A recent article on SmartMoney.com offers 3 often overlooked ways to save on your income taxes. Two of the three items have to do with parenthood and buying a home, but of particular interest to our readers is tip #2, Selling Grandma’s Stuff: “If you sold something last year that you inherited, understand that your tax basis for gain or loss purposes generally has nothing to do with what your benefactor paid for the asset. And that’s probably going to save you a bundle in taxes.” If you sold an asset from an inheritance last year (or if you received an inheritance last year at all, regardless of whether you’ve sold the asset or not) let your tax professional know.

Another potentially useful resource for tax savings is the ABC News article Top Ten Commonly Missed Tax Deductions to Put Cash in Your Wallet. This article reminds us to include the little things—such charity volunteer related expenses, the new car deduction, old school books used for work, and more. There are a number of tax deductions your family may be able to take advantage of… if you just know where to look.

If you have not yet completed your tax return by April 15th, or are still mulling over tax deductions, you may consider filing for an extension. But do it in a timely manner. Ask your tax professional for help. Somtimes the additional time to reflect on your circumstances may be well worth the effort.

• Fund those retirement savings accounts. As the article above points out, you can fund your 2009 retirement accounts up until April of 2010, but if you have an employer who will match your investment it’s likely they’d like to know before the end of the year what amount they’ll be matching. If you’re self employed you’re on a tighter schedule because the deadline for setting up a solo 401(k) is December 31.
• If have plans to receive any expensive medical procedures in the near future that won’t be covered by your insurance, you may want to consider having them done before January 1^st. Unreimbursed medical expenses that exceed 7.5% of your adjusted gross income are deductable.
• If you’re in the market for a new home, the homebuyer credit has been extended from November 30^th to May 1^st 2010. This credit used to be only for newcomers to the real estate market, but is now available for both new homebuyers and longtime homeowners looking to purchase a new home.
• A different—but related—course of action is making upgrades to the home you already own. Certain energy efficient improvements to your home can also get you a credit on your taxes… if you get the improvements done before the end of the year.
• One more way you may save money on your taxes this year that you won’t find mentioned in the Forbes article is to create an estate plan. To the extent that the legal planning services cover tax advice or regard income producing property, a portion of the professional fees that you invest in establishing your plan may be deductible from your federal income taxes (providing that your itemized expenses exceed 7.5% of your adjusted gross income).

All of these are good ways to save money on your 2009 taxes, but action needs to be taken before the end of the year. That gives you only… 27 days left to take action!

The emotional loss is only part of this confusion, especially if—like most partnerships—you and your spouse ran your household and finances with a division of labor, each partner taking on the responsibilities that they most enjoyed and were most suited to perform… this includes the financial responsibility. The emotional impact of losing a spouse is hard enough, but in today’s complex financial world what do you do if the spouse you’ve lost was the family “Chied Financial Officer” ?

The first and most important step, according to this article from the Chicago Tribune, is organization. Knowing what your bank balance is, what your expenses are, and where important documents are located is absolutely key to getting through the rough patches. The second step—and this one may be the hardest—is taking stock of your new financial situation and adjusting your lifestyle and spending. Losing a portion of your family’s income is a shock, and people often go through the motions of their previous lives because they simply can’t yet face the reality of their loss. In addition, death comes with its own set of expenses which can make a substantial dent in your savings.

If you feel you just don’t have the strength or focus to deal with financial issues immediately following the death of your spouse,  ask someone to help you temporarily. Eventually, when the grieving process has run its course, you will surface again; and when that happens you don’t want to find that the life you knew has been buried under debt.

The article mentioned above contains a helpful guide for those who are dealing with loss. It includes well-known items such as “contact close friends and family” and “make funeral arrangements” as well as items that may not come to mind as naturally, such as “write an obituary” and “contact the deceased’s employer.” Few people think about these things when under emotional strain, which is why this list is an excellent resource to file away for a time when it may be needed.

