How to Speak to an Attorney

 

Many people live decades of adult life before they ever see an attorney. Perhaps they procrastinate on estate planning, never get divorced or adopt a child, never serve as someone’s executor, never start a business, never face criminal charges, and never suffer a personal injury. Also, in many states, people use title companies, instead of lawyers, to conduct real estate closing transactions.

Then there comes a time in life when people need an attorney. Often, it is when they are older, and-perhaps-wealthier and start thinking about transferring assets. What to do? This post describes tips for speaking to an attorney from a seminar that I attended that was taught by two attorneys.

 

Go Prepared- Have a clearly defined purpose for meeting with an attorney (e.g., serving as an executor or drafting a will) and try to anticipate questions that will be asked about pertinent facts related to your case. In addition, make a list of specific questions that you need answers to.

 

Gather Documents- Bring materials related to a case when seeing with an attorney. For meetings related to serving as executor, this includes: a deceased person’s will, bank statements, car/house titles, death certificates, funeral/cremation bills, and a net worth (assets – debts) calculation.

 

Prepare to Discuss “Sensitive” Topics- Consider two common examples: treating children equally in wealth transfers and wanting to keep assets solely in the family blood line by excluding any transfers to a child’s spouse. The attorneys noted that family bequests do not have to be equal.

 

Be Open About Heirs With Issues- Let an attorney know about children in prison or with a substance abuse issue as this information is germane to proper estate planning. Be open and honest about family disfunction issues and know that an attorney is there to help you, not to judge you.

 

Consult Your Spouse First- Talk with your spouse about the issues that you are consulting an attorney about. Otherwise, you might just hear the words “I didn’t know you felt that way” in discussions with an attorney and that can be awkward for everyone involved.

 

Be Open About Marital Status- Tell your lawyer if you are separated (and therefore technically married) and living apart, but not divorced. This situation has implications for taxes and asset transfers. For example, the sale of a jointly held home without a separated spouse’s consent.

 

Consider Attorney Fees- Remember that, while attorneys can serve in designated roles in legal documents (e.g., executor), it can be expensive, especially for them to act as a durable power of attorney agent. If you do name an attorney, provide them with detailed information about your finances so they have the background information that they need and don’t have to hunt it down.

 

Review and Revise- See an attorney every 3 to 5 years after estate planning documents are prepared or sooner if there are major lifestyle changes (e.g., death of an heir, executor, or spouse). The purpose of the review is to make sure that documents still do what you want them to do.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

 

 

Looking Ahead to Your 2024 Tax Return

 

With the 2023 tax filing deadline in the rear view mirror, now is a good time to look ahead to 2024 taxes that you will owe in April 2025. 

In a recent article for the Rutgers Cooperative Extension newsletter, VISIONS, I described key features of your tax return to review for future financial planning including income sources, tax write-offs, changes in tax filing status, tax rates and marginal tax brackets, tax withholding, retirement plan contributions, and capital gains and losses.

This post extends that discussion with a description of seven key steps to take to plan for your 2024 tax return due in 2025.

 

Estimate Your 2024 Income- Project your income from all sources, including wages/salary, investments, rental income, business income, etc. Consider any expected changes such as salary increases, job changes, side hustles, or expected increases or decreases in income.

 

Review Your Tax Withholding- Make sure your tax withholding aligns with estimated 2024 income. Adjust your withholding (and/or estimated quarterly payments), if necessary, to avoid an under-withholding tax penalty. The IRS withholding estimator can help make this calculations.

 

Organize Receipts and Records- Start organizing receipts and documents related to investment transactions, required minimum distribution (RMD) withdrawals, tax credits, and more. Good record-keeping throughout the year will make it easier to prepare your 2024 tax return.

 

Maximize Retirement Plan Contributions-Contribute as much as you can afford, up to the maximum allowable amount, to tax-advantaged retirement accounts (e.g., 401(k) plan). Not only does this help you save for retirement, but it can also reduce your taxable income for the year.

 

Consider Tax-Efficient Investments- Consider strategies to minimize taxes. For example, you can hold investments for a year and a day or longer to qualify for lower long-term capital gains tax rates or consider tax-free investment vehicles such as Roth accounts and municipal bonds.

 

Do Strategic Tax Planning- Explore tax planning strategies that may apply to your situation, such as bunching deductions, contributing to a Health Savings Account (HSA), Roth IRA conversions, or utilizing tax-loss harvesting to offset capital gains.

 

Consult a Tax Professional- Consider consulting with a tax professional or financial advisor for personalized guidance and advice. If you have complex financial situations or anticipate significant changes in your tax situation for 2024.

 

Finally, it is not too early to begin thinking about income taxes in 2026, when the Tax Cuts and Jobs Act (TCJA) is set to expire. If Congress does not extend the TCJA or pass a new tax law before January 1, 2026, 2017 tax rules will apply, indexed for inflation. 

As a result, there will be an increase in tax rates (e.g., 12% rate becomes 15%), standard deductions will halve, the child tax credit will revert to $1,000, and the $10,000 limit on itemizing state and local taxes (SALT) will end. Readjusting to old tax rules and tax rates and making sure that tax withholding is correct will take some advance planning.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

 

Five Ways for Women to Take Charge of their Financial Futures

 

I recently attended a webinar about women’s finances presented by the FINRA Investor Education Foundation in cooperation with the New York Public Library. The webinar began with a justification for focusing on financial planning for women. Among the statistics that were presented from various studies are the following:

 

¨   37% of women have high financial knowledge (vs. 57% of men)

¨   59% of women feel anxious about their finances (vs. 52% of men)

¨   48% of women (vs. 40% of men) find it very or somewhat difficult to cover monthly bills

¨   48% of women (vs. 53% of men) have access to an employer retirement savings plan

¨   In 2020, women controlled $10 trillion of assets; projected to rise to $30 trillion in 2030

Following the introduction, the following five steps for women to take charge of their finances were presented:

 

Set Financial Goals- Goals should be SMART (specific, measurable, achievable, realistic, and time-bound) with a target dollar amount and deadline. SMART goals should be written down and prioritized with periodic reviews and revision, if necessary. It is not necessary to achieve one financial goal before starting to save for another. Multiple financial goals can be funded concurrently. For example, debt repayment and savings for a new car and retirement.

 

Start an Emergency Fund- Even modest savings amounts make a difference. A study by SaverLife® found that maintaining a savings balance of $100+ is correlated with avoiding high-cost borrowing, greater financial satisfaction, and a better ability to pay utility bills. Webinar attendees were encouraged to aim for 3 to 6 months of essential expenses in emergency savings, automate savings if possible, and put tax refunds to work by saving all or part of them.

 

Get Involved With Family Finances- All women should understand their household’s cash flow (income minus expenses) and net worth (assets minus debts), even if they are not the lead financial manager in their family. This includes understanding characteristics and amounts of different categories of investments including retirement savings plans like IRAs and 401(k)s.

 

Know Your Investing Options- Major investment categories include stocks, bonds, cash equivalent assets (e.g., money market funds and certificates of deposit), mutual funds, and exchange-traded funds (ETFs). When investors diversify, they reduce risk by spreading out their holdings. Stocks can be diversified by selecting different industry sectors and company sizes and bonds can be diversified by types of issuers and different maturities.

 

Start Saving for Retirement- U.S. adults are living longer and women live about 5.8 years longer than men, which needs they need to accumulate adequate savings to create a “paycheck” in retirement. Three tips were provided: understand your retirement savings plan, automate your contributions, and learn about the tax benefits of IRAs and employer plan contributions.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.