Planning Tips

In addition to credit bureaus, which keep records of individuals’ credit habits, did you know that there is an electronic database that keeps files on your auto insurance dealings? There is also a large medical-file bureau. Just as the information in your credit bureau file can stop you from getting credit, data in the auto insurance database can stop you from getting car insurance and data in the medical-file bureau can stop you from getting health insurance.

That’s why it’s a good idea to check up on these three record-keepers to make sure their records on you are correct. Here’s how to do it:

Credit Bureaus

To get a copy of your credit report from each of the three main credit bureaus, call or write them and request a report. The report is free if you have been denied credit, otherwise you will pay a small fee. Also, FICO scores are available for an additional fee.

Equifax: Call 800-685-5000. To request a credit report on Equifax’s Website, click here. The basic report is $9.00.

Experian (ex-TRW): Call 888-EXPERIAN (888-397-3742). The basic report costs $9.00. To request a credit report on Experian’s website, click here.

Trans Union: Call 800-888-4213. To request a credit report on Trans Union’s Website, click here. Basic report costs $8.00.

The best course of action is to request a report periodically from each of the three bureaus. Check your report carefully. If you find an error, write to the bureau requesting a correction. If the bureau doesn’t agree to fix the mistake, you have the right under federal law to add a statement to the credit report, disputing the information. Or you can ask the creditor who reported the error to correct its report.

Auto Insurance

If you’ve been denied auto insurance, or charged more than you thought you were going to pay, it’s a good idea to check your Motor Vehicle record. To do so, call ChoicePoint at 800-456-6004, or click here.

Medical Reports

The Medical Information Bureau (MIB) keeps files on about 15 million individuals. More than 600 insurance companies supply MIB with data. An insurer uses an MIB report in deciding whether to issue a health policy to an individual, and how high premiums should be. The MIB report contains information on chronic health conditions, and on accidents you’ve had, among other things. If you’ve been denied health insurance, check your MIB report to make sure it’s accurate. Even if you have health coverage, it’s a good idea to check out the MIB report to avoid problems in the future. Call 617-426-3660, or click here.

Planning Tip: Pyramid Schemes on the Rise: How Savvy Investors Get Stung. "Pyramid schemes," a type of fraudulent investment, are on the rise again. At the initial stage of a pyramid scheme, potential investors are approached — often through the business opportunity sections of newspapers or through friends and acquaintances — with promises of quick profits spawned by recruiting others to sell the promoter's product. For a start-up fee, an investor is promised a certain remuneration for bringing new recruits into the promoter's sales force.

The more recruits, the more the investor receives. The merchandise or service to be sold is irrelevant. The main focus is to get an investor to recruit three or more other participants, each of whom recruit three or more others, and so on.

Why don't pyramid schemes work? In order for everyone to profit in a pyramid scheme, there would have to be a never-ending supply of potential (and willing) participants. There is no such thing. When the supply runs out, the pyramid collapses and most participants lose their investments.

Here are some of the reasons these investors got stung:

1. They were lured into investing by promises of very high investment returns in a short time.

2. Their ordinary caution went astray because the promoter was connected to a charity, shared similar religious or political interests, or had connections to well-known individuals. (There are many examples of fraudulent activities masterminded by "pillars of the community").

3. They failed to ask the questions they ordinarily would have asked if approached by an investment promoter.

4. They succumbed to pressure to "reinvest" or let the money "roll over" instead of cashing out.

5. They failed to ask for a prospectus, offering circular, or similar document.

Planning Tip: How Much Life Insurance Do You Need? Life insurance has become a popular investment vehicle, as well as a way of protecting family members on the death of the breadwinner(s). As vital as life insurance is to a family's overall financial plan, people commonly give it insufficient attention — perhaps because they are put off by the confusing array of available products, or simply because they are too busy.

How much life insurance coverage do you need? Determining how much insurance to buy requires you to invest some time in calculating, first, your current annual household expenses, and then your assets, debts, and other sources of income. Your financial advisor can assist you in this computation.

The ideal amount of coverage is the amount that would allow your dependents to invest it after your death and maintain their desired standard of living without touching the principal. Although the old rule of thumb — to buy five, six or seven times your annual salary — may serve as a starting point, it is no substitute for making the calculations to find out how much you really need.

