Page 42 - February 2016

TOM TUOHY
BENEFITS REPORT
Taxes, taxes, taxes ...
It is hard enough to stay ahead. Let’s make cer- tain we do not lose opportunities to save on taxes or cut expenses. There has never been a time to be more vigilant. Let’s go over some of the more important considerations.
successor, or alternate, beneficiary in the event your primary beneficiary has died. Common mistakes include not updating when there is a change in beneficiary or naming a minor as beneficiary.
Retirement: It takes an incredible amount of discipline and knowledge to ensure we have everything we need to live comfortably and securely for the rest of our lives. Today, with the uncertainty surrounding the market, health insurance costs and our retirement funds, it is essential to pay very close attention. Recently
There can be tax implications. If you name an adult benefi- ciary, they may be able to stretch the time and defer the tax due at your death. This is not true if you name a trust. However, if you have a minor or disabled beneficiary or have special inher- iting instructions, your successor beneficiary should be your living trust. If you name a minor or disabled person as a bene- ficiary, all the proceeds will go to probate court for administra- tion. It is important to get the right advice for your situation. Call me today if you have questions.
the Federal Reserve raised interest rates. Experts believe this will not have any significant effect on long-term investments. However, your financial advisor may suggest a reallocation of your investments. Another suggestion might be to fix or elim- inate debt costs on outstanding loans.
Property: Yes, property tax bills are on the way. With the con- stant change in market values, the assessment on your prop- erty may not be accurate. And you can appeal. The entire appeal process can be handled on your behalf by a lawyer, and you only pay a percentage of what you save. No upfront costs. A no-risk proposition to save on your tax bill. It is important to contact the Benefits Plan office to start the process before you get the bill.
The bottom-line is what you do now makes a difference and it adds up over time. If you do not have a financial advisor, you should consider one. Aside from the peace of mind, any min- imal cost involved would be more than made up in additional security and increased equity.
Capital Gains: This is a big one. You have heard of a quit claim deed or may have used one yourself to transfer title to property. The potential tax problem arises if you quit your interest to someone who is not your spouse or someone who is not an owner of the property. Maybe your parent or elderly relative has placed your name on a title in this way. Or you placed your child on the deed, thinking if something happened to you it would simply transfer to them. That can be a costly mistake.
Tax-Qualified Accounts: Deferred compensation, IRAs, and annuities are tax-deferred savings. You are the lifetime benefi- ciary and you name a primary beneficiary at your death and a
When you transfer ownership through quit claim, you are making a gift. The transferee will be liable for capital gains taxes based on the original purchase price versus the market value when they sell the property. The tax rate is 15 percent. You should avoid this tax issue by naming a beneficiary for the property in your living trust. They will receive a “stepped up” basis, to the market value at the time of your death, and no capital gains tax. If you do not have a living trust, this is more than enough reason to get one.
The good news is you can avoid most of these taxes and costs that eat into your savings, decrease the value of our investments and threaten your retirement security. Your FOP Benefits Plan provides certified financial and retirement plan- ners, legal services for living trusts at 50-percent reduced rates and property tax appeals, plus many more benefits, including average savings of $466 on home and auto insurance. (See back cover of this magazine for additional benefits.)
Registration for FOP members is free. Visit www.fopbenefit- splan.com or call 1-866-729-5454 for assistance with register- ing. d
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MARCH 2016
Tom Tuohy is the founder of Tuohy Law Offices and the FOP Benefits Plan. He has been a police lawyer for 33 years. His father was a CPD detective and his grandfather was CPD Chief of Major Crimes. Tom can be reached at 312-559-8400.