If you are having a particularly hard time with the grieving process don’t be afraid to ask others to help with the more difficult items, or to hand the list over entirely to someone else. This is when your own probate or estate planning attorney (or the deceased’s attorney, if they had one) can be especially helpful.

Although it sometimes feels as if time should stand still when someone we love passes away, life does go on, for better or worse. But the world is full of caring and knowledgeable people to help you through the process… if you only know where to look.

Studies have shown that most families have one person who takes care of all the finances: paying the bills, setting aside money for investment and savings, planning the family budget, etc. This may be convenient in the short term, but it can create long term problems. If both partners aren’t aware of the family budget and financial status there can be a tremendous disconnect in spending habits, leading to resentment and often a slow decline into debt. Furthermore, what happens to the family finances if the “accountant spouse” dies or becomes incapacitated? The surviving spouse often has no idea what the family financial status is, or even where accounts or investments are located and how to access that money. The best solution is for couples to talk about their finances often, or take turns being the family CFO.

Even children benefit from a certain amount of involvement in the family financial planning. Having a regular allowance or earning pocket money for chores not only teaches kids about money management, but also helps them understand when they have to wait to get that new video game, or when the family may have to cut back on certain luxuries. Including children in certain financial decisions, such as which charities to support or how to spend surplus cash, teaches them accountability, and that the choices they make can have a lasting impact.

Many of us look upon our finances with dread; but it doesn’t have to be that way. Skill with money matters can bring us just as much pride and joy as skill with a paintbrush, tennis racquet, or any other skill that must be acquired with practice and hard work. With a little education, and the involvement of the entire family, we can all become the masters of our own financial futures.

“…Infant, schoolboy, lover, soldier, justice, pantaloon, and second childhood, ‘sans teeth, sans eyes, sans taste, sans everything’”.

Anyone who has had to watch as their parents age knows how true this passage can be. And just as difficult as watching your parents age can be talking to them about it. No parent wants to show weakness in front of their child, or admit that they need help; and often their reluctance to talk is fueled by the fear that they’ll be “put away”, or have their freedom and independence taken from them. Adult children are reluctant to bring up the subject as well—they’re afraid of angering their parent, or sometimes their afraid of having their worst fears confirmed.

But ignoring the subject won’t make it go away, and waiting too long can be disastrous. The best way to talk to your parents about aging is to bring it up early, before fear and obstinance have set in. Having these discussions ahead of time prepares both parent and child for what may lie ahead, insures everybody is on the same page and that there are no surprises in store.

However, even with advance discussions and planning, it is likely that a few uncomfortable subjects will still come up. This article from Reader’s Digest has some advice on how to broach these difficult subjects (including the subject of estate planning), and even provides a few scripts to help get the conversation started. If you’re still uncomfortable, having a third party mediator can be helpful; a trusted doctor—or even your estate planning or elder law attorney—can be a calm voice of reason in deep emotional waters.

Author Linda Stern recommends mid-year as the best time to start thinking about your taxes because it gives you plenty of time to take advantage of various planning strategies and tax breaks, many of which she outlines in her article. Stern also points out that scheduling an appointment with your accountant in July—when accountants are not nearly as busy as March or April—means you’ll have more one-on-one time to strategize and discuss your financial situation.

Stern’s article is full of good advice and suggestions for saving on your taxes this year, but she forgets one important strategy: Creating your estate plan. Talking to a lawyer about your estate plan not only helps in understanding and organizing your finances, and protecting your assets for the future; but the money you spend in creating an estate plan can be tax deductable. Talk to your lawyer and accountant now about how you can protect—and save—your money in the future.

At first glance, this may seem like a great idea; what could be better than having your healthcare records and your end-of-life wishes stored in one easily accessible place? And Google does their best to make it easy for you to create an advanced directive with them as well. The problem is, not all advanced directives are created equal.

