College Financial Aid

College Financial Aid

If you are getting ready for college or have children who are nearing the end of high school, today’s blog will be well worth the read as we will discuss financial aid for college.

Financial aid can consist of the following: loans, grants, scholarships and work study. Grants and scholarships are preferred because they do not have to be paid back, unlike student loans which does have to be paid back with interest or work study which requires a work commitment. In general there are three main sources for college grant aid: the government, state higher education agencies, and colleges.

To be considered for any type of grant aid, you or your child should file for the federal government’s financial aid application (FAFSA). In addition private colleges, usually require the CSS Profile form of their own individual aid form. The FAFSA and CSS Profile can be filled out and submitted online (is free but the CSS Profile has a fee). Please note that these forms do take some time to fill out, but it will be worth it. Not only are these forms a prerequisite to various types of grant aid, but some colleges may require them in order for students to be eligible for college merit scholarships. Keep in mind that students must reapply for financial aid annually.

U.S. Government Grants

There are two main federal grants for college; Pell Grants and Federal Supplemental Educational Opportunity Grants (FSEOGs). Both are based on financial need.

The Pell Grant program is the United States’ largest financial aid grant program. Pell Grants are made available to undergraduate students with exceptional financial need and are the foundation of every undergraduate student’s financial aid package (for those who qualify). Graduate students are not eligible. Pell Grants are administered by the federal government and awarded on the basis of college costs and financial need. Financial need is based on factors such as family income and assets, family size and the number of college students in the family.

The second largest program is the FSEOG and it is available to students who present the greatest financial need. Priority is given to Pell Grant recipients. The FSEOG is a campus based program, meaning the financial aid office of each college administers it. Every college receives a certain amount of FSEOG funding from the federal government every year. Even if a student is eligible based on their financial need, the college may have already used up all the funds for that year.

State Grants

Many states offer programs as well, each one is different, and they tend to prefer state residents attending in-state schools. For more information, please contact your state’s higher education agency.

College Grants

Many colleges offer specialized grant programs. This is true for older schools with many alumni and large endowments. These grants are usually based in scholastic ability or financial need.

For more information on college financial aid, college funding click here or call our office at 201-342-3300. One of our associates will be happy to speak to you.

Avoiding Probate

Avoiding Probate

Many people will have their estate go through probate after they pass on. But what is probate? Why should we be concerned about it? And how can we avoid probate? On today’s blog we will answer all these questions and more.

Probate refers to the court proceedings that conclude all of your legal and financial matters after your death. The probate court distributes your estate according to your wishes—if you left a valid will—and acts as a neutral forum to settle any disputes that may come up regarding your estate.

There are a number of problems with the probate process that make it worth avoiding.

First off, the probate process may take a great deal of time. Often, it will take months or even more than a year—complex or contested estates can take even longer. With few exceptions, your heirs will have to wait until probate is over to receive their inheritance.

As for the cost of probate, it can vary from state to state depending on where it is carried out. Though all states require the payment of the court fees (which may only be a few hundred dollars), attorney fees will add significant amounts to this cost. Typically, attorney fees are based no what is reasonable for the tasks at hand. These fees can go up dramatically if the will is contested or when something extraordinary arises.

Depending on your state, probate and administrative fees can take up between 6 and 10 percent of your estate. That percentage is calculated before any deductions or liens are taken out.

Fortunately, there are strategies you can use to help avoid the probate process altogether. A trust may enable you to pass your estate on to your heirs without ever going through probate at all. While trusts offer numerous advantages, they incur upfront costs and ongoing administrative fees. The use of trusts involves a complex web of tax rules and regulations. You should consider the counsel of an experienced estate planning professional and your legal and tax advisers before implementing such strategies.

To learn more about avoiding probate, click here, or call our office at 201-342-3300. One of our associates will be happy to speak to you.

What is Asset Allocation?

What is asset allocation?

Asset allocation is about not putting all your eggs in one basket. It is a systematic approach to diversification that can help you determine the most efficient mix of assets based on your risk tolerance and time horizon.

What asset allocation seeks is to manage investment risk by diversifying a portfolio among the major asset classes (stocks, bonds, and cash alternatives). Each one has a different level of risk and potential return. At any given point, one asset may be increasing in value while another may be decreasing. Diversification is a way to help manage investment risk. And although asset allocation and diversification do not guarantee a profit or protect against a loss, it can help cushion the blow when one asset class drops in value.

