Estate Planning Before You Travel: Why It’s Critically Important

Vacations can be the perfect opportunity to relax, disconnect from work and responsibilities, and enjoy your spouse, partner, kids, or friend’s company. But before you head off on your next getaway, there’s something else you should consider doing that might not sound quite as fun—creating an estate plan. While it may not sound like the most exciting way to spend a day, here are some reasons why you need to think about your estate plans before you travel.

  • An estate plan ensures that your minor children will be placed with the person you choose in the event that you and your spouse have a medical emergency while on vacation. Do not risk your children being placed in the foster care system based on the laws of the state in which you are traveling.
  • An estate plan ensures any medical decisions needed while away from home will be handled according to your wishes and with as much ease as possible, no matter where in the world you are when something happens. If you fall ill or become injured and can’t make medical decisions for yourself, your estate plan will ensure that decisions will be made by the person you choose and with your indicated desires for your care at the forefront.
  • Without an estate plan in place, your family or friends could have a heavy lift to get you back home, locate your assets, keep your bills paid, and even ensure your children get taken care of by the right people in the right way.
  • Lastly, an estate plan ensures that any debts or liabilities are taken care of properly in case something happens while on vacation. This can help prevent creditors from trying to collect from surviving family members after the fact — something no one wants to deal with during such a difficult time.

Yes, Even Married Couples Need an Estate Plan

You might think that because you are married, you don’t need an estate plan. Or you might even think your Will is enough and would just handle everything. But that’s generally not the case.

Even if you are married, you still need medical powers of attorney, making it clear that you want your spouse making medical decisions for you and  adding in additional decision-makers. You still want a Living Will to give clarity on how you want medical decisions made for you.

Finally, if you have dependent children, you want to ensure you’ve made it as easy as possible for their care to be continued by the people you want, in the way you want. Without a plan in place, decisions around their care could be tied up for months, including access to the financial assets their caregivers would need to ensure they have what they need along the way.

The Benefits of Working With an Attorney

While you can create an estate plan without legal assistance, there are serious risks to the people you love if your plan is not completed, not updated after it’s been done once, or not completed properly. The only real guarantee for the people you love to have as much ease as possible is if you work with an experienced attorney specializing in estate planning, particularly Life & Legacy Planning. As an Estate Planning Law Firm, we understand what needs to go into a thorough and complete estate plan — as well as the potential pitfalls or issues that could arise due to your unique personal and family dynamics — so you can rest assured knowing everything is being taken care of properly before you embark on your trip.

At Cris Carter Law, LLC, we can advise you on other important documents such as Wills, Trusts, powers of attorney (POA), health care directives (HCD), and guardianship paperwork (for minor children) so you can make informed decisions based on what you want to have happen if you become incapacitated or die. All these items should be considered when creating an effective estate plan — especially when one or both parties will be traveling outside their home country at any point.

Don’t Let a Lack of Planning Dampen Your Vacation Spirits!

Taking a few simple yet critically important steps now can save you and your family considerable headaches down the road if anything were ever to happen while on the road—not only do we want you to enjoy each moment spent together, but we want peace of mind knowing that whatever comes your way is handled according to your wishes!

We can help put a plan together now so that you don’t forget about this important task before packing up for your next adventure. Making sure all your affairs are in order will ensure nothing stands in the way between you and enjoying time together! Contact us today to get started.

Adulting 101: Your Living Will

You may have heard people speak of a “living will” and wondered what they are talking about. A living will is also called an advance health care directive. But, no matter what you call it, every adult needs a legal document that tells your loved ones and doctors the medical care you want if you cannot make those decisions yourself.

Your living will outlines the procedures, medications, and treatments you want or do not want to prolong your life when you cannot make those decisions for yourself. Additionally, it can address if and when you want life support removed and whether you want hydration and nutrition supplied if that is the only thing keeping you alive. If these decisions need to be made and you haven’t provided specific instructions, decisions will be made, and they may not be the decisions that you would have chosen.

Don’t confuse a “living will” with a “last will.” A “last will” sets forth what happens to your property and wealth after you die. A living will sets forth what medical treatment you want while alive.

A healthcare or medical power of attorney is another part of advanced healthcare directives. The healthcare power of attorney is the legal document that names who will make the healthcare decisions for you. Simply put, a medical power of attorney names those who can make medical decisions in the event of your incapacity, while a living will explains what medical care you want.

A living will is a vital part of every adult’s estate plan, as it can ensure your medical treatment is handled exactly the way you want if you cannot communicate. Without a living will, your loved ones are left to make difficult decisions which can result in conflict, stress, and guilt.

