The Tax Cut and Jobs Act of 2017, which became effective for tax years starting in 2018, significantly impacted many taxpayers. The change impacting the most taxpayers was the enhanced standard deduction and loss of many itemized deductions. Tax forms were also presented differently making it difficult for taxpayers who reviewed their returns in detail to compare year-to-year. While there were many changes, there are still some important tax savings strategies that may help you pay less in taxes. Which ones apply to your situation? Ask yourself the following questions…
Atlanta Financial Blog
The Importance of Personal Umbrella Policies
In a blog that I wrote a few months ago regarding asset protection, I mentioned that a generally efficient and expedient way for many people to protect their assets is by having an appropriate umbrella liability policy in place. However, this is a part of a comprehensive financial plan and strategy that is often either overlooked or not kept current by many people, so I wanted to follow up with some more detail on the importance of umbrella liability insurance policies.
Why do you need an umbrella insurance policy? How would you answer the following questions?
• How would you pay for medical expenses and damages if someone was injured or hurt in your home or another property you owned, and filed a big claim for damages? Are you protected?
• What if you are at fault in a serious car accident and the people in the other car are badly hurt, incurring large medical bills and they sue you?
• If you have pets, or other animals, what if you got sued because someone suffered significant injuries caused by an animal that you own?
These types of things can happen to anybody, so, it just makes sense to have an up to date umbrella liability policy if you have assets that you want to protect.
Why Have an Umbrella Policy?
Most likely, you insure your home and vehicles. You may also insure other types of things you own (boats, rental property, etc.). But, the question is do you have enough coverage, along with the right types of coverage to protect your personal wealth? If you haven’t reviewed or updated your insurance coverages in a while, you may find that they fall short of what you need.
For example, a common liability coverage structure for an auto policy is to cover $100,000 for injuries per person, $300,000 for injuries per accident, and $50,000 for property damage per accident.1 These coverages are not likely to be enough if you find yourself involved in a serious accident. For example, people who get hurt may seek much more than $300,000 in damages. Jury Verdict Research said that 13% of personal injury liability awards and settlements reach at least $1 million. 2
In situations where you are facing claims in excess of your insurance policy’s coverages, an umbrella liability policy can make a big difference. An umbrella policy kicks in when your other underlying liability policy (such as your car insurance) hits its limit. Using the common auto liability structure described above, let’s say you are involved in an accident and are being sued for $1 million for injuries to people involved in the accident. In that example, if you had an umbrella policy with $1 million or more of coverage, it would cover the damages that exceeded the auto policy’s coverage limits so you don’t have to use personal assets to settle the claim. And the insurance company will even cover all the costs to defend up within those policy limits as well, which can be a huge relief mentally and financially.
How Much Do You Need?
To begin, in order to have an umbrella policy, you need to have the other insurance policies, such as car or homeowner’s insurance, already in place with appropriate liability coverage. The insurance company generally specifies the required amount on the underlying policy. This is to ensure that where your car and homeowner insurance policies end, the umbrella policy should take over so there are no gaps in coverage.
A general rule of thumb is that if your net worth is $20 million or less, make sure your umbrella policy covers what you’re worth. If you are worth more than $20 million, it becomes a question of how much risk you’re comfortable taking on. 3 Normal policy limits for umbrella liability coverage run from $1 million to $5 million.4 Policies more than $5 million may require a specialty policy.
The Cost of Coverage
How much will a comprehensive umbrella policy cost? A number of factors determine the cost of coverage, including but not limited to:
• Number of homes and where they are located
• Number of cars and the number of people being covered (including their age and driving histories)
• Other motorized transport (boats, planes, ATV’s, etc.)
• Ownership of vacant land or rental property
• Amount of existing liability coverage you have before adding the umbrella policy
The good news is that umbrella policies tend to be relatively inexpensive. Here are some common examples of the cost of annual umbrella liability coverage4:
• $1,000,000 coverage-$150 to $300
• $3,000,000 coverage-$275 to $425
• $5,000,000 coverage-$375-$525
What to do? If you don’t have an umbrella policy, or if you have not reviewed your policy’s amounts or coverages in a while, please contact your Atlanta Financial advisor and we will work together with you and your insurance professional to make sure you’re well covered by your policy.
1 September 28, 2018 www.nerdwallet.com Lacie Glover “What Liability Car Insurance Covers and How Much You Need”
2 November 29, 2018 www.insurance.com Les Masterson “Increasing Liability Coverage for the Best Auto Insurance Protection Comes Cheap”
3 Source: AES Nation, LLC
4www.insurance.com Gina Pogol “When it Rains It Pours” April 19, 2019
Divorce can be one of the most painful transitions an individual or family can experience. And once the litigation is done, family members often continue to suffer. Adults often experience a decline in their physical and emotional well being, with a heightened rate of stress-induced illnesses, depression and a loss of identity and social connections¹. Children often suffer in less obvious ways, with educational and adjustment problems in early childhood, and emotional problems related to the divorce increasing in young adulthood². Many couples fight hard for their marriage and family, but simply aren’t able to overcome their differences. What are the top causes they report for ending their marriage? Most of us know…
We’ve all experienced this in one way or another: the paycheck lands, we think that we have recommitted our mind to being thrifty and frugal, but then something (or someone, reflection in the mirror included) happens to derail the process. We know it is necessary. We understand the benefits. But it isn’t fun! YOLO, right?! Sure, denying ourselves today the zeal of instant gratification is NOT enjoyable, but it IS responsible.
Whether you are just beginning the “adulting” journey and are trying to get a handle on what having personal, financial accountability means, or you’re a cashflow veteran and you’re pushing forward with a much needed over-haul of your money management repertoire, these 5 tips are essential to remember when taking command of our favorite 6 letter curse word… the BUDGET…
Recently, I ran across an article about the best (and worst) states for retirement. It caught my attention because the “best” state turned out to be …. Nebraska! Many would be surprised at this. After all, who would retire in such a cold place in the middle of the country? Actually, I was not at all surprised. I was born in Lincoln, Nebraska and spent the first twelve years of my life there. I still visit relatives in the Cornhusker state and enjoy the wonderful people, slower pace and beautiful scenery the state has to offer.