Claire Hunsaker, Author at The Free Financial Advisor

How Does a Home Warranty Transfer Work?

June 23, 2022 by Claire Hunsaker Leave a Comment

When you sell a home, the warranty on the appliances usually goes with it. But what happens if the buyer wants to transfer the warranty to their own name? Here’s how it works.

What is a home warranty and what does it cover?

A home warranty is a service contract that covers the repair or replacement of major home systems and appliances that break down due to normal wear and tear. Examples include:

The repair or replacement of major home systems, such as the heating and cooling system
The repair or replacement of appliances, such as the refrigerator, washer, and dryer
Coverage for events like water damage or a power surge

Most home warranties last for one year, though some companies offer multi-year contracts. And you can renew them.

What is a home warranty transfer?

Home warranties are transferable service agreements. In fact, it is common for a real estate agent to purchase a home warranty for their clients as a gift that offers additional protection during the first year of ownership.

A home warranty transfer is when the current owner of a home with an existing home warranty transfers the coverage to the new owner. This can be done at the time of sale, or anytime after the sale has been finalized.

How does a home warranty transfer work?

When you are ready to sell your home, you can transfer the home warranty to the new owners. This is typically done by contacting the home warranty company and providing them with the new owner’s contact information. The home warranty company will then send the new owner a welcome packet that includes all the details of the coverage.

In most cases, the home warranty will automatically transfer to the new homeowners. However, there may be a fee to do so. The best way to find out is to contact the home warranty company directly.

What are the benefits of transferring a home warranty

There are several benefits to transferring a home warranty to the new homeowners:

It offers peace of mind to the new homeowners, knowing that they have coverage in case something goes wrong with a major appliance or home system. This can be particularly powerful in a time of recession as families are trying to survive inflation.
It can save the sellers money, as they won’t have to pay for any repairs or replacements out of pocket.
It can be used as a selling point when marketing your home.
It can help you close the sale of your home, since many buyers are looking for properties that come with a home warranty.
In some cases, it may even help you get a higher price for your home.

If you are selling your home, be sure to ask your real estate agent if they recommend transferring the home warranty to the new homeowners. It may be just what you need to close the deal.

Tips for choosing a home warranty

When shopping for a home warranty, there are a few things to keep in mind:

Research the warranty company on a site like Trustpilot, and read the reviews. Before signing up for a home warranty, be sure to read online reviews to see what other customers have said about the company. This will give you an idea of what to expect
Make sure you understand what is and is not covered. Some home warranty companies have restrictive coverage plans that exclude certain items or limit the amount they will pay for repairs.
Pay attention to the deductibles. Home warranties typically come with a service call fee, which is the amount you have to pay when you make a claim. The deductible is usually around $100, but it can be higher depending on the company.

Claire Hunsaker

Claire Hunsaker, ChFC®, is a Chartered Financial Consultant featured in American Express, Forbes, Parents, Real Simple, and Insider. She offers free financial planning for single women through AskFlossie, where she is CEO. Claire holds an MBA from Stanford and is an IRS-certified Tax Preparer. She has 20 years of business and leadership experience and approaches money topics with real talk and real humor.

Five Financial Questions Women Should Ask About

June 9, 2022 by Claire Hunsaker Leave a Comment

It’s no secret that women face unique financial challenges. From the gender pay gap, to managing household finances, it can be tough for us to make informed decisions about our money. To empower ourselves and make sure we’re on the right track financially, we need to ask the right questions. Here are some of the most important ones.

What Insurance Should I Have?

Insurance is a big (and often surprising) topic for women: we live longer, are more likely to experience a disability that impacts our earnings, and are more likely to support children or elders. We have a stronger need for a safety net.

As a high-level guide: max out any employer-sponsored coverage (like through your job) and then get an individual policy for the remainder of your need, as your budget accommodates.

Life Insurance

Life insurance is a tax-free gift you give the next generation, and term life insurance is inexpensive. Buy what you can afford, on the private market or through your employer.

