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1. Plan for the Future
Everyone should be planning for the future, especially in times of turbulence, like 2020 clearly showed us. Anything can happen and change at a drop of a hat, and we need to protect our security and our family from any possible circumstances.
One of those things is to plan for what would happen to your Estate.
So what is Estate Planning?
- Do you have a car?
- Do you have a bank account?
- Do you own jewelry? Furniture? A home?
Chris Downs from Krupa Downs Law has yet to encounter someone who could not answer yes to some of the questions.
Our takeaway from this is that everyone has an estate. Many Moms haven’t considered what could happen to their shared or solely-owned property once they pass or once their spouse passes.
For more tips on Estate Planning and setting up a Will, Chris Krupa Downs has you covered.
2. Who gets my home when I’m gone?
Written by: M. Jnana Settle, Managing Attorney, Paul Dollahite, Associate Attorney from The Settle Law Firm, PLLC
For many families, the home is one of the largest investments they’ll ever make – and one they want to ensure goes to their loved ones when they’re gone.
Unfortunately, transfer of the family home in Texas is a complicated issue due to Texas’ complex real estate, inheritance, and homestead laws.
Without estate planning in place, families often find that their interest in the home, along with money from its sale, is distributed in unforeseen ways– including to step-children and the government.
Community Property Does NOT Always Go to the Spouse!
Community property consists of most assets acquired during the marriage. Contrary to popular belief, a community property home does not always go to the surviving spouse, even when bought during the marriage.
In a blended family situation with no estate planning, step-children of a surviving spouse inherit the community property of the deceased spouse. This often results in estranged, adult step-children co-owning 50% of a home alongside their surviving step-parent. Usually, this was not what the deceased spouse wanted, but without a will and other planning, this outcome is legally unavoidable.
If the step-children are minors or mentally incapacitated, not only is the distribution of funds problematic, but selling the home may require a complicated court proceeding pertaining to their interest.
The Government Can Take Your Home When You’re Gone!
In Texas, the Medicaid Estate Recovery Program (MERP) is entitled to make appropriate claims on a home once there are no qualifying people occupying the home (such as a surviving spouse or minor children).
For those who receive long-term services from Medicaid, the state of Texas has the right to ask for reimbursement from their estate after they die. While a will alone cannot avoid MERP, estate planning attorneys in Texas utilize several types of specific deeds as non-probate transfers.
These deeds CAN legally avoid the MERP process, saving your home and ensuring that what you’ve worked so hard for during your lifetime goes to benefit loved ones after you’re gone, instead of to the government.
Probate is Time-Consuming and Expensive!
Although going to court to probate the estate of a loved one is much easier and less expensive for someone who died testate (with a will) than it is for someone who died intestate (without a will), for many families, probate can be avoided altogether with proper estate planning. Revocable living trusts, also known colloquially as family trusts, are a popular probate-avoidance strategy.
In addition, transfer on death deeds, rights of survivorship for vehicles and financial accounts, and other non-trust strategies are often inexpensive ways to avoid probate for simple estates.
The attorneys at The Settle Law Firm, PLLC, are committed to finding cost-friendly solutions for all clients.
Copyright, The Settle Law Firm, PLLC
213 N. Murphy Rd, Ste 500, Murphy, Texas 75094
www.TheSettleLawFirm.com / 972-914-9252
3. Get your Taxes in order
Advice provided by Joe Hockaday CPA, based in Frisco
Have a small business? You may want to look at how you file.
Many business owners can deduct 20% of qualified business income when calculating their federal taxes. Tax reform allows taxpayers to deduct 20% of their profits for all pass-through entities: sole proprietorships, SCorp and partnerships. So…if your profits are say $50,000, you only pay taxes on 80% of the $50,000, or $40,000.
This is subject to certain conditions and limitations, so make sure you speak with a tax professional who can asses your unique situation. There are other ways to lower income taxes by selecting the proper entity. Let Hockaday CPA help you make that decision!
Ways to limit your tax liability.
Retirement contributions – if you don’t already contribute to a retirement fund with your job, you may be eligible for a tax deduction by contributing to an IRA. Keep in mind there are income thresholds and maximums you can contribute. Prior to filing, it’s best to contact your financial planner, and CPA for the best tax savings for your situation.
Whether you are a small business or individual, donations are always a great way to add a deduction to your return and help others at the same time. However, note in 2020 if you take the standardized deduction, you can include up to $300 in charitables (for single taxpayers) and $600 (for married-filing jointly taxpayers).
