Marriage or remarriage requires a number of important steps, including revising your estate plan to take into account your new marital status.  One step that is often overlooked – at least until tax time arrives – is the need to review and possibly change your withholding status.

Why?  Your marital status can change how you file and how much tax you owe.  You certainly have the right to file taxes separately even if you are married, but often you will owe less tax if you file jointly.  But in some cases you may fall prey to what is often called the “marriage penalty,” a situation where you owe more because you are married than you would have had you remained single.

In either case, you should review your current withholding to determine if you should make a change.  If marriage will cause your tax burden to drop, you may want to have less taken out of each check so you get the use of your money now rather than at refund time.  If marriage increases your tax burden and you don’t want to owe money at tax time, increase your withholding.

Talk to your account, if you have one.  Every situation is different, so if you’re unsure, get professional help.

And if you want to ensure that your tax burden is as low as possible where your estate is concerned, call our offices for an appointment.  Tax planning is important while you’re alive – and after.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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Our goal is to help you protect your assets, your estate, and your loved ones, both now and after you pass away.  With that in mind, here are some basic tips to help protect your money when you’re online:

• Check your accounts regularly for unauthorized activity or unusual purchases.  The sooner you report a problem, the quicker it can be fixed.  Check your bank accounts at least once every couple days, and if you see a problem contact your bank immediately.
• Don’t use public computers to access financial accounts.  It might be handy to use a computer at the library, for example, but viruses or spyware could snag your personal information.  The same holds true for friends’ computers.
• Make your login and password difficult to guess.  Birthdays, the names of your kids, the street you grew up on – those can be easy for hackers to determine.  Use random characters, including numbers and capital letters.  A password that is easy for you to remember is also easy for a hacker to guess.
• Never respond to emails from your bank or financial institution. And don’t click on links in “bank” emails.  No bank will ask for information by email.
• Never provide your PIN by phone.  If you call your bank, the representative may ask for your middle name, birthday, or zip code in order to verify your identity, but they will never ask for your PIN.
• If you receive a call and aren’t sure whether it is legitimate, ask for a phone number so you can call that person back.  In fact, ask for the bank’s main switchboard number and then the person’s extension so you can be sure the caller is legitimate.  The bank won’t mind – but an identity theft will.

It’s your money and your identity – keep it safe!

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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A reverse mortgage is exactly what it sounds like:  Instead of making payments to the bank to pay off your mortgage, the bank makes monthly or lump-sum payments to you from the equity in your home.   That way you get extra income while remaining in your home – for as long as you live (or are able.)

Reverse mortgages can, under the right circumstances, be a great way to create additional income without significant risk.  The loan does not have to be repaid until you leave your home or pass away.  (Keep in mind that depending on how long you live no real equity may remain in your home when you do pass away, so if you intend to leave your home to your heirs, a reverse mortgage may not make sense.)

Until recently up-front reverse mortgage costs have been relatively high.  A new FHA reverse mortgage program, the Home Equity Conversion Mortgage (HECM), cuts up front costs from 2% to just .01% of the property value of your home.  To learn more about reverse mortgages, check out this booklet from the National Council on Aging.

Also keep in mind proceeds from a reverse mortgage could impact your eligibility for Medicaid, Social Security, or other programs.  Call our office to make sure a reverse mortgage makes sense within the context of your overall estate plan.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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Do you know your credit score? You should, it’s the basis for many credit related decisions and it can significantly impact your cost to borrow by affecting the interest rate charged.

This is especially important for seniors because they are a prime target for identity thieves. Seniors tend to be more frugal with their money and may not rely on or check their credit on a regular basis.

This makes it easier for identity thieves to establish fraudulent credit accounts because it often takes months before the fraud is discovered.