Disability Insurance

Disability insurance is so important for women – it will replace a portion of your income if you can’t work, and you want to target 60% and 70%. Especially if you are a single mom or supporting family. To achieve this target, you will probably need a private policy in addition to any coverage from your employer (if available).

Long-Term Care Insurance

And finally, if you’re approaching retirement, long-term care insurance is important if you want to make sure you don’t have to spend all of your savings on health care in retirement. It can be very expensive, so don’t purchase this til you’re older and approaching the need for it.

These are just general guidelines – there’s no one right answer when it comes to insurance. It’s important to talk to an expert (like a financial planner) about what kind of coverage makes sense for you given your unique circumstances.

What is the Best Way to Budget?

There’s no one right way to budget your money – find the method that works best for you and stick with it! Consistency is much more important than perfection.

The Envelope Method

Some people use the “envelope system” where you put a certain amount of cash into an envelope for each category (like groceries, entertainment, and transportation). That’s all you get for that category for the month. This is great if you have to be very careful and want to stay away from credit cards entirely. It’s also a great system if you like using a physical planner over software/apps.

Budgeting Apps

If you prefer using technology to manage your finances, there are a number of great budgeting apps out there that can help you track your spending and set goals. Some popular options include Mint, You Need a Budget (YNAB), and EveryDollar.

Spreadsheet Budgeting

For those who like having more control over their budget (and who are comfortable with Excel or Google Sheets), creating a budget in spreadsheet form can be a great option. This method gives you a lot of flexibility to track your spending in the way that makes the most sense for you.

Pay Yourself First

One of the best ways to make sure you’re saving enough money is to “pay yourself first.” This means that as soon as you get paid, you put some money into savings before you spend any of it. This can be difficult at first, but if you make it automatic (i.e., set up a direct deposit from your paycheck into your savings account), it will become easier over time.

What is the best way to save money?

Again, there is no one right answer to this question – it depends on your goals and financial situation. But the upshot is that you can build an emergency fund or improve your generational wealth. Here are some general tips that can help you get started:

Increase Your Income

It can be very challenging, but to save money, you need to bring in more money than you spend. You can lower your costs and watch your spending, but you can also increase your income through a side hustle, a raise at work, or a promotion. You could sell extra things around your house. You don’t need to make a huge commitment – even small improvements in your earnings can make a big difference.

Automate Your Savings

Set up automatic transfers from your checking account to your savings account so that you’re automatically putting away money each month. This is a great way to make sure you’re always saving something, even if you don’t have a lot of extra money.

Join a Savings Challenge

A savings challenge is a great way to encourage you to save more money and get some community support. There are all kinds of challenges out there (like the 52-week challenge, where you save $52 in week one, $51 in week two, and so on), but the important thing is that you find one that works for you and stick with it. Dasha Kennedy at the Broke Black Girl runs a great year-long savings challenge to help women save $1000.

How Much Do Women Need to Save For Retirement?

As much as you can.

Women retire disadvantaged: we generally receive lower social security benefits due to lower earnings. We also tend to live longer (which means more years in retirement), and we’re more likely to experience a period of disability. All of this points to the need to have a larger retirement nest egg.

Target 20% Savings

Controversial opinion: I encourage all women to target 20% of pre-tax household income for savings. That is a lot. But most of us are playing catch up, and starting from lower earnings. Build up to it by increasing your savings rate little by little, and remember that even small amounts add up over time.

Invest Your Savings

You want to make sure your money is working hard for you, and one of the best ways to do that is to invest it. Investing can be intimidating, but on average, female investors outperform by 1% because we are less likely to panic. 1% is what professional investment advisors charge. Set up auto investment, choose low fee index funds and increase your contribution little by little. Like saving, successful investing is about consistency and patience.

What Biggest Money Mistake Should Women Avoid?

