All you have to do to meet the requirements for having a Roth IRA, says Investopedia in the article, “Roth IRA Contribution Rules: The Basics,” is work for a living. That can be earned income that you get from a job, including commissions, tips and taxable fringe benefits, or net earnings for the self-employed.
Leaving a Vacation Home to the Next Generation
You may have envisioned a time in the future, when your children and grandchildren enjoy the same lakeside home as you have for years after you’re gone, and are pleased with the idea of leaving the family vacation home to the next generation. But think again, says a recent article in Financial Planning, “Save clients from tax pitfalls, family strife when passing on that lake cabin,”because your vision may not translate into reality.
Harness the Power of Time to Build Wealth and Don’t Forget to Protect Your Nest Egg
Want to know how to build, protect and grow your retirement savings? One of our favorite sources of practical advice comes from the 70th-anniversary issue of Kiplinger’s Personal Finance. In “5 Time-Tested Tactics to Save for Retirement,” Kiplinger’s editors shared some of their best tips.
Start Now. A 25-year-old who saves $450 a month in a tax-deferred retirement account and earns an average yearly return of 7% will have about $1.1 million at age 65. If he or she waits until age 35 to start saving, they’d have to save $950 a month to reach the same balance by age 65. You should aim to save 15% of your income, including any employer match for your retirement plan.
Take advantage of employer incentives. For your company’s 401(k), you can contribute up to $18,000 ($24,000 for people 50 and older) in 2017 to this pre-tax account. Your employer may also add another 4% to 6% of your pay and possibly more. Try to save 15% of your income, including the company match, from the beginning of your career until the end. Even if you have to cut back for a few years, contribute at least enough to get the full company match, and boost your contributions later to get back on track.
Leaving Town? Before You Move to Another State, Consider These Costs and Expenses
When you and your family are faced with a move to a new state for work, the biggest question on everyone’s mind will be where will the family live. But the house is only the start of the questions you’ll need to answer before making any final decisions. This article from Kiplinger’s, “5 Financial Matters to Consider When Moving to a New State,” points out factors you might not have thought about when preparing for relocation.
Senior Weddings Call for a Different Kind of Planning
Just as your life was probably simpler the first time you married, your subsequent marriage, especially if it occurs later in life, can become problematic if good planning doesn’t happen in advance. If you don’t know your legal rights or your responsibilities, reports New Hampshire Magazinein “Navigating Late-Life Remarriage,” you, your children and your new spouse may be in for some unpleasant surprises.
While death and the likelihood that one spouse will outlive the other is inevitable, another important factor is that the divorce rate among those who remarry later in life is 60%. This is much higher than the rate of any other segment of the population and some experts think that number may go even higher.
Fearing Loss of Control is One Reason People Try to Hide Alzheimer’s
It was at least three years after his diagnosis that comedic actor Gene Wilder revealed he was suffering from Alzheimer’s disease. This isn’t unusual, according to experts discussing his situation in the Investment News article, “Hiding Alzheimer’s, like Gene Wilder did, is natural, so prepare for it with all clients.” Wilder, star of Blazing Saddles, Willy Wonka and the Chocolate Factory and many other classic comedies, died at age 83 from complications of Alzheimer’s disease. He wanted to leave his audiences laughing, rather than being sad that he was suffering from this dreaded disease.
New Year’s Resolution #7: Prepare for a New Administration
If Trump’s administration succeeds in eliminating the U.S. federal estate tax, there will still be plenty for estate planning attorneys to do, according to a Forbes article, “If the U.S. Federal Estate Tax Goes Away, What Will Single-Family Offices Likely Do?” Estate plans are still going to be needed to provide direction as to how assets are to be distributed, and all estate plans will likely need to be reviewed and revised in light of changes to the law.
Life insurance purchased to pay estate taxes will also need to be reviewed. One way to do this is to convert permanent policies with meaningful cash values into private placement life insurance policies (PPLI). Private placement life insurance is a variable universal life insurance policy that provides cash value appreciation based on a segregated investment account and a life insurance benefit. PPLI is designed to maximize savings and minimize the death benefit.
The investment account typically uses tax-inefficient hedge fund strategies. PPLI can be especially useful as an element of more complicated tax strategies. With advances in technology and greater efficiencies, private placement life insurance is becoming more popular for more wealthy individuals.
Certainly, other changes in tax law are likely to impact estate plans. It will be important as the new administration begins to tackle its campaign promises to keep abreast of changes in the law and speak with your estate planning attorney about the impact on your estate plan.
Whether or not the federal estate tax is eliminated entirely, or if a new estate tax structure is created, the only thing that is certain is that if changes are made, estate plans will need to be reviewed and revised. Make sure to keep in touch with your estate planning attorney as new laws take shape and new legislation is passed.
For those who are clients of Family Estate Planning Law Group, you know that we will be keeping abreast of any changes and should you have any questions, you can feel free to contact our office. Our next client workshop on January 25, 2017 will focus on some of the potential changes in estate planning. To register, visit our events page or explore our website for more information.
Reference: Forbes (September 29, 2016) “If the U.S. Federal Estate Tax Goes Away, What Will Single-Family Offices Likely Do?”
Eight Florida Districts Experiment with Eldercaring Coordination
Caring for a vulnerable parent or spouse can become a huge problem when siblings and relatives are busy doing battle with each other instead of taking care of their family member. In extreme cases, which are more common than you might imagine, the situation can escalate until a guardianship procedure is the only solution. [Read more…]