It’s important to be as accurate as possible in estimating your family’s needs, since an underestimation could lead to your being underinsured, and an overestimation will lead to money wasted on unnecessary coverage.

TIP: To accurately estimate your family’s annual income needs, it’s helpful to have the following documents with you: A checkbook register for one year, a year’s worth of credit card statements, and last year’s tax return.

Planning Tip: What Type of Life Insurance Should You Buy?

Life insurance can provide protection in case of death, and can also function as an investment. Although many insurance companies offer a wide range of policies, there are really only two basic types of coverage: (1) term insurance and (2) policies that generate cash values. The choice of insurance product depends, of course, on what you wish to accomplish.

1. Term coverage: Term life insurance provides death protection for a specific time period. Premiums are based on the insured's age and may increase each year, but they are generally cheaper than other types of insurance such as whole life (discussed below). Some forms of term insurance include:

Renewable insurance, which many be renewed at the end of the term without having to take a new medical exam. The renewal rate is usually higher than the original premium.
Convertible insurance, which permits conversion into a cash-value policy without regard to changes in health.
Decreasing term insurance, which is term insurance with a constant premium and a declining face value. Such policies are commonly used for paying off a mortgage.

2. Cash-value insurance: Life insurance may be used to generate a forced savings or a rate of return as an investment.

Whole life: One of the most popular forms of insurance is whole (or permanent) life insurance. It provides coverage for the insured's life as long as a constant premium is paid. The premium both pays for the insurance and builds up a cash value return. Usually the policyholder has the right to (1) borrow the cash value at good interest rates, or (2) terminate the policy and receive the cash value.
TIP: The cash value's rate of return may be below what is available from other investments.
Universal life: Universal life insurance combines a renewable term policy with a cash value feature. Many such policies guarantee a minimum interest rate of return. After you pay the first year's premium, the accumulated cash value can be used to pay the premium. You have the choice as to whether to make further payments (within certain limits). Also, many such policies allow you to select either a death benefit that is constant while the policy is in effect, or one that increases according to changes in the policy's cash value.
Variable life: This type of insurance provides a variety of investments for a fixed premium. The death benefit will reflect the investments' performance (i.e., the increase or decrease in cash value). These policies are securities that have prospectuses filed with the SEC.
Universal-variable life: This combines the flexible premiums of universal life with the investment choices of variable life.
Single-premium life: This is paid for only once. Its cash value can be invested in a variety of ways, but the return may not be guaranteed. A holder of this type of insurance may also be able to borrow against the cash value at low (or no) interest rates after the first year.

We have only outlined general considerations in analyzing the type of insurance that's right for you. You should seek the advice of a financial professional such as Buser Brothers for your specific situation. Further, it is vital that the estate planning implications of owning life insurance (not addressed here) be discussed with us or your tax advisor.

Planning Tip: Main Home Tax Exclusion Rule. You can exclude the profit on the sale of your "main home" — up to $250,000, or up to $500,000 if married filing jointly and if certain other tests are met. This tax benefit generally cannot be used more than once during a two-year period.

What is a "main home" for this purpose? Usually, the home you live in most of the time is your main home. It can be a houseboat, a mobile home, a cooperative apartment, or a condominium.

To exclude your gain, you must generally have owned and used the property as your main home for at least two years during the five-year period ending on the date of sale.

NOTE: If you sell the land on which your main home is located, but not the house itself, you cannot exclude any gain from the sale of the land.

If you have more than one home, only the sale of your main home qualifies for excluding the gain. If you have two homes and live in both of them, your main home is the one you live in most of the time.

What Type of Medical Plans are Available for Employees? As an employer, you can choose for your employees either an insured plan (also known as an indemnity or fee-for-service plan) or a pre-paid plan (also known as a health maintenance organization).

An indemnity plan allows the employee to choose his or her own physician. The employee typically pays for the medical care and then files a claim form with the insurance company for reimbursement. These plans use deductibles and coinsurance as well.

Coinsurance is the percentage of medical expenses that the employee pays, with the plan paying the remaining portion. A typical coinsurance amount is 20%, with the plan paying 80% of approved medical expenses.

The most common types of indemnity plans, which provide health care to groups of employees, are:

1. A basic health insurance plan that covers hospitalization and surgery and physicians' care in the hospital. The deductible can range from $100 to $1,000 a year.