We all know that unforeseen illness or injury could strike at any time. Don’t wait to plan. We can assist you to ensure your medical treatment and end-of-life care is tailored to suit your unique needs and wishes and provide counseling and guidance in decision-making.

5 Loving Things To Do For The Ones You Love

5 Loving Things To Do For The Ones You Love

It’s a new year, which means a new chance to do what you’ve been putting off until the time is right. That time is now. Here are 5 of the most loving things you can do for the people you love in the New Year because, at some point, you will become sick or die. And while we don’t like to think about it, the best way not to need to think about it is to plan well.  Then, you can put it out of your mind and live your life as if every day is your last.

The Five Most Loving Things You Can Do For The People You Love In The New Year:

1. Make a Plan. Having a will, a trust, a power of attorney, a health care directive, and, if you have kids, a Children’s Protection Plan is vitally important so you don’t leave your family in a mess and having to deal with an expensive court process overseen by a judge who doesn’t know (or really care) about you or your family. Without a plan in place, you are planning to fail! Don’t do that to your loved ones.

2. Write a letter or record a CD. Pass on what really matters to your family — your values, insights, stories, and experience — in written or recorded form so they can return to you long after you are gone. There are many ways you can save special memories for those you will leave behind one day.

3. Pay for and plan your funeral. Cremated or buried? Ashes or body where? Yes or no to a viewing? Make these decisions now and let your loved ones know, in writing, so they don’t have to worry and wonder. And have the payment arrangements for your funeral expenses handled so they don’t have to scramble and pay for the arrangements at a time when they are overwhelmed with grief.

4. Plan to pay no taxes. Will there be taxes on your estate, and if so, how will your heirs pay them? Meet with your personal and trusted attorney to be sure there are no surprises with estate taxes or other costs, especially if there’s insurance involved. You don’t have to be rich to think about this.

5. Get organized. Let loved ones know where they can find your legal documents, other important paperwork, and the key to your safe deposit box. Be sure to include all of your password information to access online accounts, including email, Facebook, and other regularly accessed computer programs.

Now is the Time to Act

Tax-Saving Strategies For 2022

Although the end of the year can be hectic, it’s also the deadline for you and your family to implement several key tax-savings strategies. By taking action now, you may be able to reduce your tax bill due in April significantly. But you must do this before the end of the year, so act fast.

While there are dozens of potential tax breaks you may qualify for, here are 4 of the leading moves you can make to save big on your 2022 tax return.

1. Maximize retirement account contributions

By maximizing your contributions to tax-deferred retirement accounts, such as IRAs and 401(k)s, you can save for retirement and reduce your taxable income for 2022.

In 2022, you can contribute up to $6,000 to an IRA, up to $20,500 to a 401(k) if you’re under 50, and up to $7,000 to an IRA and $27,000 to a 401(k) for those 50 and older. If you don’t have the cash available to fund the maximum amount, contribute at least any amount that your employer will match since that’s basically free money, and you lose it if you don’t use it.

That said, the ability to deduct your traditional IRA contributions from your taxes comes with certain limitations. These limitations are based on factors such as whether or not you or your spouse are covered by a retirement plan at work and your adjusted gross income (AGI), so make sure you know how your family is affected by these limits when taking deductions. On the other hand, Roth IRA contributions are not tax-deductible since they are made after taxes are taken out, but withdrawals from a Roth in retirement are tax-free.

Additionally, consider maxing out your Health Savings Account (HSA) contributions. Contributions to HSAs for 2022 are capped at $3,650 for individuals and $7,300 for families, with an additional catch-up contribution of $1,000 allowed for those aged 55 and older.

You have until December 31st, 2022, to contribute to a 401(k) plan and until April 18th, 2023, to contribute to an IRA or HSA for the 2022 tax year.

2. Defer income if you’ll make less next year

If you’re expecting to make significantly more income this year than in 2023, try to defer as much income into next year as possible. However, this strategy only makes sense if you’ll be in the same or a lower tax bracket next year.

On the other hand, if you think you’ll be in a higher tax bracket in 2023, you may want to do the opposite and accelerate income into 2022 to take advantage of a lower tax bracket.

3. Use “loss harvesting” to offset capital gains

With the stock and crypto markets down this year, it can be the ideal time to use a strategy called “loss harvesting.” This means selling taxable investment assets (such as stocks, mutual funds, and bonds) at a loss to offset any capital gains you may have realized earlier in the year. Capital losses offset capital gains dollar for dollar.

