptcy?
A:
When this bankruptcy is filed, your employer intends to restructure all of their assets in order to overcome their financial depression. During this restructuring, 401(k) plans may continue on; however, if part of the restructuring is to cut back on benefits, you may lose any matching contributions the company may have made if you’re outside of your company’s designated vesting period.

Q: What happens as a result of a Chapter 7 bankruptcy?
A:
When this bankruptcy is filed, you employer intends to liquidate; when this happens, your 401(k) plan has a high probability of being terminated.

Q: Is there any kind of protection for my 401(k), should a Chapter 7 occur?
A:
Yes; under the Employee Retirement Income Security Act (ERISA) of 1974, the funds held within your 401(k) account must be held separate from company assets and must be protected from creditors; typically, they’re held within a trust or insurance account for safekeeping.

It’s important to keep in mind, however, that any payroll deductions your employer hasn’t yet sent over to the 401(k) will not be recovered.

Q: How often does my employer transfer deductions to my 401(k)?
A:
Your employer is required to transfer all payroll deductions into their individual 401(k) accounts no later than 15 business days past the end of the month within which they were drawn.

Matching contributions that your employer may have been making sometimes occur less frequently (i.e. quarterly, semi-annually, or annually) and therefore might not make the transfer before the bankruptcy occurs.

It’s a good idea to regularly check your 401(k) account statements to monitor this activity, but if your 401(k) comes up a bit short due to bankruptcy, you’ll probably find that the deductions from your most recent paycheck never made it through.

Q: What happens if my 401(k) funds are distributed to me before I reach the age of 59.5 due to company bankruptcy? Am I required to pay taxes on the funds in the account?
A:
If you decide to keep the funds, yes, you will have to pay the same taxes and penalties that you would have paid had you withdrawn your 401(k) before the designated retirement age. You can avoid this, however, by simply rolling the funds from the account over into a new account with a new employer, continuing your 401(k) plan with little, to no, financial interruption.

When is Too Old to Drive?

Once you have been retired for a while, the topic of driving usually comes up.  This may be something that you stop doing because you no longer feel that it is in your (or others’) best interests, or you may be told that holding a driver’s license is no longer an option for you, for a variety of reasons.

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Everyone must acknowledge that they may not possess the capacity to drive throughout their entire lifetime. Getting older does not necessarily mean you are no longer capable of driving, of course. Many persons continue to drive adequately as they age. If one’s capacity to drive is beginning to diminish, there are usually a few signs.

Many people notice their vision is not as strong as it once was, especially in the bright sunlight or in the dark.  If you are feeling that it is more difficult for you to turn and look, checking blind spots, you may also find that this is decreasing your reaction time.  If you notice any sort of change in your driving, such as getting lost or neglecting to stop at stop signs or traffic lights, this too may be symptoms that it is time to have your driving evaluated.  This thought should only be reinforced if friends or family are reluctant to be in the vehicle with you or speak to you about your driving.

Having your driving evaluated is usually divided into two portions, the initial one being completed by an Occupational Therapist who tests vision, physical movement and reaction time ability.  The final portion is typically the driver instructor assessing how you fare on the road.  The final decision of whether to revoke or return your license is usually made by the Occupational Therapist and the driving instructor together.

Many folks are hesitant to have their driving skills assessed due to the fact that they are concerned their license will be revoked, rendering them dependent on others. Simply having your driving evaluated does not mean this is the case of course, however if it does end up that the decision is made to withhold your license, there are a number of options you can think about to get around.

If your license is revoked, this does not mean your days of independence have to be over.  Most cities have public transit which offer a senior’s discount or deal for a monthly or annual pass.  Many senior centers also offer community shuttle buses to and from events at no cost.  Churches typically over free rides to and from service and also often have drop-in visitors if you are finding it difficult to get out.

If taking groceries by foot or on public transit is not an option, many community centers have volunteers who either drive you to do your grocery shopping, or are able to deliver groceries to you.

If you live in a small town or rural area which does not have public transit, think about calling the township as many of this small communities do have volunteers for seniors who can no longer drive.  If nothing of this sort exists where you live, considering speaking with other seniors in the same position and seeing if something new can be arranged.