Life Changes Articles

  Ready for Life’s What If’s?

WHILE PREPARATION CAN’T PREVENT ALL OF LIFE’S WHAT MIGHT GO WRONG IT MIGHT HELP TO PREPARE FOR AN EVENT AND HOW TO HANDLE IT IF IT ACTUALLY HAPPENS

Always try to have as little debt as possible. Pay off credit cards monthly.  Avoid as best as possible to have balances to carry forward.  Make sure you keep your fixed expenses, such as insurance premiums, mortgage payments or rent at a level you can manage for six months to a year with limited income such as unemployment insurance supplemented by savings.  A liquid emergency fund that can cover projected expenses are helpful.  Consider switching to a spouses health plan if possible.

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  Divorce and Health Coverage

If you are middle aged and are in the midst of divorce, you absolutely need to secure health coverage immediately. If you are not eligible for medicare and your spouse has coverage through an employer sponsored group health insurance plan, you can probably continue under the spouses plan under cobra. Understand that Cobra coverage is expensive. You will have to reimburse your spouse’s employer for your premiums, plus a 2% administrative fee. Under Cobra you can continue your ex spouses plan for up to 36 months after the divorce or separation date or until you take a job offering at least equivalent coverage your or you become eligible for Medicare.

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  Tax Saving On Inherited IRAs

You can save a lot of money if you inherited an IRA from someone whose estate was big enough to be subject to the federal estate tax.  Basically, you get an income-tax deduction for the amount of estate tax paid on the IRA assets you received.  Let’s say you inherited a $100,000 IRA and the fact that the money was included in your benefactor’s estate added $40,000 to the estate bill, you get to deduct that $40,000 on our tax returns as you withdraw the money from the IRAs.  If you withdraw $50,000 in one year, for example, you get to claim a $20,000 itemized deduction on Schedule A.  That would save you $5,600 in the 28% bracket.

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  Divorce and Health Coverage

If you are middle aged and are in the midst of divorce, you absolutely need to secure health coverage immediately. If you are not eligible for medicare and your spouse has coverage through an employer sponsored group health insurance plan, you can probably continue under the spouse’s plan under COBRA. Understand that COBRA coverage can be expensive. You will have to reimburse your spouse’s employer for your premiums, plus a 2% administrative fee. Under COBRA you can continue your ex-spouse’s plan for up to 36 months after the divorce or separation date, or until you take a job offering at least equivalent coverage, or you become eligible for medicare.

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  Dealing with Lump Sums from Divorce or Inheritance

applesLump sum distributions from an inheritance or a divorce settlement come with some complexities.

There are timing issues. For example, you may need to make certain decisions in a timely manner if you are planning on reinvesting the assets. And if you are planning on reinvesting the assets, you should consider the short term and the long term along with your lifestyle and other assets.

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  What To Do When A Relative Dies

When a loved one dies the details that need to be taken care of by survivors may be overwhelming during such an emotional time.

Immediately

  • Determine decedent’s wishes.
  • Contact the funeral home and determine cost. (Veterans can be buried in a national cemetery free.)

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