Tax day is coming up quickly, are you ready to file? And just as important—are you taking advantage of all the savings and deductions available to you? Most people who do their own taxes are unaware of some of the lesser-known deductions which can help you save money come tax-time. We have a couple of articles we’d like to share with our readers that may make it easier for your family come April 15^th.

A recent article on SmartMoney.com offers 3 often overlooked ways to save on your income taxes. Two of the three items have to do with parenthood and buying a home, but of particular interest to our readers is tip #2, Selling Grandma’s Stuff: “If you sold something last year that you inherited, understand that your tax basis for gain or loss purposes generally has nothing to do with what your benefactor paid for the asset. And that’s probably going to save you a bundle in taxes.” If you sold an asset from an inheritance last year (or if you received an inheritance last year at all, regardless of whether you’ve sold the asset or not) contact our office before filing your taxes.

Another potentially useful resource for tax savings is the ABC News article Top Ten Commonly Missed Tax Deductions to Put Cash in Your Wallet. This article reminds us to include the little things—such charity volunteer related expenses, the new car deduction, old school books used for work, and more. There are a number of tax deductions your family may be able to take advantage of… if you just know where to look.

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Everybody knows the latest big news: President Obama’s healthcare reform bill was finally approved by the senate—for better or worse—and although politicians may still be arguing the benefits and evils of the bill across party lines, most Americans are asking one simple question: What does this legislation mean for me?

CNN Health attempts to answer that question and more in a recent article entitled (appropriately) “Answers to your questions on healthcare law.” At a time when everyone either loves or hates the bill, it’s not always easy to get a straight and non-partisan answer to a question that really has nothing to do with politics; but this CNN article does a good job of providing straightforward answers to many of the frequently asked questions, and explaining exactly how this bill is likely to affect you and your family now and in the years to come.

We know that many of our clients will have questions about this bill that go beyond those answered in this article, and we invite you to contact our office with any concerns you may have; especially about how this may affect your decision-making rights, legal healthcare documents, or Medicaid qualification. Whether you are a parent of young children worried about your health insurance, or a retiree facing the need to tighten your purse strings in your “golden years,” this legislation may have an impact on you; contact our office to find out how.

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Could it be that some movement finally happening in the House of Representatives with regards to the estate tax?

It looks like it may be, if we are to believe this recent article in Bloomberg Business Week. According to the article, the House Ways and Means Committee has plans to begin discussions in April (after the spring break) about former President George W. Bush’s tax cuts benefiting the middle class.

Of special interest to our clients is the section about the estate tax, found at the bottom of the article:

“…The committee would begin work to retroactively reinstate a federal tax on multimillion-dollar estates that expired Dec. 31. The legislation would likely seek an extension of a 2009 law, which applied a 45 percent tax rate on the value of estates that exceeded $3.5 million per individual… One possibility being considered… would let heirs choose to pay the capital gains tax that replaced the estate levy if that is more beneficial.”

Just one more reason to be sure you see your estate planner as soon as possible in 2010.

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Do you need long-term care insurance? You may think you’re too young to think about that quite yet, but what about your parents? If you’re reading this blog it’s likely that your parents are at an age where they soon may need some sort of care, whether that will be in-home care, nursing care, or even need to stay in a nursing facility; if your parents haven’t planned ahead for this eventuality, the burden for their care—either financial or physical or both—may fall on you.

It is for this very reason that a new trend in long-term care insurance seems to be emerging. According to this article by Stacy Schultz, there is an upswing in the purchase of long-term care insurance by the Boomer Generation—except the insurance isn’t for the Boomers themselves, it’s for their parents. “Many of them have just had a relative go through being in a nursing home, and they see the devastation and the stress it causes,” quotes the article. “They’re concerned about mom and dad, and if their parents don’t have a lot of means they want to buy insurance for them.”

If you are considering buying long-term care insurance, either for yourself or your parents, you have a number of options, especially compared to even just a few years ago. Forbes.com recently published an article outlining the improvements in long-term insurance, and what your options are if you’re buying it today.

