Are you considering making a sizable financial gift to a friend or family member? A financial gift can be a great way to make a difference in a loved one’s life. It can also be an effective estate-planning strategy, as gifting may potentially remove assets from your estate. That could reduce the amount of assets that face probate and the estate tax.
Gifting could trigger its own set of taxes, though. You may not know gift tax exists or how it works. Depending on the size of your gift, you could face up to a 40 percent gift tax.1 If you fail to pay the tax, the recipient may face additional tax obligations.
How can you make your gift without creating additional tax liability? And how do you know if you should worry about the gift tax? Below are a few important facts to keep in mind as you develop your gifting strategy.
Long-term disability is an extended inability to work due to a physical condition. Disability can be caused by a broad range of medical issues like accidents, chronic pain and injuries, serious illnesses, and much more. If you suffer a disability and are unable to work, you could face steep medical bills along with the burden of funding your expenses while not receiving a paycheck.
You can minimize the financial risk of disability by using long-term disability insurance, which pays you a monthly benefit should you ever become physically unable to work. You can use the monthly benefit to pay bills and replace your lost income. The amount of the monthly benefit is often calculated as a percentage of your salary.
Below are a few questions to ask as you shop for disability insurance. All of these questions involve features that impact the policy’s premium. If you can’t answer these questions, you may want to do more research before you commit to a policy.
Is retirement quickly approaching? Do you also have children in the home who will be heading off to college at some point in the future? If so, you may be feeling pressure to save for both retirement and your children’s future college expenses.
The challenge for many families is finding enough extra money to save for both college and retirement. You may be in the same position. There could be extra funds available to save for college or retirement, but not for both.
In that situation, which goal should be the priority? Both are obviously important. You likely want your child to have access to the best education, but you probably also want to enjoy a comfortable retirement. How do you balance the two?
Are you thinking about the kind of legacy you will leave for your loved ones after you pass away? Your estate plan should prioritize your objectives and offer a strategy. It should also identify risks and challenges, such as taxes, end-of-life costs and even probate expenses.
One risk you may want to consider is debt. Many retirees try to minimize debt before they end their careers. However, that’s not always possible. Unexpected costs always arise, even in retirement. You could have credit card debt, mortgages, medical bills and more.
It’s possible that your debt could impact the amount of assets that are distributed to your heirs. When you pass away, many of your assets will likely pass through a process called probate. That’s the legal process for settling an estate, and it often includes tasks like notifying heirs, liquidating assets and distributing inheritances.
Retirement is a time for you to kick back and enjoy life. There are many things people consider doing in their post-work years. With newfound free time, it’s easy to start spending money on costly things you never would have considered before.
For many retirees, it’s difficult to balance the desire to enjoy their newfound freedom with the need to stay within budget. Most retirees live on a semi-fixed income, so large cash outlays can have a substantial impact on their finances. Before making a big purchase, consider how it may affect your ability to live comfortably in later years.
Below are three common ways retirees spend through their savings. Think carefully before going through with any of these transactions.
Filing early provides you with an immediate source of guaranteed income. Delaying Social Security increases the benefit you’ll ultimately receive down the road. So when is the right time to file? The truth is, there’s no one right answer to that question because it depends on your individual circumstances.
Whatever you ultimately choose, it’s important to consider your options carefully. It may be one of the most important decisions you make affecting your retirement. Once you decide to file, you can’t change your mind.
Below are a few things you may want to take into account as you prepare to make this major decision.
To live your dream retirement, you’ll need to have a strong financial foundation as you enter retirement. That’s why you may want to create a list of financial goals to achieve before you stop working. Your list of financial goals should align with your unique needs and goals. However, some items are nearly universal for a comfortable and financially stable retirement. Three such items are listed below. If you’re preparing for retirement, you may want to develop a plan to hit these milestones.
You probably know a will is the most fundamental part of any estate plan, but did you know a will doesn’t have to be the only component of your plan? A will can achieve many things, including the distribution of your assets to the appropriate heirs. However, a will can’t do everything, and there may be some goals best accomplished through a range of other documents known as will substitutes.
Simply put, a will substitute is a document or tool that acts in place of a will in the estate-distribution process. A will substitute may apply to your entire estate or to specific assets. Some will substitutes are strictly estate-planning tools, while others are financial tools that can also be used for other purposes.
Do you need a will substitute as part of your estate plan? It depends on your needs and goals. However, if you want to pass assets on to your heirs quickly and at minimum expense, there’s a possibility a will substitute could be right for you.
Are you one of the millions of Americans with insufficient life insurance protection? There’s a broad range of reasons why people carry less insurance than they need. However, the fact is an insufficient coverage amount could lead to financial difficulties for your dependents and loved ones if you unexpectedly pass away.
Below are a few of the common beliefs and myths that keep some people from purchasing additional insurance. Do any of these ideas sound familiar? If so, now may be the time to reassess your life insurance strategy and explore additional coverage options.