Blog   Tagged ‘financial advisor’

Financial Word of the Week: Power of Attorney

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Financial Word of the Week - power of attorney

A durable power of attorney is a legal document where you as the “principal” designate an agent to handle the matters described in the document during your lifetime. A power of attorney is “durable” only if it provides that your agent may act even if you are disabled. In addition, there are many different kinds of power of attorney:

  • ordinary – revocable and automatically terminates upon the death or incapacity of the principal
  • springing – become effective only when needed, at some future date or upon some future occurrence, usually the principal’s incapacity
  • general – authorizes an agent to transact business for the principal
  • special – limits the agent’s authority to only a specified matter.
  • durable – remains in effect during the principal’s incapacity

Powers of attorney are central part of most estate plans, and provide a mechanism outside of court guardianships and conservatorships for management of your affairs. It can be a useful complement to a revocable trust, as the trustee would not have powers regarding assets not held in the trust. Rather, the agent can deal with assets held outside of the trust and other business that the trustee may not be able to handle, such as signing your income tax returns or dealing with a retirement asset.

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Financial Word of the Week: Credit Shelter Trust

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Financial Word of the Week - credit shelter trust

A Credit Shelter Trust (also known as family trust, non-marital trust or bypass trust) is one that is usually employed as part of a married individual’s estate plan. Upon the death of the first spouse, it is funded with the estate tax exempt amount, sometimes referred to as the Unified Credit. Such a trust is often structured to provide benefits to a decedent’s surviving spouse, without triggering estate tax upon the second spouse’s death. Property in the credit shelter trust can then pass through to descendants upon the death of the surviving spouse with no estate taxes paid by the estate of either spouse. In 2015, the estate tax exempt amount is $5,430,000.

In light of the high exemption amount, it is always a good time to update your estate plan with your legal advisor.

 

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Financial Word of the Week: Estate Tax

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Financial Word of the Week - estate tax

If you’re an heir to a relative or friend’s estate, you need to know what an estate tax is AND realize that there’s a good chance it may not apply to you as it once would have in the past. Estate tax is a transfer tax imposed when someone passes away and leaves his or her assets to you. Currently, the federal government and 16 individual states charge an estate tax.

The federal estate tax rate is currently at 40 percent. Fortunately, the tax code allows all individuals to pass a certain amount of assets (either during their lifetime, at death or a combination of both) before those transfers are subject to the federal estate tax. This amount has jumped dramatically in the past 15 years, going from $675,000 in 2001 to $5,430,000 in 2015. As a result, many estates will not be subject to a federal estate tax.

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Financial Word of the Week: Corporate Fiduciary

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Financial Word of the Week - corporate fiduciary

A corporate fiduciary is a financial institution that exercises fiduciary‡ responsibility for the benefit of an individual or individuals. Mostly commonly, it’s children and the elderly who need fiduciaries. A fiduciary exercises a high standard of care in managing another’s money or property. Fiduciaries can be known by many names – trustee, executor and conservator are a few common examples of fiduciaries in an estate planning context. For more, read our post on “What are fiduciaries and why do you need them?”

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Corporate fiduciary vs. individual fiduciary

Some of the advantages to hiring a corporate fiduciary over an individual fiduciary include gaining the institution’s financial expertise, neutrality, longevity, and high standard of care. Corporate fiduciaries have these pros:

  • many years of experience in managing and investing funds for clients,
  • no ties to any one beneficiary, and so will be in the best place to follow the grantor’s wishes,
  • longevity that eliminates concerns that death or disability of an individual fiduciary will  interfere with management of assets, and
  • will exercise a high standard of care, as they have internal safeguards and audits to ensure compliance to state and federal regulations governing fiduciary conduct.

Regardless of the nature of the role, the aim of a corporate fiduciary is to make the best financial decision for the beneficial owner of any assets under its supervision.

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Financial Word of the Week: Charitable Remainder Trust

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Financial Word of the Week - charitable remainder trust

Conceptually, a charitable remainder trust (CRT) is similar to a charitable lead trust (CLT), except the payouts happen in the reverse order. In fact, a CRT is a trust that provides for distributions  to one or more individuals for a term specified under the terms of the CRT, with the balance passing to one or more charities at the end of the specified term.  The individuals generally receive an annual payment equal to a fixed annuity amount or a percentage of the trust assets valued annually.  The individuals will generally receive these payments either for a term of years (up to 20 years) or throughout the lives of one or more named individuals.

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Unlike a CLT, a CRT is considered a tax-exempt trust, and the trust itself does not pay any taxes. This allows the donor a current charitable deduction for contributions made to the CRT with the amount of the deduction being the present value of the remainder interest that will pass to charity. This makes a CRT a great vehicle for highly appreciated assets as the assets can be contributed to the CRT and the assets will not generate any tax to the trust when sold inside the CRT. However, it is important to note that the payments made to the individuals, may be subject to taxes at the individual level. Also, it is important to note that in order to receive the tax benefits and to qualify as a CRT, the IRS has placed certain restrictions on how a CRT must be structured, this is in part to ensure that a portion of the assets will in fact pass to the designated charities.

