Archive for the ‘Finance’ Category
Making a Will Won’t Kill You
By Cecil Scaglione
Mature Life Features
If you want to get even with your kids, don’t make a will.
Let them squabble over your savings and stuff while they’re being scolded by your surviving spouse. But despite any spite you may feel toward your family — you can make a will bequeathing your estate to your favorite pet, if you wish — you should prepare documents to prevent the government from snatching a chunk of your estate.
Taking some estate-planning steps ensures that your assets go to whom you wish after your demise rather than leaving the decision up to the courts. This also slashes much of the legal costs that linger after you’re gone if you’ve made no plans for your estate.
The basic document is a will. This avoids leaving the disposition of your financial assets and
memorabilia to chance. You should choose an executor to process and administer the terms of your final testament. You also can name a guardian to handle the financial legacy for any under-age grandchildren named in your will.
Preparing a will can be done as easily as writing one out by hand on notebook paper with your signature and without a witness or notary. Stationery stores have handy-dandy write-your-own-will forms that allow for signatures of two witnesses after completion.
There’s plenty of assistance available in your local library and on the Internet if you don’t want to
take on the expense of an attorney or proceed to more detailed estate-planning processes. While
estate planning is highly recommended whether you’re 25 or 75, you should at least write a will.
Mature Life Features, Copyright 2003
Tax Audit Needn’t be a 4-letter Word
By Cecil Scaglione
Mature Life Features
If you’ve been audited by the Internal Revenue Service, you know it can be a traumatic test.
If you haven’t been, there are some simple steps to take to alleviate much of the pain and panic.
The first thing to do is make certain you have documentation supporting all your income and expenses: receipts, canceled checks, and bank, credit-card and dividend statements, for example. If you haven’t started yet, now’s as good a time as any. The IRS never sleeps.
Keep these records for at least three years, which is the normal period the IRS has to audit your tax return. However, it has up to six years to challenge your return if it thinks you have under-reported your income. You need the documentation to prove them wrong. If you didn’t file a return for any time period or filed a fraudulent one, you’re subject to an audit at any time.
Your state (and your city, if it has an income tax) have time-expiration dates that may differ. If you file tax returns in another country, add those expiration dates to your calendar and make certain you keep tax records long enough so you don’t get caught without documentation if your return is questioned.
The IRS treats everyone equally: you’re guilty until you prove your innocence.
That’s why a letter from the IRS can send shivers through anybody who receives one. The first rule here is, don’t ignore it. Most notices include a deadline for responses and the IRS will expect to hear from you by that date.
If you have a tax-preparer, take the IRS notification to him or her immediately. If you don’t have a tax preparer and the IRS is requesting additional information, make copies of the necessary documents and send them to the agency right away.
Even after the challenge limit expires, it’s a good idea to keep your tax returns for a few years extra, along with such documents as your year-end mortgage and investment-portfolio statements. It’s best to have on hand all records for assets you still own, ranging from your house to automobile to major appliances and jewelry. Financial planners report that their clients’ biggest tax error is poor record-keeping.
Your chances of being audited by the IRS are small, but there is no need to gamble. If you don’t maintain your records and if the IRS asks for more information than you have kept, the agency is going to assume that you tossed them out for a reason — that you may be hiding something.
Stress Is Part of Inheritance
By Cecil Scaglione
Mature Life Features
Most people have some idea what they’d do with a financial windfall.
Take a cruise around the world, pay off the mortgage, or move to another part of the world. But then what? It isn’t easy becoming wealthy overnight.
It was estimated during the ’90s that current retirees will pass on some $10 trillion dollars to their baby-boomer heirs.
Many of the people inheriting this money have little concept of the challenges they face.
The first, of course, is what to do with the money. Do you put that $10,000, $100,000 or $1 million into the stock market or real estate? Do you sell the company or farm you inherited? Do you keep all the stocks, bonds, and mutual funds in the portfolio that suddenly becomes your property?
Most financial planners offer this piece of advice: don’t do anything for a while.
That’s more difficult than it sounds. An Oppenheimer Funds survey revealed that 40 percent of baby boomers who had already received at least a $50,000 inheritance made a financial decision in less than a week after getting the money.
Inheriting a family business or apartment building will require more immediate attention than a stock portfolio. But that’s no reason to make any rash decisions.
Whatever the form of the inheritance, you should focus on what you want to do with the money. Do you invest it for retirement income, pay debts, or make charitable donations, for example?
Establishing goals will help you manage the money better.
While the financial side requires patience and some effort to educate yourself on the best avenues to follow, the emotional side of inheriting is the more difficult challenge.
The inheritance may be intertwined with the death of a loved one and, as a result, associated with grief.
Guilt is another major emotional component of an inheritance, financial planners point out, linked to the feeling that the heir is uncomfortable with not having earned the money. Or he or she might not have been fond of the benefactor.
There’s also a feeling of isolation tied to inheriting money as the recipients often worry, with good reason, about friends and family badgering them for loans or gifts.
It’s the emotional stress that causes some folks to get rid of their inheritance as quickly as possible, by disclaiming it or giving it away or just spending it as fast as they can.
On the other hand, people who have taken time to plan what to do with an inheritance have been known to sit on their wealth and continue living in their current lifestyles with the comfortable assurance that their financial future is secure.
Mature Life Features 