The biggest mistake you can make is to hand your finances off to a partner and ignore them. Women are socialized to do this (and it’s changing, slowly) but we pay for it. If you are widowed or experience divorce, you will be adding a terrifying and steep learning curve to a personal crisis.

Additionally, and I say this as Chief Financial Officer of our family, financial decisions will be better with your input! Even though I do this for a living, my husband often has great insight and our decisions benefit from his involvement. Don’t discount your ability or perspective, especially given that women are better investors.

Claire Hunsaker

How to Transfer Assets to Children Before Death

May 19, 2022 by Claire Hunsaker Leave a Comment

If you are a parent, you already know it’s important to plan for your children in case something happens to you. One way to do this is by transferring assets to them before you die and in your estate planning. This can be done in a number of ways, and each has its benefits. In this blog post, we will discuss the different options available to you and how each can help protect your children’s future.

Remember: Generational Wealth building isn’t just for parents: grandparents, aunties, and uncles can change the shape of the entire next generation.

Work with A Family Law Attorney and a Tax Planner

There are many different ways to transfer assets to your children, and almost all of them require a lawyer and have tax implications. It is important to consult with an attorney as well as a tax planner, both to choose the transfer structure that is right for you and also to ensure that the documents are compliant with Federal and State property and tax law.

Draw Up a Will

One way to transfer assets to your children before death is through a will. A will is a legal document that outlines how you would like your assets to be distributed after you die. A will doesn’t actually transfer ownership of your assets until after you die, but it can be used to specify exactly who should receive what.

If you have a will, it is important to keep it up-to-date as your life and circumstances change. You should also review it regularly with a family law attorney to make sure it still meets your needs.

One important note: a will is great for establishing your wishes for the distribution of your assets are followed, but it will not keep your estate out of probate. Probate is the legal process of distributing a person’s assets after they die, via the courts in your state. It can be time-consuming and expensive, if you have substantial or complex assets, so many people choose a trust.

Create and Move Assets Into A Trust

A trust is an arrangement in which one person (the trustee) holds and manages property for another person (the beneficiary). It’s a critical part of estate planning. Transferring assets into a trust can help avoid probate because the trustee can distribute the assets according to your wishes without having to go through the court system.

Moving assets into a trust that can be managed by a trustee will give your children access to the assets when they reach a certain age while ensuring that the assets are managed responsibly.

One common type of trust is a living trust, which is created during your lifetime. You can name yourself the trustee, which gives you control over the assets during your lifetime. Then, when you die, the trust remains in force and the beneficiary can receive the assets without having to go through probate. You can even trigger the execution of your trust before you pass away.

This is a good option if you want to maintain control over the assets during your lifetime, but also want to avoid probate.

Name Beneficiaries on Financial Accounts and Insurance Policies

Most financial accounts and life insurance policies allow you to name a beneficiary. This means that the account or policy will be transferred to the named beneficiary upon your death, without having to go through probate. Having updated beneficiaries is the cheapest and easiest way to transfer assets such as retirement accounts, bank accounts, and life insurance policies.

It is important to review your beneficiaries regularly and update them as needed, especially after major life events such as marriage, divorce, birth, or death. This can be especially important for single parents and blended families.

Transfer Assets During Your Lifetime

Another way to transfer assets to your children before death is through a gift or by selling the asset to them for less than its fair market value.

The upside of this option is that you are still around to help them manage the asset. The downside is that lifetime transfers have serious tax implications that vary depending on the value of the asset and your state’s laws.

Gift Assets to Your Children

You can give $16,000 per year, per child (or any other recipient) without needing to file any tax forms or pay any tax. If you are married, you and your spouse can each give $16,000, for a total of $30,000 per child. More importantly, the current (2022) Federal gift tax lifetime limit is $12.06 million per person, and you can also double it if married. While it would require you to file a form, gifts of any size can be given to your children without owing any gift tax, as long as the total amount gifted during your lifetime does not exceed the $12.06 million limit.

