“Tis impossible to be sure of anything except death and taxes.” It’s a notion that’s normally attributed to Benjamin Franklin. However, the first mention of the idea is from a 1716 book by Christopher Bullock, The Cobler of Preston. Whoever said it first, it remains true; you can’t escape dealing with taxes. Whether you believe you won’t face any tax liability in April or you feel your family won’t have problems with the IRS and your estate after you’ve gone, you should take steps to prepare yourself and your family for the inevitable.
If you bring up the idea of dealing with what happens to your family financially after you’ve gone, they might be immediately repulsed. The topic is at once morbid and dull. They might fear you’d actually bore them to death. However, you should find a way to initiate the discussion. The first jumping off point can be bringing up the idea of a will.
Death
Before you start talking about a will, it might be a good idea to draft one. Most Americans don’t have one, which isn’t too crazy given that most people think wills are for the rich and most people aren’t wealthy. However, a simple will can make things easier on your family if something happens to you. A will can:
Make it easier for them to access funds after you die
Transfer ownership of property like homes and cars
Give them the right to control things like utilities and phone bills
Make funeral arrangements easier on your survivors
You can specify an executor in the will. The executor will be the person you trust to make sure your wishes are carried out and that your family’s needs are taken care of. You can name someone to act as a guardian of your children, if you have any, should something happen to you and your spouse.
Trusts or living trusts are good for those who want to maintain some control over their estate but have specific intentions in mind for what will happen after you pass on. They are especially good for people with large estates, businesses or assets to protect from creditors or an angry ex. You can determine beneficiaries and set rules for distribution to them.
Taxes
While you’re still kicking, the federal, state and local governments impose some kind of tax on us all. Having a family discussion about taxes is important, especially for married filers, whether you file jointly or separately. You can discuss gains and losses and other tax liabilities, and make certain you don’t miss out on exemptions and deductions. Moreover, you’ll have two people able to collect receipts and other documents you’ll need whether you file yourself or you have an advisor handle things for you.
Discussions regarding taxes may become difficult if your household is staring down a significant tax bill. For many Americans, the tax debt is already decided in large part coming from the regular paycheck. For those who are self-employed, April may yield an unwelcome surprise. If your spouse earns a salary from an employer but you are an entrepreneur, you’ll both be liable for those taxes. If the self-employed individual hasn’t paid taxes quarterly, there may be a large bill coming due.
If you normally file jointly, you can always make the decision – together – to file separately. You can get together and look back at the tax year to make the best decision on the issue. Generally, you’ll have more tax liability by filing separately. However, in certain circumstances, filing separately may be a better decision.
Discuss Difficult Financial Issues with an Experienced Tax Attorney
Dealing with the inevitable doesn’t have to be painful. A little planning and advance discussion goes a long way. It may help to invite a trusted third party into the matter, like an attorney with experience in tax issues and estate planning. A lawyer who has dealt with hundreds of sensitive matters like end-of-life decisions and estates won’t be able to help you avoid either death or taxes; however, they can make things a lot easier.
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Our office practices primarily in the areas of estate planning, wills, trusts, probate, federal income tax planning, and business formations or dissolutions.
Belinda France has over 25 years of legal experience and extensive professional affiliations, honors, speaking engagements, and published works.
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France Law Firm, P.A.
2548 Blairstone Pines Dr
Tallahassee, FL 32301
Phone: 850.224.1040
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