• estate planning for kidsFirst a little warning. I’m taking the time to type this, as I always do, on Monday morning. Frankly, it’s just a perfect way for me to start my week here at our little Worcester tax service. Our office processes are such that the post actually gets put on the website sometime later, depending on client and workflow.

    And I hear something is happening this Tuesday?
    (I don’t know … might be a rumor.)

    The point being, I’m going to save my election analysis for next week, after which point (presumably!) we’ll know our next President, and Congressional make-up. And at which point, you’ll get “Jay Walia’s Take On Post-Election Taxes” for Worcester area families :).

    I’ll do my darnedest to put together a clear, actionable “post-mortem” on the election, and what it might mean for YOUR finances and taxes. Frankly, the Congressional results matter a little more on that front than does the Presidential one, but obviously the future of the ACHA law (“Obamacare”) also seems to hinge on the Presidential outcome. Here in Worcester, as across the country, we wait with bated breath.

    And we shall see, won’t we! (I considered writing two versions of this, depending on the outcome, but that seemed a little silly … and there is still a chance we won’t know the outcome until a few days later anyway.)

    Now, a couple important items before I get to my article:
    1) If you’ve been affected by Sandy, we are standing with you.
    There are some federal breaks available … but you should also know that the tax code can hold some traps for those seeking help.
    (http://online.wsj.com/article/SB10001424052970204707104578093272648532756.html)
    Call us (when things have settled, of course!) and let us help you! (508) 753-3532

    2) Did you see George Lucas’ Jedi move?He sold his business THIS YEAR — before the tax code changes kick in. Smart stuff, right there.
    (article: http://www.marketwatch.com/story/george-lucass-jedi-estate-planning-2012-11-01)
    Do you have year-end moves that you should make now? Like taking more income this year than next, if you somehow have some discretion on it? Be sure to talk it through with us. This is, after all, what we do. (Ahem: (508) 753-3532 :))

    Anyway, last week I wrote about teaching your children re: finances. But there’s another side to that story, and it involves how things would happen if a metaphorical “storm” were to strike your family… (hint: be as prepared for it as you can be, in advance).

    Your Favorite Worcester Tax Service Breaks Down Three “Must-Do’s” For Responsible Parents
    Many people think that because the “estate tax” threshold has been raised as high as it has, that estate planning is no longer very necessary.

    Well, this issue is so much bigger than how much money Uncle Sam gets to take from an estate. You see, when I think about what frightens parents most, seeing their children in a vulnerable position pretty much tops the list–whether it’s at home, at the pool, or any other place in public.

    What exacerbates this further is knowing the fear which children themselves feel when they are surrounded by people they don’t know, and aren’t sure what to expect from what their parents have set up for them.

    Put the following steps into place, and you’ll eliminate at least some of these dangers…

    #1: Identify a Clear Plan for the Care of your Children.
    Did you know that 74% of parents have not named guardians? Worse, of the 26% who have, most have made 1 of 6 common mistakes that leave their kids at risk.

    When you name short AND long-term guardians for the care of your children, you must give clear guidance to your caregiver and everyone you’ve named to care for your children, in written form. Just by naming these guardians (both short and long-term), your children never have to be put in a situation in which they would be taken out of your home and into the hands of strangers if something happens to you.

    An even better step, if your children are old enough for this discussion, is to tell them this plan. Don’t make a big deal of it…you don’t want to frighten your kids at the prospect of your loss. But they’ll feel better knowing that you’ve selected people they can trust and love to care for them well.

    #2: Properly Document Your Decisions
    Parents often have discussed and agreed upon a guardian for their children and have even made their wishes known to their families; however, not documenting these decisions can result in your wishes not being followed when it really is too late.

    You see, if you don’t communicate your wishes in a legally-binding document, you are placing your children in a “free for all”. Without clear legal guidance, every family member has equal priority of guardianship and the decision about the care of your children will be left in the hands of a broken-down court system and some judge who doesn’t know you or your kids.

    This legal documentation is particularly important if you intend for a friend to care for your children,as courts will almost always choose a family member over a friend.

    Also, don’t forget to leave behind specific guidance about how you want your children raised.  Education decisions, healthcare decisions, discipline decisions … these are all things you care a lot about and would want made consistent with your opinions for how your kids are raised.

    #3: Don’t Neglect Their Financial Future
    Sure, there’s different schools of thought on this issue. Some parents don’t want to overwhelm their children with too much in their bank accounts at once, which is understandable.

    But, regardless of how you structure this provision, providing sufficient financial resources for your children’s care is your responsibility. And, as a responsible parent, you must take steps to protect what your children will receive … whether it’s through life insurance, savings or some other means.

    To do so, establish a living trust, to receive any life insurance benefits your children would receive, so that they don’t get access to your assets at the age of 18; and make sure your living trust holds on to the title to any assets that would go through probate in the event of your death. And, if your estate is large enough, you will want to plan to avoid estate taxes as well.

    All of these issues are things we routinely secure on behalf of our clients. If you haven’t yet set any of these items into place, call us right away ((508) 753-3532), and we’ll either help you, or connect you with someone who can.