We all know the importance of starting a savings plan for retirement early – after all, this is the only way to accumulate that million dollars the experts tell us we’ll need to live comfortably.

Unfortunately, reality doesn’t always make that possible and many of us end up in our 40s and 50s with very little saved, stressed about the retirement that’s looming in our near future.

So, can you still retire comfortably without having the coveted million dollars in savings?

Yes… yes you can. While a million bucks would certainly make things easier, it’s not mandatory for a carefree retirement. In fact, you can enjoy a wonderful retirement with much, much less.

To start, do your math and figure out how much money you would need each year in order to live. Factor in future changes such as paying off a mortgage or dependents moving away from home. Then estimate how much money you expect to have coming in, including both Social Security and any pension or retirement plans you might have.

With these two numbers, you can start focusing on how to fill the gap.

The best way to do this is with savings and investments, such as an employer-sponsored 401k or an IRA account. But while you’re socking money away in savings, also remember that you don’t have to stop working when you retire.

Maybe this is when you’ll finally launch that small business you’ve always dreamed about or work part-time as a florist or at a day-care center. This is an opportunity for you to actually choose something you’red really want to do instead of choosing a career because it pays all your bills.

For most people, figuring out how to close the financial gap opens up a whole new range of possibilities and if you let your imagination run with those possibilities, you might find that you’re a little excited about the idea of retiring after all.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

Planning for retirement is one of the most important things you will do during your lifetime, and any mistakes you make today can be extremely costly later. In fact, according to experts, of those people that do have retirement plans, about 90% will still live in poverty or run out of money before they die.

You Need a Goal – Having an IRA and/or 401k in place is not enough. You need to know how much money retirement will cost you so that you can start planning and working toward that goal. Unfortunately, most people never calculate this important number and don’t know there’s a problem until it’s too late.

Not Saving Enough Money – Simply socking away 2 or 3% in your 401k isn’t going to cut it. Recent surveys revealed that about 75% of people between the ages of 55 and 64 had less than $56,000 saved for retirement. To keep from making this mistake, you will need to start saving for retirement, and do so aggressively. Put as much money as possible away now so that you’re not scrimping for cash later.

Not Saving While Still Young – While planning for retirement might not seem a like a big deal when you’re in your 20s and 30s, the truth is, time flies. Before you know it, you’re pushing 50, retirement is just around the corner and you’re just starting to think about saving. If you haven’t already started a retirement plan, do it now.

Never Rely on Social Security or a Pension – Company pension plans are a risky thing to rely on as many are underfunded and the majority of companies are moving towards dropping pension plans altogether. Social Security doesn’t offer much more security, and even if it did, the benefit amount that you receive is likely just a fraction of what you’ll need to live.

Not Investing – One of the best things you could do as far as a retirement plan is to add some investments beyond your 401k. If you get some extra money, why not put it in some type of investment, such as annuities or CDs. Of course before you invest, you should retain the services of a professional financial consultant to help you choose the investments that are right for you.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

Passing on the wealth you’ve accumulated over the years to your heirs isn’t always as easy as it seems. With the $1,000,000 estate tax exemption scheduled to come back in 2011, a much larger group of people will be paying inheritance taxes in the coming years. Fortunately, smart estate planning can help at least minimize those taxes so that the bulk of your estate goes to your heirs and not Uncle Sam.

• The Gift Tax exclusion is an important exemption that you don’t want to overlook. This allows you to gift money up to a certain amount each year, without any tax consequences. The important thing to remember is that you cannot carry it over to the next year so it is necessary to use it within the same year, or you will lose it. Under the law, you can gift up to $13,000 to the same individual each year in addition to a lifetime exclusion of $1,000,000. This $1,000,000 lifetime gift reduces the amount you can leave at death; the $13,000 annual gifts are in addition to this. In addition, gifts to spouses (if a US citizen) and those made directly to a medical provider or school are exempt as well. So, unless you have a very large estate, you could theoretically pass the majority of your estate to your heirs tax free.

• Because funeral expenses can be used as a tax deduction for the estate, this can lower the total amount of taxes that your loved ones will have to pay. So will a gift to charity.

• The portion of an estate that is left to a surviving spouse is also exempt from taxes, as long as the spouse is a citizen of the United States, and no other party has an interest in the property or assets being inherited by the spouse.

The bottom line – consulting with an estate planning attorney can ultimately save you and your loved ones money in the long run.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

Having an idea of what you’d like your estate plan to do is a great first step to creating the plan itself. Setting goals will help you identify the tools you need to make the estate plan right for you.

And although no two estate plans are the same, there are some basic objectives that are common across the board:

• Maintain the value of your assets. This is actually one of the primary goals that many people have when they consider estate planning.

• Provide for your family in the event of death or disability. Will your family have the financial support they need when you’re no longer around? Creating an estate plan is a good way to ensure they do.

• Naming a guardian for minor children.. If something should happen to you before your children are old enough to care for themselves, your estate plan ensures you’ll have a say in who raises your children.

