If you’re wondering if your taxes will go up…

Here’s a short list of what expires on January 1, 2011:

1. Personal income taxes will increase:  10% to 15%, 25% to 28%, 28% to 31%, 33% to 36%, and those in the 35% bracket move up to 39.6%.   Remember, that’s just a federal hike. State taxes get put on top of that.
    
2. The “marriage penalty” will start from the first dollar earned.
    
3. The child tax credit drops from $1,000 to $500 per child.  The dependent care and adoption tax credits are reduced.
    
4. The marriage deduction reverts to the single deduction amount.
    
5. The “death tax” returns, with the top tax rate on estates over $1 million going to 55%.
    
6. The capital gains rate increases from 15% to 20%.
    
7. The dividends tax increases from 15% to 36.9% (and another 3.5% increase in 2013 for healthcare reform).
    
8. If you make an early, non-medical withdraws from a Health Savings Account, the tax increases from 10% to 20%.
    
9. Tax benefits for education tuition and fees will not be available.  Tax credits for education will be limited.
    
10. Teachers can no longer deduct classroom expenses.
     
11. Employer-provided educational assistance stops.
     
12. Many families will no longer be able to deduct student loan interest payments.

With Medicare and Social Security in trouble, a war on terror, and an aging population, I can’t see taxes going lower. What does this mean for you?  Maybe it’s time to start looking at saving strategies that allow for tax-free growth and tax-free access.

When a life insurance death benefit comes in handy

I sell quite a bit of life insurance, but rarely for death benefit purposes.  Which may sound strange to some of you because isn’t that what life insurance is for—when someone dies?  Well, yes.  I just happen to use other features of the product to create “life benefits” as well.

In presenting my “life benefit” plan to use life insurance, I often say, “and the death benefit just comes along for the ride.”  Ultimately, clients are paying for the death benefit even if that’s not their focus.  Sometimes it’s nice to have that passenger on bus.  Because when the unexpected or the untimely happens, the death benefit is nice to have.  It’s the difference between scrambling for donations from family and friends and knowing that you have money to take time off to grieve, to support your loved ones and business partners once you’re gone.

As many of you  know, I’m adamant about my clients getting their estate planning done.  It is a great act of love to make sure your affairs are handled and your family and friends know what your wishes are after your death.  I come from a long line of dead people, so trust me when I say that there is no worse combination on this place than death, family and money.  The second thing you need to do is get your life insurance in place early and often.  Get it when you’re young and healthy.  It’s one of those things that you’d rather have and not need than to need and not have.

For whatever it’s worth, I’m not a big fan of life insurance on kids, but if you can get a cheap rider on your own policy, it might be worth having.  I can’t imagine anything worse than the loss of a child.  Having time to take off work potentially without pay and grieve is huge.

Here’s what I do think is important:  Tell your family and friends when you’re alive how much you love them and what you respect and appreciate about them.  Record it, at least your voice, so they can hear it in the future.  Those of us left behind often forget the sound of our loved ones’ voices, and to have them for hard times is a beautiful gift.