Page 27 - May 2017 Newsletter

Protect your assets from the government
You work hard in an increasingly tough envi- ronment. One thing you must count on is the protection of your income, investments, and savings.
probate to transfer them to your heirs. If you transfer all your assets to your Living Trust, they will not be subject to
probate.
If you are early in your career, max out in deferred comp contributions and ap- ply 10% of your net income to an invest- ment account. The compound interest on your investments and savings during
FOP
Benefits Plan
Disability
I have been stressing this major risk to my clients and at the CPD retirement seminar: If your child or other beneficiary acquires a disability through illness or accident in the future, whatever you leave them
TOM TUOHY
your entire career will secure your retirement. Seek the advice of a financial planner. You will be grateful for the professional guidance.
If you are close to retirement, follow the advice of a re- tirement advisor and create a solid plan for your retirement years. Resist taking any deferred savings withdrawals early to avoid penalties and lost financial security in your later years.
Even with a solid plan and professional advice, you can lose some of your assets to the government if you do not take precautions.
Capital Gains
Joint title holders: This is common. Your mother added you to the title. You added one or more of your children to the deed. It is easy to do with a simple quit claim deed, but you should never do it. The liabilities of each title holder place the property, or investment or bank account, at risk. Consider your liability exposure from lawsuits on the job be- fore you add your name to a parent’s account or title.
And consider this tax exposure – if you add someone to the title of real estate, there will be a capital gains tax of 15% to that person for all appreciation from your original purchase price to the sale. There is no homeowners exemption avail- able in that situation. Always name a beneficiary in a Living Trust for the property you own. That beneficiary will receive a stepped-up basis at the time of your death – and pay no tax. If you have $200,000 of equity in your home, that means eliminating $60,000 in capital gains and avoiding probate.
Appreciated assets: A top rate of 15% applies to qualified dividends and the sale of most appreciated assets held over one year (28% for collectibles and 25% for depreciation re- capture) for single filers with taxable income up to $418,400. Consult a CPA before you sell any appreciated investments.
College expenses: Don’t pay taxes that you can avoid. Earnings in a 529 Plan grow federally tax-deferred, and you can withdraw funds tax-free when used for qualified edu- cation expenses. Single filers can make a maximum contri- bution of $2,000 to a Coverdell Education Savings Account. You may claim up to $2,500 for an American Opportunity Tax Credit on eligible college expenses paid from a non-529 account.
Probate
According to the AARP, more than $2 billion is spent in probate-related expenses, an average of 2 to 7 percent of each estate. And you can avoid this completely with a Living Trust. Your FOP Benefits Plan offers a complete Living Trust estate plan for you (or you and your spouse) for a 50 percent reduction in fees through my office. Avoid probate, as well as its cost and average 18-month process. If you die with assets in your name, even if you have a will, they will go through
when you die will be taken by the government as re- imbursement for SSI or Medicaid, or they will be sub- ject to the loss of their benefits – unless you have a Living Trust with specific protections. None of us can be certain of what will happen between now and the time of our death, and our time always comes too soon. Avoid any risk with a
Living Trust.
Call my office today with any questions on any of this con-
tent and lock in your 50 percent reduced rate for a Living Trust. There are financial and retirement planners and tax advisors available in your FOP Benefits Plan and many other products and services, including $2,500 in interest-free cred- it through the new Zebit benefit.
Registration for FOP members and family is free. Visit www.fopbenefitsplan.com or call 866-729-5454 for assis- tance with registering. d
Tom Tuohy is the founder of Tuohy Law Offices and the FOP Ben- efits Plan. He has been a police lawyer for 34 years. His father was a CPD detective, and his grandfather was CPD Chief of Major Crimes. You can reach Tom at 312-559-8400.
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