Plan and re-plan.
Meeting with your CPA at the beginning of the year to create the best tax saving plan is key. There are several tax strategies to take advantage of, especially if you have your own business. At Joe C Hockaday, CPA we have our Optima Program where you hire your kids, and keep more of your money for the things you love. However, setting this up earlier than later is key.
At anytime of the year should you feel your income or job situation may change, reconnect with your CPA to again reassess on what your best options may be.
Know the deadlines.
The IRS allows for extended deadlines. For business (partnerships and S-corps), the deadline to file a return or an extension is March 15th and deadline For filing personal returns and extensions is April 15th. You can go to IRS.gov, or ask your CPA, and you can extend your deadline to file to September 15th for partnerships or SCorps returns, or to October 15th for personal and corporate returns.
When you file an extension, that is simply an extension to file. So…any balances due and paid after 4/15 will be subject to the late payment penalty and interest.
Also, we have a pay-as-you-go system of taxation in the US. What this means is the IRS expects you make tax payments throughout the year. If you are a W2 employee, chances are you have elected for taxes to be taken out of each paycheck to make these payments. However, if you don’t make quarterly payments, or if not enough is withheld from you paycheck, the IRS can assess an underpayment penalty.
4. If you’re needing to separate or Divorce this year what do I need to consider?
If you are a Mom considering divorce, there is not one piece of advice that an attorney can give you that encompasses all divorce cases. Each divorce and each family are unique, so your legal advice really should be tailored to your specific circumstances.
Scheduling a consultation with an attorney to discuss your particular case is of the upmost importance to protect yourself if you are considering filing for divorce. One thing I can offer as advice is to not set up a precedent prior to the divorce that you do not want to be followed in the divorce.
For example, don’t agree to a 50/50 schedule with your kids when you and your Husband are separated if you do not believe that would be in your children’s best interest when the divorce is final.
Courts will look at what you were doing in the months immediately preceding your divorce filing to see what is “normal” for your family.
Additionally, co-parenting and keeping your children out of any parenting conflicts are always good advice.
Thank you Hanshaw Kennedy Hafen Family Law for providing this advice.
Get your budget in order. Keep track of your bills, bank account details and start itemizing your costs as it relates to your household and your children.
Think about how much you spend on auto expenses (gas, insurance, tolls, parking); cell phone; Internet; utilities; credit cards and other debts (including student loans).
Will you have expenses for kids? Private school, daycare, extracurricular activities, clothing, grooming, medical expenses? Find a good budget worksheet and fill it in to the best of your ability ahead
If you have copies of your spouse’s pay stubs, this is useful too.
Timeline of Relevant Facts of Marriage
It is very helpful for your attorney if you have a list of facts including the date and location of marriage; any moves throughout your marriage; when children were born or adopted or otherwise brought into your home – and their names; any incidents of counseling, healthcare issues that may be relevant, issues with children that may be relevant; and instances of any family violence, verbal abuse, financial abuse, emotional abuse, physical abuse, and sexual abuse during your marriage, as well as any affairs or other issues you think may come up (that can be used in your favor and those that may be used against you)
Are you currently facing a divorce?
At Hanshaw Kennedy Hafen Family Law, they’ve been representing families and individuals in Collin, Dallas, and Denton counties, when it comes to navigating a variety of family law matters. They’ll provide you and your family with reliable advice and zealous representation while partnering with you through the entire legal process. They know every case and situation is unique and strive to ensure that your case is handled with care and attention to get you the results you and your family need.
Their mission and goal for every client is to provide exceptional, efficient, results-oriented legal representation. They know that there are many options for legal representation but they’re the partner you can trust to get you results.
Call their offices today at 972-731-6500 to schedule a FREE consultation.
5. Aim to be Financially Secure
- Always be aiming to grow your savings. Even an old-fashioned piggy bank can help, or you can set up a transfer each month from your checking to a savings account which comes out right after your pay check has gone in. It adds up over time!
- Consider your income streams – do you need to work from home or need a side-hustle or a new job?
- Look at your insurance policies and the coverage they offer – for life insurance as well as day to day policies.
If there’s one thing we’ve learnt from 2020, it’s that life is unpredictable. If you have the time available, we recommend you plan to take care of as many of these things as possible for 2021.
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Disclaimer: Informational purposes only. This blog post is not Legal Advice or a substitute for legal advice.