2. A major medical insurance plan that supplements a basic plan by reimbursing charges not paid by that plan. Here there would be a much higher deductible.

3. A comprehensive plan that covers both hospital and medical care with one common deductible and coinsurance feature.

Some employers self-insure their plans, meaning they pay expenses directly. Typically, they will still have stop-loss insurance to cover catastrophic claims.

A Slip of the Lip May Bring on a Tax Audit Many taxpayers have learned, to their dismay, that it generally isn't wise to talk carelessly about their taxes — especially about sensitive areas. Why? Because the wrong person overheard their careless talk and "turned informer," either for revenge or in the hope of an "informer's reward."

An informer's "tip" to the IRS will often trigger a tax audit. Even though the taxpayer has done nothing improper, he or she may have to suffer through the audit. Not only is this time-consuming, it can also result in additional taxes due to the discovery of an innocent error on the return or the disallowance of a marginal deduction.

TIP: Most informers are disgruntled employees and former spouses or lovers.

How To Avoid Becoming a Victim of Credit-Card Fraud. Credit cards are very convenient but they do expose you to fraud if you are careless. To reduce the possibility of becoming a victim of credit card fraud, take the following precautions:

Make sure the purchase is recorded accurately before you sign your receipt.

Verify that the card handed back to you is your card.

Make sure the clerk destroys any carbons or destroy them yourself

Take all receipts home with you. (Thieves can use a casually discarded receipts to make fraudulent charges against your account.)

Check receipts against your monthly statement to verify accuracy.

If you don't keep your statements, destroy them before discarding them.

Do not give your card number to a merchant to validate your check. (Many states have laws prohibiting this practice.)

Do not reveal any personal information when using your credit card. (Most credit card companies prohibit merchants from requiring you to provide personal information, such as your address or telephone number, as a condition of accepting your card. Once the credit card company approves the purchase, the merchant is protected.)

Be careful in giving out credit card numbers over the phone. If you are not familiar with the merchant, get its full name and address and check it out with the Better Business Bureau before placing the order.

Keep a record of your credit card numbers in a secure place, and report a missing card to the issuer immediately to avoid responsibility for unauthorized charges.

Taxpayers Short on Funds at Tax-Filing Time Should Not Delay Filing Return-Many taxpayers who are short on funds when their taxes are due tend to delay filing their tax return. This can happen to anyone who made a mistake planning their tax liability and, of course, is unwise. There is a failure-to-file penalty (5% per month of the balance due for up to five months) that is applied to taxpayers who miss a filing date without a proper extension for filing their return.

Note: A taxpayer can put off filing a return — and avoid the failure-to-file penalty — by getting an extension to file (up to four months) by filing Form 4868.

If a taxpayer doesn’t have the funds to pay the tax due at the time of filing (either the return itself or the extension request), he or she should still file on or before the due date and pay as much as possible to keep down the interest payments and to show good faith.

Note: In addition to the failure-to-file penalty, there is also a penalty for failure to pay tax on time. This penalty doesn’t apply during the four-month extension period of Form 4868, if at least 90% of the tax due is paid by the return due date, through withholdings, estimated tax or with the Form 4868.

TIP: If you have not filed a tax return for a previous year, call us. Your problem may not be as great as you think. It is normal for most people to lose sleep over such things. Maybe we can help put your mind at ease.

Where a taxpayer cannot, in good faith, pay the tax, IRS will generally work out a payment schedule after it has reviewed the taxpayer’s financial condition.

How Not To Pay Extra Alimony Here's a story that points up the importance of complying with the letter of the law — when it comes to tax deductions.

Dexter had been divorced from Dora for a number of years, and had dutifully paid alimony the entire time, according to what was in his divorce decree. He rightfully deducted these payments every year on his tax return. Those who pay alimony are allowed a deduction, while those who receive it must report it as income.

In 2001, Dexter wanted to help Dora, who was experiencing financial difficulties. He agreed to increase the payments he made to Dora, and that year he paid $20,000 more to Dora than he had paid in previous years.

When Dexter told his tax advisor that his alimony deduction would be $20,000 higher for 2001, he received the bad news: None of the extra alimony was deductible.

To be deductible under the tax law, alimony payments must be "under a divorce or separation instrument" — such as a divorce decree, temporary order of support, or a written separation agreement. If alimony payments are not found in one of these three writings, they are not deductible alimony for tax purposes. (Alimony payments must also meet certain other tax law requirements to be deductible.)

