Redkey Gordon P.C.

Put These Money-Makers (or Money-Savers) into Action NOW

Here are money tasks to do this week that will help 2015 be more prosperous. Most can be done in about an hour.

As reported in a Chicago News Service article titled “Got an hour? Tackle these money tasks,” a recent survey from the National Endowment for Financial Education found 64 percent of U.S. adults will make a financially focused goal in 2015. The article also notes that in making those goals, you should be specific and make individual tasks to keep the job manageable.

The first question you might ask is “Where the heck do you get the money to fund these goals?”

The article says most goals can be paid for little by little over time, even with a tax refund from the IRS (last year the average was about $3,000), and then details several money tasks to do this week that will help 2015 be more prosperous. According to the article, most tasks can be done in about an hour!

Here are a few tasks to take on:

• Join a credit union. Or think about whether a small community bank would be able to meet your needs with fewer fees and lower loan rates than the big guys.
• Get out of debt. Ok, this will take a little longer, but start with a sound financial plan.
• Choose a better credit card. Get a card that fits your needs better, or consider going without.
• Start saving for college. With school-age kids, you should log onto your state's college savings website and open a 529 college savings account and set up a recurring contribution, even if it's just a few dollars a month.
• Start your emergency fund. Why? Because you might need it! Just 38 percent of Americans have enough money in their savings accounts to pay for unexpected expenses, and nearly 56 percent of Americans have no rainy day fund whatsoever!
• Review your wireless plan. Another way to save is to look at what you spend each month on your cell phone. Make sure you're on the right plan for your situation.
• Raise your retirement contribution. Up your contribution to at least 10 percent.
• Make a will. Set an appointment this week with Robert A. Gordon, an experienced estate planning attorney, to create a will, a durable power of attorney, and living will or healthcare directive.
• Cook. This is a big one:  an American family of four spends about $3,800 per year on eating. Dine out because you want to, not because you're a crummy meal planner. Make a plan to cook at home and cook in batches to freeze meals for later.
• Check on your nest egg. When's the last time you did any retirement planning? Really? Sounds like it’s time to get on that too.

Read about more tips in this article and take action with the help of an experience estate planning attorney, Robert A. Gordon of Redkey Gordon Law Corp.

Reference: Chicago News Service (January 25, 2015) “Got an hour? Tackle these money tasks”

Best Advice for Millennials? Start Saving ASAP

Don't think savings is a big deal? Ask anyone who is running their own business, decided to retire early or abandoned their old job to go after their dream career. Savings was their saving grace, no pun intended.

The Fall 2014 Merrill Edge Report showed that 80 percent of millennials think about their long-term finances when they are paying bills; nonetheless, they also need to pay themselves.

A recent The Huffington Post article, titled ”4 Things I Wish I Knew About Money in my 20s,” emphasizes that the most important thing a millennial can do today to improve his or her financial future is to start saving. It's important for millennials to find a balance between paying off any debt and saving for their future goals and retirement.

Making retirement a priority among many competing financial needs can be a challenge. The original article recommends that millennials go through their employer-sponsored retirement plan, such as a 401(k) or 403(b) account, or set up an automatic transfer from their bank or brokerage account into their personal IRA, Simplified Employee Pension (SEP-IRA) or SIMPLE IRA.

Along with retirement planning, a budget must be your top priority. While creating a budget might be the very last item on your to-do list, it’s essential to maintaining a solid financial foundation. Budgets are essential to estimate your monthly income and expenses, and at the end of each month, you should look at how your actual spending stacks up against your budget and make adjustments. Budgets also help to make sure you live within your means, and help you plan for day-to-day spending.

Contact your local Sacramento County experience estate planning attorney, Robert A. Gordon of Redkey Gordon Law Corp.

Reference: Huffington Post (February 2, 2015)”4 Things I Wish I Knew About Money in my 20s”

Seniors: Beware of Scammers!

Seniors make up about one-fifth of financial abuse victims nationwide, Commerce Commissioner Mike Rothman said Thursday. They're tempting prey for scammers because old age often comes with reduced cognitive abilities. Financial scammers who target elderly or vulnerable Minnesotans would face stiffer penalties under a law Gov. Mark Dayton included in his two-year budget proposal.

As of late, seniors are falling victim to financial scams more than ever before. They make a tempting target for scammers when their cognitive abilities decline, making it easier for scammers to take advantage of their vulnerabilities.

As reported in a recent Minneapolis Star Tribune article titled “Dayton wants new financial protection law for elderly, vulnerable to protect from scams,”Minnesota Governor Mark Dayton has a plan to combat scammers. Dayton has proposed a plan that would add a $1 fee to insurers for every life insurance or annuity product they sell, which would help hire outreach employees, a senior ombudsman, and an investigator.