If your losses exceed your gains, you can write off up to $3,000 of collective losses against other income. Any losses in excess of $3,000 can be carried over into the following year. In fact, you can carry over such losses year after year over your lifetime.

Note that the loss harvesting strategy does not apply to tax-advantaged accounts, such as 401(k)s, IRAs, and 529 plans. Additionally, the IRS “wash-sale” rule prohibits using this tax write-off for buying a “substantially identical” asset within a 30-day window before or after the sale that generated the loss.

Always consult your CPA or financial advisor before employing loss harvesting to ensure it doesn’t backfire on you.

4. Watch your required minimum distributions (RMDs)—or ensure your parents are watching theirs—if you or they are over age 72

If you have an employer-sponsored retirement plan, including a 401(k), 403(b), traditional IRA, SEP IRA, or SIMPLE IRA, you must start taking required minimum distributions (RMDs) by April 1st of the year that follows

the year you turn 72. After that, annual withdrawals must be made by December 31st each year to avoid a severe penalty.

If you fail to take the proper RMD, you may face a 50% excise tax on the amount you should have withdrawn based on your age, life expectancy, and account balance at the beginning of the year. That said, if you do make a mistake, you may be able to avoid the penalty by requesting a waiver from the IRS. You can request a waiver if your failure to take the RMD is due to a reasonable error and you take steps to make the required distribution. To request a waiver, submit Form 5329 to the IRS with a statement explaining the error and the steps you are taking to correct it.

Note that in 2022 the IRS updated its uniform lifetime table to calculate RMDs to account for longer life expectancies. As a result, your RMDs for this year may be slightly lower compared to previous years. To determine your RMD, refer to the IRS RMD worksheet or use an RMD calculator.

Maximize Your 2022 Tax Saving

There you have just four year-end tax-saving strategies that could save your family thousands of dollars on your 2022 tax bill. But DO IT NOW, as the end of the year will be here before you know it.

‘Tis the Season

Beware of Holiday Scammers

‘Tis the season for fall leaves, first snowfalls, hot apple cider, and holiday cheer. For most of us, the holidays are full of giving, getting, and goodwill. 

But we must also realize that the holidays are the time of year when scammers are out in droves. Unfortunately, not only is the number of scammers multiplying each year, but scammers have also become more and more adept at creating new scams to rip you off both in person and online. 

Thousands of people become victims of holiday scams each year. The numbers are staggering. Consumers lost $770 Million to scams that originated on social media in 2021. Non-payment or non-delivery scams cost people more than $337 million, and credit card fraud accounted for another $173 million in losses. That is a large chunk of change! Not only is it the hard-earned money you can lose, but scammers can rob you of your identity and personal information and ruin your festive mood.

When shopping online this holiday season—or any time of year—always be aware of deals that seem too good to be true. Do your part to avoid becoming a scammer’s next victim! 

Tips to Avoid Holiday Scams

Whether you’re the buyer or the seller, there are a number of ways you can protect yourself—and your wallet.

PROTECT YOUR PERSONAL INFO. It’s easy to hit a button and “Buy” from anyone anywhere on your phone or laptop. However, be sure you’re not sharing personal or credit card information over public Wi-Fi. Only “BUY” when you are on a secure network.

DON’T CLICK. Don’t click on just any links or attachments in emails, websites, or social media. Phishing scams and similar crimes offer a link to click on whereby you give up some personal information like your name, password, and bank account number. You may unknowingly download malware to your device with just a few link clicks. 

GIFT CARDS. Yes, gift cards are a convenient holiday gift, but they also open the door to several scams. Gift cards are for gifts, not for payments. If someone asks you to pay them with a gift card, that’s a scam. Gift cards are popular with scammers because they’re easy for people to find and buy. They also have fewer protections for buyers compared to some other payment options. They’re more like cash: once a scammer has the gift card number and the PIN, they have your money. 

If you are going to use gift cards, stick to stores you know and trust. Avoid buying from online auction sites because the cards may be fake or stolen. 

Check out your gift card before you buy it. To ensure your gift card is protected, avoid the rack and ask for one directly from the counter. Make sure the protective stickers are on the card and that they do not appear to have been tampered with. Also, check that the PIN on the back isn’t showing. Get a different card if you spot a problem. And always keep your receipt with the card’s ID number on it, as that will allow you to file a report if your gift card goes missing.  

TOO GOOD TO BE TRUE DEALS. There may appear to be deals galore over the holidays, and many are on social media – but not all of them are legitimate. Carefully read reviews, look for security credentials on websites, and research unfamiliar retailers before you take advantage of a deal or discount. If it is too good to be true, it probably is. 

