Author - Lon Jefferies, CFP®, MBA

1
Uniform Transfer to Minors Act (UTMA)
2
Coverdell Savings Accounts
3
Utah 529 College Savings Plans
4
The Power of Compounding
5
Your Financial Advisor: Friend or Foe

Uniform Transfer to Minors Act (UTMA)

Uniform transfers to minors accounts allows someone to make a gift or a transfer of property to a minor without setting up a trust. All transfers to UTMA accounts are considered irrevocable and the donor cannot reclaim the gift or change the beneficiary of the account.

An adult is designated as the custodian to manage the account for the benefit of the minor until the child reaches the age specified in the statute. Custodians have certain powers and responsibilities under these laws and they should consult with legal counsel to understand their obligations with respect to the account. Once the …

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Coverdell Savings Accounts

Unlike 529 plans, the rules governing Coverdell Savings Accounts are dictated by the IRS. Thus, there is no variation in these plans from state to state.

Contributions to Coverdell accounts are not deductible on either a federal or state income tax return. However, similar to 529 plans, earnings withdrawn from these accounts are tax-free if used to cover qualified education expenses. Also similar to 529 plans, funds withdrawn that are not utilized for education expenses are taxed as ordinary income and subject to a 10 percent penalty.

Coverdell accounts offer several advantages over 529 plans. First, the definition of qualified …

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Utah 529 College Savings Plans

Utah 529 College Savings Account

Utah offers one of the most attractive 529 plans in the country. Like all 529 plans, contributions to a Utah 529 plan are not deductible on a federal income tax return. However, the State of Utah will allow the contributor to claim a 5 percent tax credit on up to $1,650 per beneficiary if the contributor is single, or $3,300 if the contributor is married filling jointly. A tax credit is a dollar-per-dollar reduction of a tax liability, and is thus more valuable than a tax deduction. Consequently, the state will pay as much as $82.50 of a single contributor’s …

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The Power of Compounding

Remember all the time we spent as children dreaming about what it would be like to be a millionaire? Surprisingly, if we had spent that same amount of time running a candy store or a lemonade stand, we would all be on track. Why didn’t anyone tell us it was so easy! Of course, many adults don’t comprehend the power of compound interest, so I suppose we should give ourselves a bit of a break, but here is the secret: assuming historical investment rates of return hold steady, a 10-year old would need to invest only $25.52 a month during …

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Your Financial Advisor: Friend or Foe

The volatile market of 2008 highlights the importance of focusing on controllable variables. A basic factor investors often overlook is the value added by their financial advisor. Here are five questions to ask your financial professional:

1. What education does your advisor possess?

Insurance representatives, annuities salespeople and stockbrokers all refer to themselves as “financial advisors.” Are these individuals qualified to provide objective, comprehensive financial advice and act in their clients’ best interest? While these salespeople are well equipped to illustrate how their particular product is appropriate for any given client, they may not have the education or financial motivation …

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