You may protect your portfolio from a major loss from a single asset and ride out market fluctuations by dividing your assets this way. It is also important to understand the risk versus the return trade off—the greater the potential return, the greater the risk.

As a result, your portfolio should be based on your risk tolerance. Generally, you should not place all your assets in those categories that have the highest potential for gain if you are concerned about the prospect of a loss. It is essential to find a balance of asset classes with the highest potential return for your risk profile.

Other important factors to consider creating an asset allocation strategy are investment goals and time horizon. Ask yourself: what do I want to accomplish? Do you want to buy a new house or car soon? Do you want to pay for your children’s college education? When you retire, do you aspire to travel or buy a vacation home? You should consider all your aspirations when outlining an asset allocation strategy.

If you would like to learn more about asset allocation, click here, or for a more personal assessment to see what’s best for you, call our office at 201-342-3300. One of our associates will be happy to take your 

Auto Insurance

Today’s article on the types of auto insurance may serve as a great tool to learn about the types of car insurance available. There are four main types of auto insurance: liability, uninsured or underinsured motorist, collision and comprehensive and personal injury. It is required by most states to carry certain types of auto insurance.

Liability Insurance

Liability insurance is usually considered a necessity and many states have a minimum legal requirement for liability coverage. This type of insurance helps protect against injury claims and property-damage suits (up to policy limits) brought by other drivers, pedestrians or property owners if you are at fault in an accident. Your liability policy helps pay for injuries suffered by others and the cost of damage to other people’s property, as well as legal costs if necessary, up to a dollar limit.

You can choose a policy with an overall limit for all liabilities or you can select one with separate limits for (1) individuals injured in an accident, (2) all injuries in the same accident, and (3) property damage.

Uninsured or Underinsured Motorist Coverage

A policy with an uninsured motorist provision will pay damages if an uninsured motorist or a hit-and-run driver injures you and/or your passenger(s). you cannot buy more coverage against an uninsured driver than you carry yourself in liability. For example, if you carry $25,000 coverage per person and $50,000 per accident, you can buy only up to those amounts of coverage against an uninsured driver. You can also add protection against inadequate insurance coverage by another driver who injures you or damages your property in an automobile accident. This provision means that your policy will pay for injuries or damage that the other driver's policy does not.

Collision and Comprehensive Coverage

Collision insurance reimburses you for repair costs to your vehicle that were caused by a collision. While this coverage is great, please note that it can also be the most expensive. Comprehensive coverage helps pay for damage due to fire, storm, vandalism, or theft. If a lender holds a lien on your car, the lender will likely require you to pay for both collision and comprehensive insurance. To lower the cost, of this insurance, you may choose a higher deductible. Although this increases your out of pocket expenses in the event of an accident, it may result in lower premiums.

Personal Injury Protection

Residents of states with “no fault” insurance, must buy personal injury protection. Personal injury insurance will pay your medical expenses in the event of a car accident, regardless of who was at fault. When you purchase this protection, you agree not to sue for any suffering or injury you may sustain.

If you would like a quote for auto insurance, click here.

For more information on auto insurance, click here, or call our office today 201-342-3300. One of our associates will be happy to speak to you.

Life Insurance for Business Owners

Did you know that life insurance is not just for individuals? Life insurance can be bought by a business owner to insure the business in the event of the death of a key employee. On today’s blog we would like to discuss life insurance policies for business owners and what one can do with the benefit money.

Purchase a buy-sell agreement

Generally, with a buy sell agreement it is determined before hand what will happen if the owner or a key person dies, or leaves due to a personal decision or disability. The death benefit from a company-owned life insurance policy can be used to purchase the decedent’s interest in the company from their heirs.

Replacing lost income

In the event the business continues, there may be a time where the business closes doors for a bit while survivors make a new plan to move forward. If this were to happen, the death benefit could be used to replace lost revenue or pay for costs associated with keeping the doors open it may also help the surviving owners avoid borrowing money or selling assets.

Replacing lost income

Most likely, any business owner has family members that are dependent on income from the business. If they were suddenly gone, the proceeds from the death benefit could replace the family’s lost income for a little while until they figure things out.