Sell Assets to Your Children for Less Than Their Fair Market Value

You can also sell assets to your children for less than their fair market value. This is The most advanced move, absolutely requires a competent lawyer and tax planner, and is generally most appropriate for family businesses. Generally, this involves a contract in which you sell the asset to your children for an agreed-upon price that is less than the fair market value.

There are a few different ways to transfer assets to your children before death. The most common ways are through a trust, naming beneficiaries on financial accounts and insurance policies, or transferring the assets during your lifetime.

Each method has its benefits and drawbacks, so it is important to discuss your options with a family law attorney and tax professional to choose the option that best suits your family.

Claire Hunsaker

Eight Ways To Counter Inflation

May 4, 2022 by Claire Hunsaker Leave a Comment

While it’s a problem that has been around for centuries, there are ways to counter inflation. It can be difficult to fight against, but with the right tools and strategies, you can overcome it. In this blog post, we will discuss nine ways that you can counter inflation and protect your hard-earned money. Keep reading to learn more!

What Is Inflation and How Does It Affect Your Money?

Inflation is the sustained increase in the prices of goods and services. This means that, over time, your money will buy less and less. Inflation can be caused by a variety of factors, including economic growth, supply and demand imbalances, and central bank policies.

People experience inflation at the gas pump, at the grocery store, and when they pay their utility bills.

Inflation is often described as a “hidden tax” because it erodes the purchasing power of your money. For a lot of people, inflation is confusing especially since we haven’t had a lot of it in the last 30 years.

The History of Inflation

In 1921, the U.S. Bureau of Labor Statistics (BLS) began publishing a national consumer price index (CPI), including estimates of the CPI back to 1913. This uses real information about what families spent money on (and how much they spent) across different geographies in the United States. Today, the data focuses on urban consumers.

In the United States, inflation has averaged about 2.36% per year from 2000 to 2020. Pretty close to the Federal Reserve target of 2%.

However, there have been high inflation spikes in the past. After World War II, when price controls were removed, the G.I.s came home and increased consumer demand, spiking prices up over 20%. The Korean war sent inflation to nearly 10%. And the Oil shocks of the ’70s sent prices up nearly 15% in two major spikes.

Today, many people are experiencing high inflation for the first time.

How Can You Protect Your Money From Inflation?

There are a few things that you can do to help protect your money from inflation.

Real estate is a great hedge against inflation. When prices go up, the value of real estate usually goes up as well. This is because people still need a place to live, and they will pay more for housing when the cost of other goods and services rises.
Invest in assets that will increase in value as inflation rises. This includes things like stocks, real estate, and precious metals.
Another way to protect against inflation is to ensure your income is protected if you currently depend on it, through disability insurance. This is especially true for single-income households.
You can also hedge against inflation by investing in Treasury Inflation-Protected Securities (TIPS). These are bonds issued by the government that provide you with protection against inflation. Series I bonds allow investors to ride inflation. These bonds are marked to inflation, and issued by the U.S. government. They provide investors with a stream of income that increases along with inflation. They can be purchased through Treasury Direct and have some penalties if you sell them early.

Ways To Counter Inflation Strategically

Inflation can be a scary thing, but there are ways that you can protect your money from it.

First, try to reduce the variable interest rate debt that you have. This is not the time to pay down low fixed interest rate mortgages. Instead, focus on reducing the balance of any credit card debt or adjustable-rate loans that you have.

Second, reduce spending on high inflation items. Gas, for instance, is up 40% in 2022. Similarly, home furnishings and appliances are up over 10%. Rethinking how you spend on high-impact items can help reduce the overall impact of inflation on your budget.

Third, don’t forget to include and possibly increase inflation in your financial planning. When you are estimating how much money you will need in retirement, be sure to use an inflation-adjusted number, and review that number annually.

Finally, try to stay informed about what is happening with inflation. This will help you make the best decisions for your money.

Final Thoughts

Inflation can rattle even the most steely investor, but there are ways that you can protect your money. A time of high inflation is a time to be conservative and watchful.

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Claire Hunsaker