Dear Liz: I want to make sure that my son will inherit the inheritance from his first marriage. I remarried 12 years ago. My husband has no children. I have a prenuptial agreement. Both her husband and I are fine financially. We own our own home and are well invested. I am not going to leave my husband without the necessary funds. The husband says he will make sure his son receives an inheritance. But her husband’s father has dementia, and she’s worried that if he does, she’ll run out of money on impulse purchases. Since we can afford it, he tends to make impulse purchases. What should I set up to ensure my son receives an inheritance?
answer: If you don’t have a concrete plan for leaving money to your son, your son may not get an inheritance even if your husband doesn’t get dementia.
In other words, if you don’t want your spouse’s next spouse to spend your money, talk to a professional. estate planning attorney about your options.
For example, you can leave part of your property to your son and the rest to your spouse. Another possibility is to create a trust that earns income from your assets while your spouse is alive and transfers the assets to her son when the spouse dies. Yet another is to nominate your son as the beneficiary for certain accounts, such as life insurance or retirement benefits, and leave other accounts to your spouse.
All of these options have their pros and cons. A real estate planning attorney can help you assess the best approach for your situation and prepare the necessary paperwork.
tax and social security
Dear Liz: you wrote in a column On the distribution of retirement plans and how it affects the taxation of social security benefits. Your example was that if someone earned more than his $44,000 in total, the benefit would be taxed at 85% of his. Does this also apply if I wait until full retirement age to start receiving Social Security? Since we are both still working, will these distributions be taxed differently than the rest of our income? Or does it matter if we are working or not?
answer: Taxing Social Security is complicated and often misunderstood, but rest assured that 85% of your benefits will not be lost. If you have income outside of Social Security, whether it comes from work, retirement plan distributions, or other sources of income, up to 85% of your benefits can be taxed at your normal income tax rate.
of previous column He said that Social Security taxes are based on “total income.” This is your adjusted gross income (the number you report on line 11 of your 1040 tax return) plus tax-free interest and half your social security benefits. Single filers with combined income between $25,000 and $34,000 will be required to pay income tax on up to 50% of their benefits, while individual filers with combined incomes above $34,000 will pay up to 85% of their benefits. have to pay taxes on If a couple files jointly, she may have to pay income tax on up to 50% of the benefit if her combined income is between $32,000 and $44,000. If her total income exceeds $44,000, she may be required to pay taxes on up to 85% of her benefits. For more information on how social security benefits are taxed, visit his website for government agencies..
Benefits may be taxable regardless of when you started. But the researchers found that if many middle-income earners delayed social security payments and used retirement benefits instead, they paid less taxes overall. For more information on Tax Torpedoes, please visit: Financial Planning Association website.
Your husband’s required minimum distributions are taxable as income unless he makes non-deductible contributions to these retirement plans. If he makes an after-tax donation, a portion of the withdrawal will not be taxed. However, most people received tax breaks on all donations, which means that all withdrawals are taxable.
A tax professional will look into your situation in detail, help you estimate your tax amount, and make sure you have enough withholding to avoid penalties.
Liz Weston is a certified financial planner and US personal finance columnist. nerd wallet. Questions can be directed to 3940 Laurel Canyon, No. 238, Studio City, CA 91604 or by using the “Contact Us” form below. Askweston.com.
This story was originally los angeles times.