With regard to the $20,000 extra he had paid, Dexter was out of luck.

TIP: Before making extra payments, be sure to consult your tax advisor, who can advise you as to the tax consequences of your actions.

When To Review Your Life Insurance Coverage. It makes good financial sense to periodically examine your life insurance coverage, in order to make sure the coverage is still sufficient. After all, life insurance is often a family's most important financial and estate planning tool.

With today's frequent changes in financial circumstances and goals, it's a good idea to re-examine your life insurance coverage on the occurrence of any of the following:

Marriage or divorce;
Birth or adoption, or acquiring a financial dependent such as a parent;
Children leaving for college;
Children "leaving the nest";
Purchase or sale of a home;
Serious illness;
Substantial growth or depletion of assets;
Retirement; and
Start-up of a business

TIP: In addition to the amount of coverage, you may need to make a change relating to beneficiaries, policy ownership, or type of coverage. You may need to consult with a professional.

Two Ideas for Minimizing Your Tax Bill What can you do now to reduce what you will owe in taxes next year? Here are two tips:

One: Keep all receipts and records that will help identify the credits and deductions to which you might be entitled:

Business expenses,
Charitable contributions,
Child care,
College expenses,
Alimony,
Deductible taxes, and
Medical expenses.

Two: Try to make the maximum contribution to any qualified retirement plan that you participate in—whether 401(k) plan, IRA, or other qualified retirement vehicle. Contributions that are deductible (to self-employed retirement plans and some IRAs) and pre-tax contributions to 401(k)s and other qualified plans, will cut your taxes this year. And allowable after-tax contributions, though not deductible or excludable this year, earn income that will be tax-deferred until withdrawn.

What Not To Put in a Safe Deposit Box Do not put wills, trust instruments, or powers of attorney in a safe deposit box. Instead, keep these in a fire-proof safe at home or at your attorney's office.

The reason: Upon someone's death, the safe deposit box may be sealed for weeks, resulting in delays and needless costs spent getting a court order to open the box. Even if the box is not sealed, the executor of the deceased's estate will have no access to the box without the will that shows that he is the executor, resulting in headaches and delays.

No legal documents should be placed in a safe deposit box if they will be needed by anyone who cannot gain access to them.

TIP: Put copies of legal documents in the safe deposit box, if you desire.

Wash Sale Rule This is the time of year we rebalance portfolios and reallocate our investment funds into new opportunities. It may (emphasis on “may”) make sense to sell some winners and some losers. The yearend process is called “Harvesting Losses” and, unfortunately, works this year better than in years past.

For instance, assume you have two securities which we will call Stock A and Stock B. Securities are defined as stocks, bonds, and options. Stock A has a gain but you don’t want to sell it because you think it is going higher. Stock B has a loss and it is time to sell it. You could sell Stock B at a loss but you can only deduct a $3,000 capital loss on 2001’s tax return and carrying over the excess to future years. Bonds could be substituted for a stock because interests rates will probably go up from here and thus bond prices will fall.

So you sell all or a portion of Stock A and all of Stock B and use the loss in Stock B to completely offset the gain in Stock A. Result- no tax paid. But, you want to continue holding Stock A. What to do?

If you want to sell Stock B but stay in Stock A, you must avoid the IRS Code’s Wash Sale Rule. The Wash Sale Rule says you can not take a capital loss on a security sale if you buy “substantially the same security” within 30 days before or after the close of the security sale. You can purchase an equal amount of new Stock A now more than 30 days in advance of when you what to sell old Stock A prior to yearend and avoid the Wash Sale Rule. You can sell Stock B at any time as long as it is before yearend. After 31 days from when you bought new Stock A, you sell old Stock A and offset the gain with the loss on Stock B. This also creates a new basis for new Stock A and would qualify in five years for the lower 18% capital gains rate effective January 2001.

Next year, you owe no taxes, you have the proceeds from the sale of both old Stock A and Stock B less what you paid for new Stock A, and you have adjusted your basis on new Stock A. This is called harvesting your losses and is an example of yearend tax planning.

What To Do When You Are Approached For Charitable Donations When you are approached by a door-to-door solicitor for a contribution of either your time or your money, ask questions — and don't hand over any cash (or charge your credit card) until you're completely satisfied with the answers. Charities with nothing to hide will encourage your interest. Be wary of reluctance or inability to answer reasonable questions.