BEWARE OF PORCH PIRATES. When you’re expecting packages over the holidays, shippers will often provide us with updates on the status of our orders. Knowing this, scammers will send phishing emails pretending to be from companies like FedEx and UPS to lure us to phony web pages and get us to share personal information. So, look closely at delivery notifications and email updates before you click on links or input information. And remember, UPS and FedEx won’t ask for personal information via email.

DON’T RESPOND TO REQUESTS FOR UPDATES. Be especially wary if a company asks you to update your password or account information. Look up the company’s phone number on your own and call the company.

ROBOCALLS. The robocall scams continue. I’ve had two calls this year that appeared to be from a utility company. Lucky for me, the caller didn’t realize that I was going to interrogate him more aggressively before he was going to get information from me. Those calls appeared legit on my phone, and identified the call as the phone number for the utility company. Otherwise, I would never have picked up the calls in the first place. The caller attempted to tell me a past-due utility bill had been overlooked. I started asking very detailed questions to which the utility company would have the answers. I did report the calls to the utility company, and they enlightened me to the fact that scammers can now disguise their call and have it appear that it is the actual telephone number of the company itself. 

The bottom line is don’t answer the phone if you don’t recognize the number. Scammers often use this time of year to call and solicit donations for fake charities. Don’t ever agree to donate to a charity or buy anything over the phone without first looking into the organization.

 As we move into the holiday season, remember that we can all be targeted by unscrupulous persons. The best thing you can do to protect yourself is to be AWARE of the newest scams out there and verify the identity of the person or organization to be sure they are legit. Don’t be afraid to ask lots of questions, pause, think, and hang up if any red flags arise. 

How To Save Big Money On Your 2022 Taxes

When you first realize that your most significant personal and business expense—bar none—is taxes, it can come as quite a shock. Seeing so much of your hard-earned money wind up in the government’s hands can feel like a shakedown. That said, spending a relatively small amount of time and effort strategically reducing your taxes can pay major dividends.

Some people resist implementing creative tax strategies because they’re worried it will get them in trouble with the IRS. However, as long as you do things correctly, there’s absolutely nothing illegal or risky about strategizing to pay the least amount of taxes possible.

On the other hand, it is illegal to evade taxes. As the late Martin Ginsburg, Georgetown Law professor and husband of the recently deceased Supreme Court Justice Ruth Bader Ginsburg, said, “Pigs get fat; hogs get slaughtered.” In other words, you want to be smart when it comes to saving on your taxes but not greedy.

As the end of 2022 approaches, we’re entering the most critical time of the year for tax strategy, and this two-part series outlines how you can get fat without getting slaughtered.

PREPARE YOUR FOUNDATION

To save big on your 2022 taxes, your first step should be either building or rekindling your relationship with your team of financial professionals. These individuals will support you in establishing the foundation for developing and implementing your tax-saving strategies. At the very least, this team should include your Business lawyer, your bookkeeper/financial manager, and your tax advisor. They each have an essential role in your success.

If your bookkeeper’s job is more about data entry than financial management, you should look for someone new—or quickly get your current staff trained and up to speed. An effective bookkeeper will manage your books on a week-to-week basis (if not daily, depending on your business). Note I said “week-to-week,” not just month-to-month or quarter-to-quarter.

Your bookkeeper’s primary responsibilities should include daily/weekly cash-flow management, monthly review of reports and categorization of expenses, and quarterly updates of your forecast and projections. Again, if your bookkeeper isn’t providing these types of services for you, your business is missing an essential part of its financial foundation. 

Outside of your bookkeeper, your tax advisor is the person who files your taxes. Ideally, you should meet with your tax advisor AT LEAST twice a year. We encourage you to meet once in May/June (after tax season) and once when approaching the year’s end in October/November. If you haven’t done that, DO IT NOW!

The purpose of the May/June meeting is a general catch-up and mid-year review that lets your tax advisor know what you’re financially on track to do for the year. Then, your advisor can consider the most effective tax strategies based on that information.

When you meet again (NOW) in October/November, that is when you’ll really get down to business. This meeting is when you’ll project cash flow through the end of the year and get a tax estimate using different assumptions, both with and without tax-saving strategies.

If your tax advisor cannot provide this level of service and is merely a tax filer, it’s time to get a new advisor. Your tax advisor should communicate with your business attorney to ensure that your financial strategies are supported with the legal tools and systems necessary to tie it all together and ensure it works properly.

PUTTING YOUR STRATEGIES INTO PLAY

Next week, we’ll discuss how to develop and implement creative tax strategies that will enable you to keep more of your money in your hands rather than the government’s.