ESTATE & TAX PLANNING
The federal tax filing deadline of April 15 may seem far away, but the date can sneak up on you before you realize it. The following simple tips may not offer advanced tax planning help, but sometimes it’s the little things that make preparing your tax return less painful.
- Get organized now. Put all your deductions in one file, credits in another file, work earnings in a third folder and investment earnings in a fourth. If you need to file any of these papers with your tax return, make copies to keep for your files.
- Double-check to ensure that your personal information, especially your Social Security number, is correct, and check your math on the return.
- Don’t guess. If you prepare your own tax return, the IRS can answer questions via local telephone numbers or its website, www.irs.gov.
- Make sure you have the right forms. Investment income, for example, needs its own tax form, while the self employed have additional forms to fill out.
- Don’t procrastinate. If you are owed a refund, why wait until April 15 to file? The earlier you file your return, the faster you’ll get your refund.
- Also, if you needa referral for a professional CPA to prepare your return, please contact me.
Estate Planning: From Soup To Nuts
Estate planning is one of the most important steps you can take to ensure a healthy financial future for you and your family. The steps you take today can help make transferring your assets to loved ones less painful in the future.
Start With A Will
A will is a legal documenta that stipulates to whom your assets will pass upon your death. With the help of an estate planning attorney, you can ensure that your assets pass to whom you name in the will, a particularly important aspect of planning for single people. That’s because if you don’t have a will, state intestacy laws will direct to whom your assets will pass after your death – typically to legally recognized family members.
Other important basic legal documents include a durable power of attorney and a healthcare power of attorney. If you become incapacitated without these documents, your state of residence will decide who will make your financial and healthcare decisions if you cannot make them on your own. Putting your wishes into these legal documents is the best way to ensure that your wishes are followed.
Another major component of a thorough estate plan is the naming of beneficiaries and secondary beneficiaries for life insurance, retirement plans and annuity benefits. These assets will pass to the named beneficiary regardless of whether you have a will. However, without a will, your other assets could pass to a person other than the one you want. Also coordinate your beneficiary designations with your estate plan. FOr example, you might will assets to a minor child from a first marriage. Make sure you detail how this money is to be spent – for example, education expenses – rather than leaving the choice to chance.
Privacy And Taxes
If you are concerned about your privacy, you may not want your estate to pass through your state’s probate courts, which creates a public record. A revocable living trust can help accomplish this, while also reducing probate costs. Discuss this with your estate planning attorney.
If estate taxes are a concern, there are steps you can take to address this issue. First, you can simply buy a life insurance policy, naming a loved one as the beneficiary. The life insurance benefit could be used to help offset estate taxes after you’re gone.
Gifting is another estate planning technique that can help you lower the amount of assets that might be subject to estate tax. Gifts made by you to as many individuals as you like of up to $11,000 (2005, indexed for inflation) each annually are free of federal gift taxes.
Whether married or single, divorced or in a non-traditional family, now is the time to ensure that important people in your life are provided for after you’re gone. Talk to an estate planning attorney and your licensed financial professional for more information.