For more information on estate planning, check out our post on the benefits of a will.


UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Financial Word of the Week: Charitable Lead Trust

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Financial Word of the Week - beneficiary

Last week, we told you what a beneficiary is and advice on how to name them in your will, trust or life insurance policy.

A charitable lead trust (CLT) is an irrevocable trust that provides an income interest to one or more charities with the remainder either reverting back to the donor, or passing to one or more individuals named by the donor. The charities generally receive an annual payment equal to a fixed annuity amount or a percentage of the trust assets valued annually.  The trust can be established for the charitable payout to last for a term of years, based on a measuring life, or a combination of the two. After the end of the charitable period, the remaining property will pass to the individuals as specified in the trust (frequently the family members of the donor). The grantor may qualify, depending on the arrangement, for a current income tax charitable deduction for the present value of the charitable gift.

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CLTs are a highly useful way to simultaneously support a charitable organization of the settlor’s choice while still retaining the assets long term for the use of the settlor or his beneficiaries.

For more information on estate planning, check out our post on the benefits of a will.


UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Financial Word of the Week: Beneficiary

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Financial Word of the Week - beneficiary

The technical definition of a beneficiary is one who benefits from the act of another.  In the financial world, the term beneficiary is used in many contexts, generally to describe an individual or entity that is to receive an interest in property.

Some of the most common uses of the term beneficiary include:

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  • naming a beneficiary of a life insurance policy, retirement plan or IRA,
  • designating the individuals who are to receive an interest in property upon the death of the original owner (generally through the use of a Will or trust), and
  • using a transfer on death or pay on death designation on a financial account (such a s a checking account, savings account or investment account).

When you’re designating beneficiaries, you can generally name individuals, charities, organizations or trusts. You might even list a group of individuals, such as surviving family members.

Many financial advisors urge clients to review their list of beneficiaries as often as possible, but most importantly after a life-changing event in which their financial priorities may have changed. This may include a death of a loved one, birth, marriage, divorce, a significant change in the individual’s financial situation or a significant change to the tax law.

It’s important to be as specific as possible when naming beneficiaries to avoid any confusion once the benefactor passes away. You should state how the benefits are doled out if one or more beneficiaries are not able to receive their distribution. This could occur if a person lists four children as beneficiaries, with each listed to receive one-fourth of the estate. If one of those children passes away before the benefactor, it could affect the distribution process if clear conditional instructions have not been included. You should also consider whether you would like the named beneficiary to have complete access to the assets or if you would like to restrict access in some manner.  For example, for many assets it may be possible to name a trust as the beneficiary and have the trust provide for limited distributions to the individuals for their health, education, maintenance and support (or however the benefactor desires to limit the distributions).

Because the naming of beneficiaries can have a substantial impact on your financial and estate plan, it is important to visit with your attorney or financial planner to see what options are available and to determine how such designations impact your individual plan.

For more information on estate planning, check out our post on the benefits of a will.


UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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How to use a home equity line of credit

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Finding the treasure within your home
home improvement

We’ve walked you through the steps to buying a new home. Before you finished unpacking, we’re guessing you already started a list of improvements and additions to give your new home a personal touch.

Reports like this one show that you’re not alone. Today, home improvement is becoming a growing trend for many American homeowners. Much of this growth is attributed to a rebound in the housing market and the highest consumer confidence scores since 2008.

So should you tackle a home improvement project?

Whether it’s updating your bathroom or adding more space to accommodate a growing family, improving your home can be a fun experience and a strategic method of increasing its fair market value. Research has shown that adding a deck and turning your attic into a bedroom raise the most value, returning approximately 85 percent of your original investment.

If you are considering making a home improvement, using a home equity line of credit (HELOC) to borrow against the equity in your home may be a good solution for financing the project. With today’s low interest rates and steady rise in home prices, you may have greater opportunity to borrow against your equity.

Some advantages:

  • You can make purchases with a HELOC debit card. Using the card is an easy and efficient way for you to pay for needed items.
  • The flexibility factor – the home equity line is something you can access as many times as you need to, as long as the credit is available. But remember to be disciplined with your spending. If you would like to use the equity in your home for a purchase, the wisest thing to do is use it for investments that help retain or add value to your home.

Give yourself an additional level of comfort by seeking counsel from your banker or financial advisor. This person is experienced in carefully reviewing all the home equity options to ensure you have the appropriate financial resources to complete your project in the most strategic way possible.

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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Ms. Michelle Nischbach joined UMB in 2010. As Territory Sales Director in the consumer bank, she is responsible for overseeing operational and advisory excellence within five primary operating markets: St. Louis, Greater Missouri, Oklahoma, Nebraska and Arizona. Ms. Nischbach has 26 years of experience in the financial industry and earned her MBA from Lindenwood University.