Your credit score is a rating between 300 and 850. The higher your score, the better your credit rating, and the more likely you are to get credit and to get it with a lower interest rate. The three major credit reporting agencies may each have a separate credit score for an individual, and you should contact them for information on how to obtain a copy of your credit report:

• Experian: 1-888-397-3742
• Equifax: 1-800-685-1111
• TransUnion: 1-877-322-8228

There are several factors that determine your credit score, including:

• Payment history;
• Debt-to-credit ratio: which is how much you’ve borrowed compared to how much you’re approved to borrow with your current credit cards and loans;
• Length of credit history;
• Types of credit; and
• Number of credit inquiries.

Knowing your credit score and the contents of your credit report are one thing, keeping them in good shape is another. The top mistakes that many senior citizens make that impact their credit scores are:

• Making payments late.
• Closing credit card accounts – It would seem to be counter-productive that closing a credit card account that is not being used would negatively impact your credit score, but it lowers the debt to credit ratio mentioned above. It is best to close the card or account only if it offers too much temptation for overspending or it has a costly annual fee.

All of these issues are easily corrected by staying informed and aware. Check your credit report at least once a year. By law, you are entitled to a free credit report annually from each of the credit reporting companies listed above. Don’t fall prey to the catchy commercials offering free credit reports, the report is already free and easy to obtain. Review the reports carefully, if there are errors, each company has a procedure for fixing them or disputing information.

All senior citizens need to stay on top of their credit scores and know the factors that affect their score. Living on a fixed income after retirement can present unique challenges, and it’s best to keep informed and aware to better face them.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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You’ve probably heard all the debate about the recent Health Care Reform laws but what you might not realize is that the new law contains two important provisions that could make paying for long term care just a little bit easier.

The first is a new piece of legislation called the Community Living Assistance Service and Support Act, or CLASS Act for short. The CLASS Act creates a new government-managed savings program similar to Social Security that allows participants to set aside money now for long term care expenses later.

The program is optional, so you can opt-out if you want, and once you’ve contributed to the plan for at least five years, you’ll be eligible for financial assistance. Experts expect the plan to pay about $50 a day to help offset the costs of long term care. Exact benefits and premiums are still being decided by the Department of Health and Human Services.

The program is scheduled to launch in 2011.

In addition to the CLASS Act, the new reform laws also expanded Medicaid, the government-assistance program that covers most nursing home expenses.

This expansion means Medicaid coverage for a large number of seniors that have not been able to qualify in the past.

While the CLASS Act is a possible step in the right direction, it is by no means a complete solution. Only a qualified Estate Planning Attorney can help you craft a complete estate plan to fully protect what you have from the cost of nursing care, probate and taxes.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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As our population ages, more and more adult children are helping their parents with financial matters. The topic of money is a difficult one in many families, and it’s especially hard to let go of any control over this area of your life. But, if you have a good relationship with your children, now might be the time to open a conversation with them about certain aspects of your money. Together, you can develop a plan to keep your finances on track as you get older, in the event that you become unable to do it all yourself.

The first thing to consider is who to ask for help. For most parents, the natural choice is one or more of their children. Of course, if your child is dealing with financial problems or struggling with addiction, it may be best to rely on another family member or a close friend instead.

Once you decide who to ask, it’s time to start the conversation. This is best done in person, in a place where you’ll have access to your financial documents, and at a time that is not likely to be high-stress. Let your child know that you’d like to have a discussion about some important financial issues, and have a conversation about what you need and what your child is able to do. Together, come up with a plan, and then put everything in writing. This avoids misunderstandings in the future, and it can also prevent bad blood between siblings, if you’ve chosen one child and not another.

The person who’s going to help you needs to know your entire financial picture, so that they’ll be prepared in the event of an emergency. This includes letting your child know where all your income comes from, where your bank accounts are (and account numbers), where safe deposit boxes are, what bills you have and when they’re due, and where your insurance and estate planning documents are.

Make sure your child knows how you handle all of your day-to-day financial chores, so if they’re not taking over immediately, they’ll know what to do when the time comes. It’s best to write down detailed instructions.