Take an hour or two this month to talk to your parents (or your kids) and advisors about what the coming years have in store. You may not need long-term care insurance, but you will certainly need a plan, and it’s never a bad idea to know your options, especially when it comes to protecting your future. In the lives of many Boomers, protecting their own future also means protecting their parents’ futures.

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Would you ever turn down an inheritance?

Your first reaction might be “Of course not!” But don’t speak too soon. Most estate plans are created at least in part to protect heirs (generally spouses and children) from the sometimes devastating blow of estate taxes; but with the estate tax in a confusing state of flux this year some of these plans won’t work as their creators intended—and heirs may end up looking for a way to protect themselves against the unintended consequences of well-intentioned estate plans.

This article in the New York Times explains what it means if you disclaim (or turn down) an inheritance, and when you may want to employ this tactic.

“Historically, lawyers have recommended disclaimers to repair estate planning oversights that bring negative tax consequences — as when parents left money to already affluent adult children. In such a case, the children could disclaim, so the inheritance would go their own children instead, rather than facing the possibility that this money might be taxed in their own estates.”

The article goes on to explain why some people might consider using this strategy this year, when—due to the expiration of the estate tax—“a formula clause could wind up allocating all the money to one [heir] or the other, rather than dividing it between the two.”

Although this is an interesting solution to be considered in some cases, there are no easy answers to the question of what to do when you are the beneficiary of an estate that has taken an unexpected turn. If you have any questions whatsoever about an inheritance—or about your own estate plan—call your estate planning attorney for help.

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A month and a half into 2010 and Congress’ failure to stop the lapse in estate tax is still making waves. These two trusted news sources explain why having “no estate tax” this year should worry you.

One of the first reasons you should be worried, as revealed by this article in the Wall Street Journal, is that a larger base of estates will actually end up paying more this year rather than less; “Under last year’s law, estates up to $3.5 million, or $7 million for married couples, were exempt from federal tax. This year that law has been replaced by a fiendishly complex levy raising taxes on the assets of those with little as $1.3 million. It will affect the heirs of at least 50,000 U.S. taxpayers who die this year, whereas the old law affected only about 15,000 estates a year.”

Another main cause of worry, explains the New York Times, is the possible reinstatement of the estate tax by congress, effective retroactively; “The general view is that Congress wants to, and should, re-enact the estate tax retroactive to the beginning of this year,” [says tax specialist Ian Shane] “In January, February or March that’s easy, but as the year goes on it becomes more difficult.”

Of course the biggest worry estate planners have is the effect this year-long lapse will have on existing plans. Couples who already have an existing estate plan are advised to get their documents reviewed—and possibly revised—to prevent “standard clauses” from having unanticipated effects. As Joanne Johnson, head of the American wealth advisory service of J. P. Morgan explained to the NY Times, “It’s common to find language like ‘I hereby fund this trust to the maximum amount I can shelter from federal estate tax.’ The rest can then pass tax-free to the spouse. Such wording is risky as long as the estate tax is off the books… because there is no maximum.” What ends up happening is that everything goes into the trust for the kids, leaving the spouse with nothing.

What is the lesson here? The lapse in the estate tax may not be the boon it first appears to be. Talk with your estate planning attorney to find out how the new laws may affect your family.

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The recent repeal of the estate tax is having unintended consequences for responsible husbands and wives who already had a will or trust in place to protect their spouse and family—instead of protecting them, that existing will could now end up leaving surviving spouses with nothing. Jonnelle Marte at the Wall Street Journal has this to say:

“It’s a common practice for people to use formulas in their wills designed to send the maximum amount of assets not subject to the estate tax into a trust, often for their children. The remaining assets are usually left to the surviving spouse. But this year, there’s no limit on the assets people can pass to their heirs without being subject to federal estate tax. So all of the assets could go into a trust and the surviving spouse would get zero.”

Does this mean you’ll have to get your will or trust updated every year? No. But it does mean that you’ll want to get your will or trust reviewed by an estate planning attorney this year. A review of your estate planning documents is a quick and easy process, especially if you don’t have any other significant changes to make. One thing is for sure, the small amount of time you spend making sure your documents are current is well worth the protection and benefit your spouse and family will receive from it.