• Naming the executor for your estate. Having an estate plan allows you to decide who will oversee your estate and the distribution of your assets.

• Naming your heirs. It’s your property – you should get to decide who gets what. An estate plan gives you that ability.

• Minimize taxes and legal fees. Depending upon how you construct your estate plan, it is possible to minimize taxes and in some instances, avoid probate and all the fees that go with it.

Once you’ve identified your estate planning goals, a qualified estate planning attorney can help you identify which goals are obtainable, and advise you on aspects of your estate plan that you may have overlooked.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

If you are nearing retirement and are thinking of selling your home because you no longer want the problems of taking care of a large house, or maybe you plan to travel, you might want to reconsider. You can actually turn your home into a monthly cash flow that can help you finance your retirement.

This is a good option for retirees that no longer want to live in their home. There are a number of benefits to renting instead of selling your house, especially if you already have your house paid for. When your home is already paid for most of what you get in rental income will be profit. If you want to travel, you can hire a management firm to oversee the rental or ask one of your adult children to take care of it.

Does it Makes Sense for You To Rent Out Your Home

Assuming that your home is paid for, most of what you get in rental income will be profit, but you do have to factor in some costs, such as upkeep on your home, as well as vacancy time. Before you decide if renting your home will be the better alternative to selling, you will first have to look at the expenses.

How much will you likely be able to charge for rent? Once you have come up with an amount, you will need to add together the costs you are likely to incur, such as home insurance, repairs to the house, taxes, and possibly property management fees. The cost should be about 10%, but can be up to 20%. With these calculations, if you rent your home for $1,500 a month you should make about $1,200 a month profit. Adding this monthly income to your retirement cash flow will obviously be very helpful.

Another advantage to renting your home instead of selling is that you will still be building equity in the property, and can sell it at a later date if you choose. Your house will likely continue to increase in value over the long term so when you do sell it, you may possibly make a bigger profit than you would if you put it on the market now.

Decrease Tax Liability

When you rent out your home there are some tax deductions that can be helpful in lowering your tax obligation. All of the repairs that you make on the home can be deducted from your income, or depreciated, as well as some travel expenses, if the travel involves taking care of your rental property. You might even be able to get a deduction for a home office if you use it to manage your rental property. Travel expenses and home office deductions can be tricky with the IRS, so be sure that you get the advice of a tax professional before using these deductions.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

While retirement can be a happy occasion for some people, it can be a source of anxiety for others. Some are happy to be retired because it allows them more time to travel and do all of the things that they didn’t have time to do while working. Others worry about finances, or if they will feel needed or useful. And then for some, retirement includes a generous mixture of all these feelings.

If you want to go into retirement without the anxiety, it is best to plan your retirement, and the earlier you do this the better. No matter how old you are there are steps you can take to plan a retirement that you will feel secure and happy with. This is especially true when you consider funding your retirement.

This checklist can help you get ready for retirement, even if you are decades away from those golden years.

• The first thing to look at is what you want to do when you retire. Will you want to live in a retirement community and take life slow, visit relatives, or travel the world?
• Once you know what you want to do in your retirement years, you will then need to calculate how much money you will need for retirement. There are retirement calculators available online that can help you to determine the amount of money you need.
• After calculating how much money you need to retire, you will then be able to tell where you are financially for retirement and how much longer you will have to save and work before you can retire.
• Look for ways that you can save money for your retirement, such as an employer sponsored 401k, an IRA, as well as investing in stocks and bonds.
• Keep track of what your benefits will be from Social Security. Each year you will get a letter from the Social Security Administration that will tell you how many credits you have toward retirement benefits, and what the amount of your benefits will be.
• Find out when you will qualify for Medicare, and the best age to apply for your Social Security benefits. For some people it may make sense to delay collecting these benefits so they will have a larger monthly income.
• Get information on withdrawing money from your retirement early if the need arises, as well as the best time to start taking withdrawals for retirement.
• Don’t forget to put an estate plan into place that includes your Last Will and Testament, a Power of Attorney, and any trusts that may be necessary to protect your assets for yourself, as well as your beneficiaries.

The better prepared you are for retirement, the more you will be able to relax and enjoy this time in your life.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

Estate planning is all about protecting you and your loved ones from the unknown. One of the ways to do that is to use an estate planning tool called a Durable Power of Attorney.

This legal document enables you to choose someone to act on your behalf in the event that you become disabled or incapacitated. The person named in your Durable Power of Attorney would be able to pay your bills, transfer money to and from your accounts and enact financial transactions for you.

And if you’re thinking you don’t need a Durable POA, think again.

Disability can strike at any time. Strokes for example, often strike seemingly healthy people with no real medical concerns. Suddenly, you’re unable to take care of yourself and must rely on family members and friends to it for you. But when it comes to writing checks on your account or discussing payment plans with creditors, not just anyone can do that. They must first have your written authorization – something you’re no longer able to give.

Now without that authorization, your family will have to go to court and have you declared incompetent. This can be a lengthy and costly process, not to mention personally humiliating for you.