About 13 percent of Minnesotans were 65 or older in 2010, according to the U.S. Census Bureau, and like many other parts of the country, that senior population is expected to increase greatly in the next ten years.

With the growing population of seniors, the Star Tribune reports that this group constituted more than 50% of the victims in the financial exploitation reports to the state's Adult Protective Services office last year—and that number is growing.

Elderly people can fall victim to scams from strangers, friends or family members, and they don't always report when a crime occurs. They can be afraid and embarrassed. But they shouldn’t be. 

Contact Robert A. Gordon of Redkey Gordon Law Corp, an experienced elder law attorney for answers and to make sure that you and your love ones are protected from scammers.

Reference: Star Tribune (January 29, 2015) “Dayton wants new financial protection law for

elderly, vulnerable to protect from scams”

Leave Your Legacy through a Roth IRA

Roth IRAs intrinsically make phenomenal transfer of wealth vehicles. With reduced estate taxes and no income tax for heirs to pay on withdrawals, establishing a Roth IRA or even converting to one from a Traditional IRA seems to be a simple decision. Just know what you are doing ahead of time.

When planning your estate, keeping all parties in mind is important. So it is with Roth IRAs.

A recent Benzinga article, titled “Legacy And Estate Planning With A Roth IRA,” says you should think about not only the account holder's tax situation, but the heir’s as well and consider the tax burdens your heirs may inherit.

The article recommend converting to a Roth when the estate owner's standard of living seems secure without the IRA. When an IRA is more of an emergency fund and a wealth-transferring vehicle, the objective is to try to ensure the maximum after-tax wealth for heirs. Only when this happens does the objective shift from personal security to the security of future generations.

Along with this, know that IRAs are controlled by regulations to ensure that the account contents are properly accounted for and the taxes paid. Inherited retirement accounts fall under a different set of regulations after the original account holder passes away. Even though the basic differences between Roth IRAs and Traditional IRAs remain, it’s critical to know that second-generation accounts are not treated exactly the same as first-generation accounts. Coupled with this is the fact that not all Traditional IRAs or all Roth IRAs are identical. As a result, you need to understand the specific regulations of your individual account. You can’t just rely on these typical situations described. So individual results may vary!

The most important thing to remember when planning your financial future, according to the original article, is that the more you know and understand regarding your particular financial situation, the better informed your decision-making process becomes. Consult with an experienced estate planning attorney, Robert A. Gordon of Redkey Gordon Law Corp.

Take the time now to invest in yourself and take ownership of your financial health.

Reference: Benzinga (January 30, 2015) “Legacy And Estate Planning With A Roth IRA”

Higher Wage Earners Should Keep These Tax Tips in Mind

There is less emphasis on estate taxes because the exemption—$5.43 million per person—is so high now. But income taxes are higher, so know what you are in for.

Maybe the estate tax doesn’t apply to you, but what about rising income taxes? How should you plan accordingly?

According to a recent post on cnbc.com, titled Tax planning tips for high-income earners,” tax planning is better done looking ahead three or five years. If you see a trend, such as an increase or reduction in income, you can alter your deductions or deferrals.

To avoid adding to your tax burden, make sure to leverage some income-producing investments, like bonds and real estate investment trusts, as well as tax-sheltered accounts—including 401(k) plans and IRAs. But this investment income is taxed as ordinary income and could bump you into the higher categories if you’re right on the edge of the line. However, if you place it in a retirement account, there’s no tax owed until the funds are withdrawn, and in the case of Roth IRAs, no tax will ever be owed after the contributions are made.

A higher estate tax exemption means that fewer people pay the federal estate tax now, and some experts are reconsidering their traditional advice. A former rule of thumb held that you should give away as much as you can during your lifetime; however, nowadays, there can be some real advantages in keeping things in your estate. In retaining appreciating assets inside the estate, heirs would have the opportunity to get a stepped-up in basis when they inherit. For instance, if a stock grows from $100 to $1,000 during a person's lifetime, the clock will reset for heirs when they inherit it. When the heir sells the stock, his or her cost basis is determined as of the date they inherited the assets (so they will not pay tax on the income from $100 to present—only from $1,000).

Each state has different rules about estate taxes so you should talk to your local California estate planning attorney, Robert A. Gordon of Redkey Gordon Law Corp, about this. It is also important to remember that not all beneficiaries of an estate actually live in the same state.

Reference: cnbc.com (January 28, 2015) “Tax planning tips for high-income earners”