1. Ask for the charity's full name and address and demand identification from the solicitor.

2. Ask if the contribution is tax-deductible as a charitable donation.

TIP: Contributions to tax-exempt organizations are not always tax-deductible.

3. Ask if the charity is registered or licensed by state and local authorities (required by most states and many communities).

TIP: Registration in and of itself does not mean that the state or local government endorses the charity.

4. Watch out for statements such as "all proceeds will go to charity." This can mean that money left after expenses, such as the cost of written materials and fund-raising efforts, will go to the charity. These expenses can make a big difference, so check carefully.

5. When you are asked to buy candy, magazines, or show tickets to benefit a charity, be sure to ask what the charity's share will be. Sometimes the organization will receive less than 20% of the amount you pay.

Caution: Don't succumb to pressure to make an immediate donation or allow a "runner" to pick up a contribution.

6. Call your local Better Business Bureau if a fund raiser uses pressure tactics, such as intimidation, threats, or repeated and harassing calls or visits. Such tactics violate the Council of Better Business Bureau's recommended standards for charitable solicitations.

Should You Use a Living Will To Spell Out Your Health-Care Wishes in Case You Become Incapacitated? The purpose of a living will is to make known your wishes as to issues such as (1) whether you want to be sustained on mechanical life support at the end of your life and (2) whether you want "extraordinary" means used to prolong your life in various medical circumstances. Another health-care related document, the health-care proxy or health care power of attorney, names someone as agent to carry out these wishes if you are incapacitated. Attorneys often prepare these forms when they prepare a will for a client.

Although you do not need an attorney to prepare the forms, it is a good idea to consult with both your physician and an attorney in preparing the forms. Your doctor can help to ensure that you have covered all the medical contingencies you want to cover, and the attorney can ensure that there are no inconsistencies between your health-care documents and the rest of your estate plan.

Life Insurance or an Annuity—Which Suits Your Needs? Traditional life insurance guards against "dying too soon" while an annuity, in essence, can be used as insurance against "living too long." Life insurance is generally for your family while an annuity is generally for you for retirement.

With an annuity, you will receive a series of periodic payments that are guaranteed as to amount and payment period. Thus, if you choose to take the annuity payments over your lifetime (there are many other options), you will have a guaranteed source of "income" until your death. As a person with life insurance approaches retirement age, and sees their children go out on their own, he or she may choose to convert all or some of the life insurance to an annuity, which can be done tax-free.

If you "die too soon" (that is, you don't outlive your life expectancy), you may get back less from the annuity than you paid in. On the other hand, if you "live too long" (and do outlive your life expectancy), you may get back far more than the cost of your annuity (and the resultant earnings). By comparison, if you put your funds into a traditional investment, you may run out of funds before your death.

Financial Planning for the Newly Married: Some Pitfalls To Watch Out For. If you have recently gotten married or are planning to do so, you will be faced with the need to make some important financial decisions. Among the main areas of financial concern are (1) life insurance, (2) form of property ownership, and (3) money management.

1. Life Insurance. A basic rule of insurance planning is that you need enough coverage to sustain your family’s present income level should you die. If you are the only breadwinner or plan on starting a family soon, you should probably purchase or increase your life insurance.

2. Property Ownership. If you and your spouse intend to buy or already own a residence or other major asset, you will need to consider the best way to hold that property. Will the property be held solely by one spouse? By both spouses jointly? Because of the complex legal implications of the various forms of property ownership, you should consult a lawyer about this issue.

3. Money Management. It’s important to consider carefully how your day-to-day finances will be handled. You should discuss financial goals, resolve differences, and establish a budget and/or saving and investment plan. Will you have joint bank accounts, separate accounts, or both? How much do you want to spend on vacations? On monthly food bills? Entertainment? Gifts? What are your long-term financial goals? Do you have a financial plan, even an informal one?

These are just a few of the areas that should be considered. Other areas that might need to be addressed are post-mortem planning and planning for the future of any children.

Professional guidance will be helpful in resolving many of the financial planning issue that flow from a marriage.

