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Setting Estate Planning Goals

Courtesy of Armstrong, Fisch, & Tutoli Attorneys at Law · July 26, 2010 ·

Having an idea of what you’d like your estate plan to do is a great first step to creating the plan itself. Setting goals will help you identify the tools you need to make the estate plan right for you.

And although no two estate plans are the same, there are some basic objectives that are common across the board:

Maintain the value of your assets. This is actually one of the primary goals that many people have when they consider estate planning.

Provide for your family in the event of death or disability. Will your family have the financial support they need when you’re no longer around? Creating an estate plan is a good way to ensure they do.

Naming a guardian for minor children.. If something should happen to you before your children are old enough to care for themselves, your estate plan ensures you’ll have a say in who raises your children.

Naming the executor for your estate. Having an estate plan allows you to decide who will oversee your estate and the distribution of your assets.

Naming your heirs. It’s your property – you should get to decide who gets what. An estate plan gives you that ability.

Minimize taxes and legal fees. Depending upon how you construct your estate plan, it is possible to minimize taxes and in some instances, avoid probate and all the fees that go with it.

Once you’ve identified your estate planning goals, a qualified estate planning attorney can help you identify which goals are obtainable, and advise you on aspects of your estate plan that you may have overlooked.

Retirement Cash Flow Through Real Estate

Courtesy of Armstrong, Fisch, & Tutoli Attorneys at Law · July 23, 2010 ·

If you are nearing retirement and are thinking of selling your home because you no longer want the problems of taking care of a large house, or maybe you plan to travel, you might want to reconsider. You can actually turn your home into a monthly cash flow that can help you finance your retirement.

This is a good option for retirees that no longer want to live in their home. There are a number of benefits to renting instead of selling your house, especially if you already have your house paid for. When your home is already paid for most of what you get in rental income will be profit. If you want to travel, you can hire a management firm to oversee the rental or ask one of your adult children to take care of it.

Does it Makes Sense for You To Rent Out Your Home

Assuming that your home is paid for, most of what you get in rental income will be profit, but you do have to factor in some costs, such as upkeep on your home, as well as vacancy time. Before you decide if renting your home will be the better alternative to selling, you will first have to look at the expenses.

How much will you likely be able to charge for rent? Once you have come up with an amount, you will need to add together the costs you are likely to incur, such as home insurance, repairs to the house, taxes, and possibly property management fees. The cost should be about 10%, but can be up to 20%. With these calculations, if you rent your home for $1,500 a month you should make about $1,200 a month profit. Adding this monthly income to your retirement cash flow will obviously be very helpful.

Another advantage to renting your home instead of selling is that you will still be building equity in the property, and can sell it at a later date if you choose. Your house will likely continue to increase in value over the long term so when you do sell it, you may possibly make a bigger profit than you would if you put it on the market now.

Decrease Tax Liability

When you rent out your home there are some tax deductions that can be helpful in lowering your tax obligation. All of the repairs that you make on the home can be deducted from your income, or depreciated, as well as some travel expenses, if the travel involves taking care of your rental property. You might even be able to get a deduction for a home office if you use it to manage your rental property. Travel expenses and home office deductions can be tricky with the IRS, so be sure that you get the advice of a tax professional before using these deductions.

Your Retirement Planning Checklist

Courtesy of Armstrong, Fisch, & Tutoli Attorneys at Law · July 21, 2010 ·

While retirement can be a happy occasion for some people, it can be a source of anxiety for others. Some are happy to be retired because it allows them more time to travel and do all of the things that they didn’t have time to do while working. Others worry about finances, or if they will feel needed or useful. And then for some, retirement includes a generous mixture of all these feelings.

If you want to go into retirement without the anxiety, it is best to plan your retirement, and the earlier you do this the better. No matter how old you are there are steps you can take to plan a retirement that you will feel secure and happy with. This is especially true when you consider funding your retirement.

This checklist can help you get ready for retirement, even if you are decades away from those golden years.

