Minors as Beneficiaries of Direct Gifts When property is left directly to a minor beneficiary, such as through joint ownership of property or a payable-on-death account, the minor won’t have the legal authority to take control of it because of their age. The same holds true for inheritances received via a last will and testament or from an intestate estate—when the deceased died without a will—or a living trust was drafted improperly, so its terms were not honored....

Understanding the benefits and drawbacks of each potential mortgage payment structure can help a mortgage borrower prioritize what’s most important for them. For example, one borrower might prefer lower costs over the life of the loan, while another might want to align their payment structure with their paychecks. Here’s what you should know about bimonthly mortgages to decide whether one is right for you. Definition and Examples of Bimonthly Mortgages Bimonthly mortgages simply divide a monthly mortgage payment into two payments....

In the United States, call deposit accounts tend to be checking accounts that earn interest and may require higher minimum balances to benefit from the best interest rates. Often, you’ll see these advertised as “advantage checking” accounts that may come with different tiers available depending on your balance. Internationally, you’ll more often see call deposit accounts advertised as a way to invest your money in multiple currency options. For example, if you lived in South Africa, you might decide to open a call deposit account and convert your money into U....

Alternate name: Cash rewards card For example, a cash-back credit card offering 1% cash-back rewards on all purchases would add $10 to your rewards balance when you make a $1,000 purchase. How Do Cash-Back Credit Cards Work? When using your cash-back credit card for an eligible purchase, the credit card issuer credits your rewards balance with a percentage of the purchase amount. Some credit cards offer the same flat-rate cash rewards for all purchases, while others provide a higher percentage for purchases in certain categories, whether you choose them or as assigned by the issuer....

Common-size income statements provide a tool for analyzing a company’s historical performance over multiple periods (quarters or years). Learn how a common-size income statement also allows for the comparison of individual line items to competitors in addition to serving as a useful tool for comparing a company’s performance over multiple years. Understand the ways in which it helps investors determine how a business is performing within its own industry....

For example, if you have a credit card and it has a 28-day billing cycle, you can expect to be billed for any unpaid charges or fees that occur in those 28 days. How a Credit Card Billing Cycle Works Although credit card billing cycles vary by card issuer, they do have to be consistent, according to federal law. According to the Consumer Financial Protection Bureau (CFPB), the days in your billing cycle can’t vary more than four days from the regular day or the date of your statement....

For instance, if you applied for a credit card and were approved, you might be given a maximum limit of $5,000 if you have decent credit. On the other hand, someone with excellent credit might be given a limit of more than $20,000 on a credit card. How the card is used and your payment history then determine whether you build your credit score or reduce it, no matter what the limit is....

Definition and Examples of Fee-Based Investment Fee-based investments are financial products or services in which the financial professional offering them is compensated with a fee plus commission. The professional selling the product or service is called a “fee-based advisor”—you typically find them through a bank, insurance company, mutual fund company, or other financial institution. Fee-based investments can include stocks, mutual funds, insurance, and more. Alternate name: Fee and commission Let’s say you’re discussing fees with an investment advisor for managing your investments....

To be a legal contract, an agreement must have all of the following five characteristics: Legal purpose: A contract must have a lawful purpose to be enforceable. For example, if one business partner contracted someone to kill another business partner, but the person took the money without fulfilling the contract, there’s nothing that can be done. A contract of murder for hire is illegal and the contract is unenforceable.Mutual agreement: All parties to the contract must have reached an agreement....

For example, if you’re interested in moving your small business into an office, the lessor might be the owner of the business office building. They would show you the available offices and discuss the amenities, size, and pricing structure for each one. When you both agree on the office that suits your needs, the lessor will draw up an agreement that outlines the costs and rules for using the property....

At that point, homeowners would have to pay the person or entity that purchased their tax lien sale certificate the debt owed along with interest. If they do not, they may face foreclosure after a certain period of time. Learn more about how lien sales work and what they mean for homeowners and investors. Definition and Examples of a Lien Sale A lien sale is when a local government tries to recover property taxes or other payments from a delinquent homeowner by selling off the debt to another buyer....

Before choosing what kind of CD to invest in, it’s important to understand how market-linked CDs differ from traditional CDs, which provide a fixed rate of return. Understanding how market-linked CDs work can help you make more informed investment decisions. Definition and Examples of a Market-Linked CD A market-linked CD is a certificate of deposit that contains a fixed sum of money and is held for a set amount of time, also known as a term, which ends on a maturity date....

Alternate names: Lender credit, negative points For example, imagine receiving a $100,000 home loan offer at a 4% interest rate, and the lender charges you $995 for their fees (this fee does not include the other closing costs you will owe). The lender could offer to give you a mortgage rebate (lender credit) for the $995 if you agree to pay a higher interest rate of 4.25% for your loan. Therefore, you don’t have to come up with as much money during closing....

Private placements are regulated by the Securities and Exchange Commission (SEC). They are not required to go through the same registration process as public offerings, but they must follow specific SEC rules to be exempt. Alternate names: Unregistered offering memorandum, private offering memorandum Types of Private Placement Memoranda Private placement memoranda come in many varieties, and many types of businesses can offer unregistered securities for sale. PPMs can be issued for:...

JGI/Jamie Grill / Getty Images For example, when advertising closed-end credit products such as mortgages or auto loans, lenders are required by Subpart C of the TILA to include disclosures when they mention the following triggering terms: The amount or percentage of any down payment: For example, “20% down” or “70% financing.” The number of payments: For example, “monthly payments of less than $100,” “pay just 15% each month,” or “$12 per month....

A UCC filing also informs other lenders that the borrower has used particular assets to secure a loan, so that creditors can make decisions on whether to approve a loan. UCC filing is a common practice among lenders, and it’s one you should know if you’re a small business owner taking out loans. Learn what a UCC filing means for your current assets and future loan potential. Definition and Example of UCC Filing The uniform commercial code is a set of rules adopted by state law that governs commercial transactions....

How a Wealth Tax Works A wealth tax targets certain assets that aren’t normally subject to a federal tax, such as personal property, collectibles, and real estate used as primary residences. You’d pay a wealth tax in addition to other taxes, such as income tax. A wealth tax can potentially deplete an individual’s wealth if they’re subject to a tax rate that’s higher than the rate at which their fortune grows in a given year....

Alternate definition: Owner-occupant is the opposite of an absentee ownerAlternate name: Owner-occupier How Does Being an Owner-Occupant Work? When you’re purchasing a multi-unit property, some mortgage programs will require you to be an owner-occupant. This includes home loans from the Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA) loans, and U.S. Department of Agriculture (USDA) loans. If your loan program has an owner-occupancy requirement, you will be asked to certify that you will live in the residence for a specified amount of time....

Definition and Example of Bad Debt Recovery Every business has to deal with delinquent and unpaid customer accounts. If someone owes you money that you’re unable to collect, that’s considered a bad debt. Some collection efforts will be unsuccessful, but occasionally, a lender or business will receive payment on accounts previously deemed uncollectable; this is what’s known as bad debt recovery. Bad debt recovery sometimes happens because of legal action taken to collect on the debt....

Learn what qualifies as chattel and how they may be used as collateral when securing a loan. Keep reading to discover the key differences between chattel and real property, and how it applies to what you own. Definition and Example of Chattel “Chattel” is a catch-all term for movable personal property or possessions, such as electronics, clothing, livestock, or cars. Owners may use chattel as collateral and borrow against it with a chattel mortgage....