Why Tax Credits Are More Valuable Than Tax Deductions. Many taxpayers are uncertain as to the difference between a tax credit and a tax deduction. Basically, a credit reduces your tax while a deduction only reduces the income that is subject to tax. The credit generally puts more money back in your pocket than a deduction of an equal amount. Deductions are generally more valuable to high-bracket taxpayers than to low-bracket taxpayers. On the other hand, credits are more valuable to low-bracket taxpayers, since they make up a larger portion of the tax owed.

Example: Taxpayers in the 35% tax bracket would save $350 in taxes if they made a $1,000 charitable contribution (a deduction), while taxpayers in the 15% bracket would save only $150. (This assumes that their itemized deductions are more than the standard deduction, thus making it worthwhile to itemize deductions—a pre-requisite for benefiting from most deductions.) If instead they have a $1,000 credit, both taxpayers would save $1,000.

When Travel Expenses Can Be Deducted: A Quick Review. To maximize the deduction for travel expenses, keep in mind the expenses that generally can be deducted while traveling away from home:

Transportation fares or the actual costs (or a per mile rate) of using your own vehicle (including transportation costs of getting around in your work area, e.g., to and from hotels, restaurants, offices, terminals, etc.)
Lodging
Baggage handling
Meals (subject to a 50% limit)
Expenses of entertaining business contacts (subject to a 50% limit)

Gratuities related to the above expenditures are also deductible (subject to the 50% limit for gratuities connected with meals and entertainment).

Phone and fax charges
Laundry

On the other hand, the following expenses cannot be deducted:

Costs of commuting between your residence and a work site.

These costs may be deductible if your residence is also your business headquarters.

Travel as education
Job hunting in a new field or looking for a new business site

The T&E provisions are, of course, more complex, but the above discussion will serve as a basic review of the rules

If An IRS Agent Calls, Get It In Writing. IRS Agents are required to notify you in writing if your tax return is to be examined. It seems, however, that some Agents are telephoning taxpayers selected for audit prior to sending a written notice. If you receive this type of call from an Agent, do not get into any discussion with the caller because:

You have no way of knowing if the caller is really an IRS Agent;

You may inadvertently divulge information that the Agent is not entitled to; or

You may make an offhand comment that might be misinterpreted by the Agent, causing him or her to adopt a position that will take considerable time and effort to overcome.

TIP: If someone claiming to be an IRS Agent calls, saying that your return has been selected for audit (or for any other reason), ask for written notification. If you receive it, talk to your tax advisor before proceeding further.

Should You Take Out Life Insurance for Your Children? Since the purpose of life insurance is to provide for dependent survivors, children generally need only enough life insurance to pay burial expenses and medical debts. Yet 25% of the cash-value life insurance policies sold cover the life of a child under 18.

Should kids have policies? Let’s take a critical look at why people buy life insurance for their children — in many cases, unwisely:

1. Investment. In some cases, a life insurance policy might be used as a long-term savings vehicle. Some parents or grandparents buy kids a variable universal life policy, in which part of the premiums is put toward a tax-deferred portfolio of stocks, bonds, and money-market funds. The investment is kept over the long term, and the child can borrow from it later, usually at a better-than-market rate.

TIP: Because of the death benefit feature of life insurance, there are extra costs to the policy that eat into your returns. Thus, a mutual fund is almost always a better long-term investment for a child’s savings. Parents can invest in funds that pay out little or no taxable income (e.g., growth stock funds), thus mimicking the tax-deferred feature of the life insurance policy.

2. Low Cost. Advocates of children’s life insurance argue that coverage for children is much less costly than comparable coverage for adults. True, but the premiums are paid over a much longer period (if they start when the insured is a child) and the coverage during childhood is of limited value (since the economic loss from the death of a child is usually minimal).

Note: Life insurance statistically favors the insurance company. It covers not only actuarial risk but also agent commissions and insurance company overhead and profits. It makes sense only if the family would suffer great economic loss and is willing to pay the loads to protect against such eventuality. If no such economic suffering would occur, life insurance is an unwise expenditure.

3. Ensuring future insurability. Maintaining a cash-value policy on a child will ensure that he or she will have coverage later—even if the child becomes uninsurable. Thus, the purchase of a minimum amount of insurance for this purpose—and to cover burial expenses—might be a good idea.

TIP: Other ways of covering the costs of a child’s death include (1) using funds already set aside for college and (2) taking out a rider on a parent’s policy (if available).