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Among the many changes in tax law to go into effect in 2010 was the change in cost basis for inherited assets. Previously, all inherited assets were “stepped-up” from their original value at date of purchase to their fair market value at date of death. In this way, if inherited assets were sold shortly after death, no capital gains tax was owed. However, in 2010 inherited assets do not receive this automatic “step-up”; instead they will be valued at the lesser of the decedent’s basis or the fair market value as of date of death. The result is that for decedents dying in 2010, the decedent’s tax basis and the fair market value as of date of death will have to be determined for every asset. As you can imagine, this will cause paperwork nightmares for heirs.

What we suggest is making a list of your assets and their values and tax basis information now, while you are still alive and your memory is fresh. This is not a list that has to be shared with anybody until after your death, but the mere existence of your list of assets will save your family and heirs hours of headaches (and heartache) later on.

If the thought of taking the time and energy to sort through files and records to gather this information makes you want to run for the hills, imagine how your heirs will feel! To ease the burden, try making your list one asset at a time, over the course of many days. However you choose to create your list, you can be sure your heirs will thank you.

(Note: There is an exemption amount of $1.3 million of gains from this carry-over basis rule, and another $3 million exemption applying to assets inherited from a spouse.)

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Now that it’s 2010 and congress has failed to take action regarding the repeal of the estate tax, we see a lot of articles discussing whether the lack of taxation for a year is a good or bad thing; sometimes these articles go even further, arguing whether estate tax in general is a good or bad thing. These are all interesting discussions, but our firm is more concerned with how your estate plan will hold up this year when it was likely designed to weather very different circumstances.

To this end, we have found that CBS’s Money Watch.com has published a very useful article about what the lack of estate tax in 2010 could mean for you and your family. The entire article is educational, but if you scroll about 1/3 of the way down the page you get to the crux of the article, a section titled “Steps to Take Now.” This section provides you with practical advice on what you can do, and what in your estate plan may need to change in order to keep up with the changing times and taxes:

• Keep good records
• Have an attorney review the “formula clauses” in your estate plan
• Be aware of the tax laws for your state of residence
• Give your estate plan a “check-up” as soon as possible!

As you and your attorney are reviewing your estate plan, keep in mind that the estate tax situation is likely to change again in 2011 (and may even change before 2011, effective retroactively), and try to plan accordingly. As Money Watch author Deborah Jacobs writes, “Whatever might be happening in Washington, no one should postpone the necessary steps. Just because Congress is inefficient and disorganized doesn’t mean that you must follow suit.”

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It’s the beginning of a New Year, a time of new beginnings when many people set goals for themselves and make their New Year’s resolutions; but according to Wikipedia, in spite of all this optimism and confidence, only 12% of people who make resolutions will actually achieve their goals!

Why is it that so many people let their goals fall to the wayside? What happens to all that New Year’s exuberance and optimism? Well according to Jonah Lehrer of The Wall Street Journal it’s all about biology. Lehrer says that the area of the brain responsible for willpower—the prefrontal cortex—is like any other muscle: it must be worked and strengthened if you expect it to perform feats of strength.

If this is true, then it makes sense that the success of your New Year’s Resolutions would depend in large part in how you go about setting them. Just as you can’t become a bodybuilder by saying “this week I’m going to bench press 200 pounds,” you can’t become a model of health and beauty by saying “this month I’m going to lose 50 pounds.” Rather, large goals are achieved by setting smaller, measurable milestones: “This week I will have fruit as my afternoon snack instead of potato chips.”

So how does this apply to our blog? Achieving financial security, a strong retirement plan, or a successful estate plan is no different than losing weight or quitting your smoking habit: it comes easiest when you take it one step at a time—and when you have a little bit of help. Instead of making a vague goal such as “this is the year I’ll get all my legal issues taken care of;” take smaller, more measurable steps such as “this month I will call and make an appointment with the attorney.”

A smaller goal such as the one mentioned above not only means less pressure at the outset, it also gives you an ally, someone who can help you along the way; and that’s exactly what our firm hopes to be.

Happy 2010!

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