The first thing to look at is what you want to do when you retire. Will you want to live in a retirement community and take life slow, visit relatives, or travel the world?
Once you know what you want to do in your retirement years, you will then need to calculate how much money you will need for retirement. There are retirement calculators available online that can help you to determine the amount of money you need.
After calculating how much money you need to retire, you will then be able to tell where you are financially for retirement and how much longer you will have to save and work before you can retire.
Look for ways that you can save money for your retirement, such as an employer sponsored 401k, an IRA, as well as investing in stocks and bonds.
Keep track of what your benefits will be from Social Security. Each year you will get a letter from the Social Security Administration that will tell you how many credits you have toward retirement benefits, and what the amount of your benefits will be.
Find out when you will qualify for Medicare, and the best age to apply for your Social Security benefits. For some people it may make sense to delay collecting these benefits so they will have a larger monthly income.
Get information on withdrawing money from your retirement early if the need arises, as well as the best time to start taking withdrawals for retirement.
Don’t forget to put an estate plan into place that includes your Last Will and Testament, a Power of Attorney, and any trusts that may be necessary to protect your assets for yourself, as well as your beneficiaries.

The better prepared you are for retirement, the more you will be able to relax and enjoy this time in your life.

What is a Durable Power of Attorney?

Courtesy of Armstrong, Fisch, & Tutoli Attorneys at Law · July 19, 2010 ·

Estate planning is all about protecting you and your loved ones from the unknown. One of the ways to do that is to use an estate planning tool called a Durable Power of Attorney.

This legal document enables you to choose someone to act on your behalf in the event that you become disabled or incapacitated. The person named in your Durable Power of Attorney would be able to pay your bills, transfer money to and from your accounts and enact financial transactions for you.

And if you’re thinking you don’t need a Durable POA, think again.

Disability can strike at any time. Strokes for example, often strike seemingly healthy people with no real medical concerns. Suddenly, you’re unable to take care of yourself and must rely on family members and friends to it for you. But when it comes to writing checks on your account or discussing payment plans with creditors, not just anyone can do that. They must first have your written authorization – something you’re no longer able to give.

Now without that authorization, your family will have to go to court and have you declared incompetent. This can be a lengthy and costly process, not to mention personally humiliating for you.

See why a Durable Power of Attorney is so important?

Fortunately, your estate planning attorney can help you draft a Durable POA that addresses all your concerns. You can make it active only in cases where a doctor has certified a need or it can be active from the time you sign, something that might come in handy for married couples.

A Durable Power of Attorney will end upon your death and it can also be revoked by you and by court order.

To learn more about drafting your own POA and other estate planning tools, give our office a call today.

Michele A. Tutoli is a Member of the American Academy of Estate Planning Attorneys.

Avoid Probate With A Living Trust

Courtesy of Armstrong, Fisch, & Tutoli Attorneys at Law · July 16, 2010 ·

While probate is a common occurrence, most people would prefer to avoid that particular experience. Probate can be expensive, time-consuming and emotionally draining. And considering that probate occurs after you’ve lost a loved one, the last thing you want to do is spend time and money in court dissolving your family member’s estate.

Fortunately, a living trust can help you do just that.

With a living trust, all your assets are transferred into the name of the trust rather than being titled to you individually. This is important because when you pass on, any assets titled in your name are subject to probate. But assets in the name of the trust can be passed directly to your beneficiaries without court supervision.

How to Create A Living Trust

Because a trust is a separate legal entity, you’ll need a legal document known as a Declaration of Trust. Your estate planning attorney will help you prepare this important document. There are however, some things you’ll want to have figured out in advance:

Your Trustee – Typically the person who created the trust (you) chooses to act as their own trustee, so that you have primary control over the assets you put into your trust. But you don’t have to be your own trustee and if you’re not sure, talk it over with your attorney to get a clear understanding of all your options.
Funding the Trust – Once you’ve created your trust, you’ll then need to fund it so start thinking about what assets you want to use. Your house is a good one for example, but it might be easier to keep your car in your own name. Again, your attorney can give you guidance on which assets work best, but it certainly doesn’t hurt to start thinking about the assets in your estate now.
Name Your Beneficiaries – Who will inherit after you’re gone? Make a list of the people or organizations that will inherit the assets and property owned by the trust after you die. Keep in mind that this will only cover the property and assets that are held by the trust; anything outside of the trust you would need to cover with a will.
Name a Successor Trustee – This is the person that will become trustee after you die.

Having this kind of basic information mapped out is the first step to creating your own living trust. If you’d like more information about a living trust, contact our office today.

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