Consider sharing a checking account, and using online billpay so that your child can help with paying bills.

Last but not least, consult with a lawyer to establish a power of attorney and to make sure that your child can do what you want him to do – and only what you want him to do – when it comes to your finances.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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If someone close to you has chosen you to be the executor of their estate, it’s because they trust you deeply. However, you may be feeling more nervous and intimidated than honored. Each estate is different, and serving as an executor can be simple or it can be daunting. A qualified estate planning attorney will have the skill and experience to walk you through the process. Here are a few of the duties you might perform as executor:

• Immediately locate and secure the assets of the deceased. This includes real estate; cars, trucks and boats; bank accounts, insurance papers, certificates of deposit, IRA’s, and stocks and bonds. You’ll want to keep these things safe and make sure no one, not even family members, tampers with them until it’s clear exactly what needs to go to which person (and it’s not always as straightforward as you might think).
• Gather important papers, including the Will and any other estate planning documents, life insurance policies, and certified copies of the death certificate.
• Select an attorney for the estate.
• After checking with an attorney, and depending on the condition and needs of the estate, pay the current obligations of the estate and manage any on-going assets, such as investments or real estate.
• With the help of an attorney, decide whether the Will needs to be probated (whether any court proceeding is needed concerning the Will).
• Identify which assets are not subject to probate, meaning that they can go directly to beneficiaries.
• Deal with the creditors of the estate, including notifying creditors of the deadline for making claims against the estate, advertising a “Notice to Creditors” in the local newspaper, determining which creditor claims are valid and paying them in the order established by law, and defending the estate against invalid claims.
• Manage the taxes for the estate, including filing the final income tax returns for the deceased; filing a federal estate tax return, if necessary; and if applicable, filing a tax return on behalf of the estate of any income earned during the administration of the estate (from rental properties, investments, etc.).
• After all claims are paid, distribute the assets of the estate to the beneficiaries as directed in the Will, prepare a final estate accounting (if necessary), and close the estate.

As executor, you’ll be keeping up with many details as you perform your duties. An estate planning attorney can help you make sure that you do your job as efficiently and as effectively as possible.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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Recently enacted in January 2010, a new law allows for any taxpayer with an existing IRA (investment retirement account) to convert that account to a Roth-IRA without regard for their income.

Under the old law, an IRA to Roth conversion could only be done by taxpayers with a Modified Adjusted Gross Income (MAGI) of $100,000 per year or less.

But this new law allows any taxpayer, regardless of their annual MAGI, to take advantage of the conversion to a Roth IRA. No matter your income, you can now convert your existing IRA into a Roth-IRA and reap the tax saving benefits. This advantage applies to both married and same-sex partner couples.

Advantages to having a Roth IRA

Roth IRAs are a great way to save for your child’s education, invest in real property, and of course to save for your retirement. Since their inception in 1998, Roth IRAs have been helping Americans save money for their retirement. The unique advantage of this type of account is its ability to allow its holder to make tax-free distributions (as long as the account has existed for at least 5 years). Another major advantage is that you are not subject to the RMD (required minimum distribution) rules that require withdrawals from your Roth IRA at age 70.5 years. In fact, there is no requirement to make any withdrawals in your lifetime if you so choose. This makes it especially advantageous for estate planning for the purpose of passing money onto your heirs without paying tax.

Before you convert your IRA to a Roth, though, it is important to consider the tax implications for the year in which you convert. As the law currently stands, regular income tax will be assessed on the fair market value of the conversion amount (you may convert all or a partial IRA to a Roth). That means that if you convert $10,000 from your existing IRA to a Roth IRA anytime in 2010, then the government will add $10,000 to your total taxable income for that year.

Likewise, these same tax implications could affect your heirs if you’re using your Roth for estate planning purposes. To determine specific details for your situation, be sure to consult with a professional estate planning or tax attorney.

Mark S. Eghrari & Associates, PLLC is a member of the American Academy of Estate Planning Attorneys.

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