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How to pay for your children’s college free of stress and debt

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College tuition is rising steadily. The price of a four-year public university has risen 2.3 percent (1.6 percent for private college), and that is on top of inflation, according to the College Board. Those increases reflect the average of the last 20 years and include tuition, fees, room and board.

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Sound intimidating? Good news, these numbers don’t have to be daunting for parents. Having a plan to properly fund these goals is half the battle, and definitely decreases anxiety. Here are some tips as you begin savings for your child’s higher education:

  1. Know the numbers – If only we had a crystal ball to predict exactly what tuition will cost when your child gets to college. We do, however, have tools that can forecast costs and assist in planning. Talk with your financial advisor—he or she will be able to help you estimate and plan for these expenses.
  1. Determine how much to fund – Once you have an expected figure, talk about how much you want to fund. There are differing viewpoints on what percentage parents and children should each contribute to education through scholarships, loans and tuition payments, so discuss this with your family and then set goals based on what everyone feels is appropriate.
  1. Establish investing timetable – The next step is to put your financial goal in writing and begin weighing options on how to achieve the desired savings. Designating monthly or annual contributions to your preferred education savings vehicles is a great way to start. However, you should feel comfortable adjusting these over time on an as-needed basis. Don’t become discouraged if projected savings do not align exactly with the end goal. The most important thing is to consistently save something to ensure the funds continue to grow.
  1. Evaluate options – There are a variety of college savings vehicles available, including 529 Plans and Coverdell Education Savings Accounts. Your financial advisor can make recommendations that are in line with your strategic plan.
  1. Communicate the strategy – When the time is right, start the conversation with your children about their educational paths. Talk about the financial support you plan to provide, and where you expect them to share responsibility. This will help your children begin establishing their own goals and promote accountability for educational expenses as well.

Saving for your children’s college expenses can seem like an overwhelming task, but it is much easier to manage with the right planning and support. Consider these tips and talk with your advisor—those college enrollment packages will arrive before you know it!

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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

 


Ms. Stokes is a senior vice president and director of Private Banking at UMB. She is responsible for driving sales and relationship management activities. She works closely with the Wealth Management leadership team and regional presidents to grow business and helps to develop roles in wealth management, relationship management and presentation skills. She joined UMB in 2009 and has more than 30 years of experience in the financial services industry. She earned a bachelor’s degree in business administration from the University of Missouri- Kansas City and a Bachelor of Arts from the graduate school of retail banking.



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My Home is Worth What? (Hometown Perspective: Denver)

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UMB serves communities across an eight-state footprint. Each region is different, with its own personality and local economy. With that in mind, we’re launching a new Hometown Perspective series where you can gain insight into UMB and the communities we serve.

HomeAs a recent home buyer in Denver, I was pleasantly surprised to see that my home had increased in value by almost 40 percent over the last several months. No, I’m not a real estate genius with an uncanny ability to spot a home at low price and flip it for a profit.  Actually, I bought my home with the idea that I would live there for the rest of my life.

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So why do I care about a rise in home value if I’m not planning to sell any time soon, if ever? The answer is that my home is a series of projects and this boost in value gives me the equity to spend on home improvements. I will be able to add a floor over the subfloor in the living room and remodel the kitchen with new cabinets and a double oven with a warming drawer. This has been the plan all along but now I can complete these projects much sooner than I expected.

 

So if you’re like many in the Denver area and your home has increased in value recently, what should you do? Put a “For Sale” sign in your front yard? Head to your local bank and apply for a Home Equity Line of Credit (HELOC)? It all depends on your own situation and your long-term plan.

  • Selling

    If you’re thinking about selling your home because the value has increased, you might consider sprucing it up a bit and then contacting your realtor. Add a coat of paint to some of the walls or have the carpet professionally cleaned. Then call up a real estate professional to work with you on selling your home.

  • Renovating

    If you plan to stick with your home for the long haul, it might be a good time to consider using your equity to start a remodeling project. If you have any questions or concerns, reach out to a trusted source of advice like your financial advisor or local banker.  They are usually well-equipped with experience, knowledge and tools that can help you decide.

Whatever you choose to do, be cautious and don’t jump into any big decisions without doing research. Look up the value of your home on sites like Zillow* and Trulia*. If you’re planning to apply for a HELOC, talk to a financial professional at your local bank about how much of your home’s value to borrow. You might even consider getting multiple opinions. If you plan to sell, you can consult your realtor on the best steps to take to prepare your home and when is the best time to put it on the market.

While you can work with a good real estate market to your advantage, your home is an asset that you should use wisely.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

* UMB Bank, n.a. has provided these links for informational purposes only, and in no way endorses or insures the accuracy of the information contained therein.


Ms. Hales is vice president, financial center manager for the UMB financial center located in the Capitol Hill neighborhood in Denver, Colo. She is responsible for planning and executing sales routines with branch staff, coaching all team members. She joined UMB in 1990 and has 23 years of experience in the financial services industry.



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