For a more in-depth article about life insurance for business owners, click here, or for personalized attention, please feel free to call out office at 201-342-3300. One of our associates will be happy to speak to you.

529 Plans

If you’re like most parents, chances are you would like to find the most suitable way to save for your children’s college education. On today’s blog, we at Federal National Funding would like to introduce you to the 529 plan.

A 529 plan (also known as a qualified tuition plan) is a popular way to save for higher education. Perhaps you have heard of the original form of the 529, a state operated prepaid tuition plan that allows you to purchase units of future tuition at to today’s rates with the plan assuming the responsibility of investing the funds to keep pace with inflation. Many state governments guarantee that the cost of an equal number of units in the sponsoring states will be covered regardless of investment performance or the rate of tuition increase. Remember, each state has different rules and restrictions. Prepaid tuition programs will typically pay for future college tuition at any sponsoring state’s eligible colleges or university—some will even pay an equal amount for out of state or private institutions.

The other type is the savings plan. It’s close to an investment account but the funds accumulate tax deferred. Withdrawals from state sponsored plans are free of federal income tax as long as they re used for qualified college expenses. Many states also exempt withdrawals from state income taxes for qualified for higher education expenses. Unlike prepaid tuition plans, contributions can be used for all qualified college expenses (tuition, fee, books, equipment, supplies, room and board) and the funds can be used at all post-secondary schools in the United States. Remember that there is a risk associated with this plan—investments may not preform as well as anticipated and may even lose money.

In many cases, 529 plans place investment dollars in a mix of funds based on the age of the beneficiary with account allocations becoming more restrictive as the time for college draws closer. Recently, states have hired professional money managers to actively manage and market their plans, so a growing number of investors can customize their asset allocations. Some states enable account owners to qualify for a deduction on their state tax returns or receive a small match on the money invested. Earnings from 529 plans are not taxed when used to pay for eligible college expenses. And there are even consumer-friendly reward programs that allow people who purchase certain products and services to receive rebate dollars that go into state-sponsored college savings accounts.

An advantage to the 529 is that contributions are considered gifts to the beneficiary, meaning that anyone can make contributions of up to $14,000 a year without facing gift tax consequences. Additionally, contributions can be made in monthly installments or be paid in a lump sum.

For more information about 529 plans click here or call us today at 201-342-3300. One of our associates will be happy to help you.

Long Term Costs

If you have been meaning to learn about long-term care costs, today’s blog is just for you.

The majority of Americans don’t have a plan when it comes to paying for long-term care. In fact, many Americans simply live their lives hoping they won’t need it. But in the event that you or your loved ones do need long-term care, there are options for covering the costs.

Self-Insurance

When a person self-insures, they pay for the costs themselves and have sufficient income to cover the costs. Keep in mind that although a person may be able to pay for long term care out of pocket now, they may not be able to in the future due to rising costs.

Medicaid

Medicaid is a joint federal and state program that covers medical bills for the needy. If you qualify, it may help you pay for long-term care costs. But, to qualify for Medicaid, you need to have few assets or have to spend down your assets. The state laws determine income and resource limits.

To get Medicaid assistance, you may have to transfer your assets to meet those limits. But this can be complicated because there are laws made to discourage asset transfers for the purpose to qualifying for Medicaid. We highly suggest meeting with an advisor such as us at Federal National Funding to discuss new Medicaid rules. If you would like to learn more about Medicaid, click here.

Long-Term Care Insurance

This type of policy can help transfer some of the economic liability of long-term care to an insurance company in exchange for regular premiums. Long-term care insurance can help pay for skilled care, intermediate care, and custodial care. Most policies pay for nursing home care, and comprehensive policies may also cover home care services and assisted living. Insurance can help protect your family financially from the potentially devastating cost of a long-term disabling medical condition, chronic illness, or cognitive impairment.

A complete statement of coverage, including exclusions, exceptions, and limitations, is found only in the policy.

Long-Term Riders on Life Insurance

A number of insurance companies have added long-term care riders to their life insurance contracts. For an additional fee, these riders will provide a benefit — usually a percentage of the face value — to help cover the cost of long-term care. This may be an option for you.

To learn more about long-term care costs, Medicaid, or long-term care riders on life insurance, click here or call us at 201-342-3300. One of our associates will be happy to speak to you.