As important as it is to have an advanced healthcare directive, and to specify your wishes for your healthcare agent and your end-of-life care, it is just as important to do it the right way. First of all, each state has its own rules and regulations regarding the legality of your healthcare directive. Secondly, those laws have a tendency to change periodically, and if you aren’t going to be able to keep abreast of these changes you need to have an attorney who will. And last but not least, hospitals take their responsibility regarding patient privacy, the wishes of the patient, and the wishes of the family very seriously. Hospitals will often not talk to your agent or release information about your healthcare status unless you have a directive that complies with all the laws of your state AND you have a signed and updated HIPAA Authorization.

Before jumping on the “great deal” Google offers, talk to your attorney about your own healthcare directive and HIPAA Authorization. If you are determined to take advantage of the opportunity to put all of your healthcare documents online, rather than using Google’s “easy” forms, it might be a better idea to upload your own professionally created documents.

This is where the revolution begins.

A recent article in The Wall Street Journal has collected some of the best websites on the internet to help you keep track of and plan your finances.  These online tools run the gamut of personal finance categories; from budgeting your household expenses to creating a financial plan to managing personal loans between friends and family.  And these aren’t just educational resources, these are interactive tools to help you implement the processes you prefer—and many of these tools are free.

We hope our readers will find these resources helpful,  but if you are one of those who would still like the advice and services of a professional financial planner but aren’t sure who to call, please contact our office.  We would be happy to recommend one who would fit your family’s needs.

The internet is no longer merely where you go for personal e-mail and the occasional online shopping trip—many businesses now exist almost exclusively online, as do reputations and friendships. What tech-savvy people need is a way to dispose of all of their online assets when they pass away, an online will, if you will.  Now there is a company that offers this kind of service: Legacy Locker.

Legacy Locker describes itself as “a safe, secure repository for your digital property that lets you grant access to online assets for friends and loved ones in the event of death or disability.” It allows you to upload login information for all of your various online assets and assign those assets to different friends, loved ones, or trusted agents. Upon your death, Legacy Locker will send the ownership information, along with your own final letter or instructions, to the people you have “nominated”. This means you can assign assets to the appropriate people: your personal e-mail to your spouse, your iTunes account to your daughter, your business e-mail and blog to your business partner.

Of course there are drawbacks; the Legacy Locker needs to live as long as you do to be effective, and you’ll need assurances that it is safe and “hack-free”, but this is obviously an idea whose time has come, because our online lives are becoming as rich as our physical lives, and will soon (if not already) need just as much protection.

Michelman’s story is frightening precisely because it could happen (and is happening) to any of us. The unfortunate truth about medical insurance, long-term care insurance, and Medicare / Medi-Cal for those who qualify,  is that they often cover “most of the cost” of medical treatment—but “most” is woefully lacking when faced with the reality of the high cost of medical care. Deductibles, Co-payments, Share of Cost, the  Medicare Prescription Drug “donut hole” and “uncovered services” can sometimes create a huge personal obligation.

And so we ask again, how does one plan for a situation such as this? The answer begins with “help”.  The medical industry, insurance industry, and government benefits programs are staggeringly convoluted and confusing.  Enlist help in navigating their requirements and regulations. Find a professional who can help you build a plan to make the best use of those systems and what they offer. Find other professionals who are well-versed in peripheral systems who can support that plan.

Medical care in the United States has become a mountain of cost, and even the young and healthy cannot afford to ignore it any longer. 

In an article entitled “Covering Your Assets” Journal writer Mark Klimek asserts that despite some IRS opposition, tax court rulings in recent years have endorsed the use of FLPs when they are used to preserve a family business for future generations.

“Setting up such a partnership could be especially useful right now for families with businesses,” according to the article.   In its present form, “[t]he Obama budget calls for the estate tax to be restored next year at a rate of 45 percent for estates worth more than $3.5 million, or $7 million for couples. Income-tax increases for high earners are on the agenda as well.” Approval awaits Congressional action.

The article goes on to describe many of the dos and don’ts of FLPs, but of course each family’s situation is special, and you should consult an estate planning attorney before making decisions about any specific strategy.

In any case, the time to act is now. According to one expert quoted in the Journal article, “There’s a realization that any kind of estate planning you can do this year is good, because 2009 will probably end up being the most favorable year for taxes ever.”