See why a Durable Power of Attorney is so important?

Fortunately, your estate planning attorney can help you draft a Durable POA that addresses all your concerns. You can make it active only in cases where a doctor has certified a need or it can be active from the time you sign, something that might come in handy for married couples.

A Durable Power of Attorney will end upon your death and it can also be revoked by you and by court order.

To learn more about drafting your own POA and other estate planning tools, give our office a call today.

Michele A. Tutoli is a Member of the American Academy of Estate Planning Attorneys.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

While probate is a common occurrence, most people would prefer to avoid that particular experience. Probate can be expensive, time-consuming and emotionally draining. And considering that probate occurs after you’ve lost a loved one, the last thing you want to do is spend time and money in court dissolving your family member’s estate.

Fortunately, a living trust can help you do just that.

With a living trust, all your assets are transferred into the name of the trust rather than being titled to you individually. This is important because when you pass on, any assets titled in your name are subject to probate. But assets in the name of the trust can be passed directly to your beneficiaries without court supervision.

How to Create A Living Trust

Because a trust is a separate legal entity, you’ll need a legal document known as a Declaration of Trust. Your estate planning attorney will help you prepare this important document. There are however, some things you’ll want to have figured out in advance:

• Your Trustee – Typically the person who created the trust (you) chooses to act as their own trustee, so that you have primary control over the assets you put into your trust. But you don’t have to be your own trustee and if you’re not sure, talk it over with your attorney to get a clear understanding of all your options.
• Funding the Trust - Once you’ve created your trust, you’ll then need to fund it so start thinking about what assets you want to use. Your house is a good one for example, but it might be easier to keep your car in your own name. Again, your attorney can give you guidance on which assets work best, but it certainly doesn’t hurt to start thinking about the assets in your estate now.
• Name Your Beneficiaries – Who will inherit after you’re gone? Make a list of the people or organizations that will inherit the assets and property owned by the trust after you die. Keep in mind that this will only cover the property and assets that are held by the trust; anything outside of the trust you would need to cover with a will.
• Name a Successor Trustee – This is the person that will become trustee after you die.

Having this kind of basic information mapped out is the first step to creating your own living trust. If you’d like more information about a living trust, contact our office today.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

2010 has been one strange year for the U.S. tax code. We have a huge estate tax issue that is still not fully resolved. Let’s take a look at where things stand for the estate tax year in terms of changes, amendments, additions and considerations.

The estate tax and GSTT have been repealed for 2010, but they may be enforced retroactively.

Even though the Obama administration preferred having an estate tax in 2010, Congress was preoccupied with other matters as 2009 drew to a close. So no action was taken, and as EGGTRA stipulated in 2001, the estate tax is 0% in 2010. [1]

So far, anyway. The longer we go with no action taken, the harder it gets for Congress to take action and put a retroactive estate tax in place. (You could easily argue that a retroactive estate tax would be unconstitutional.)

Of course, the estate tax and the generation-skipping transfer tax (GSTT) are scheduled to return in 2011. Congress may restore things to 2009 levels, $3.5 million exemption for estate tax and GSTT with 45% estate, GSTT, and gift tax rates. By doing nothing, though, estate taxes would reset to pre-EGGTRA levels in 2011 (the exemption level at just $1 million with 55% estate, GSTT, and gift tax rates). [1]

With no estate tax in place for 2010, the step-up basis rules have been replaced by carryover basis rules.

This year, assets in an estate are subject to capital gains taxes when sold based on the original price paid for the asset. This could mean some big problems for heirs if an asset was bought by Mom or Dad 20 or 30 years ago. Let’s say the asset is a stock. If Mom or Dad purchased shares off and on through the years, you’ll have quite an assignment to find that paper trail, and you may end up paying capital gains tax on the appreciation if the estate is really large. Fortunately, each estate can exempt $1.3 million of gains from the carryover basis rule, and another $3 million exemption applies to assets inherited from a spouse – so as much as $4.3 million of an estate, if transferred to a spouse, can retain the step-up in 2010. [2]

The federal gift tax rate is 35% for 2010, not 45%.

Yes, there is still a gift tax in 2010 on gifts above the lifetime exemption amount of $1 million. However, the tax bite is just 35% for 2010. Of course, if you end up gifting less than $1 million during your lifetime, you won’t have to worry about the gift tax at all but you will need to be sure to file a gift tax return.[3]

IRS CIRCULAR 230 DISCLOSURE: Tax advice contained in this communication (including any attachments) is neither intended nor written to be used, and cannot be used, to avoid penalties under the Internal Revenue Code or to promote, market or recommend to anyone a transaction or matter addressed in this communication.

[1]moneywatch.bnet.com/retirement-planning/article/estate-tax-what-you-need-to-know-for-2010/378294/ [1/5/10]

[2] articles.moneycentral.msn.com/RetirementandWills/PlanYourEstate/5bigMythsAboutTheEstateTax.aspx [4/14/10]

[3] moneywatch.bnet.com/retirement-planning/blog/financial-independence/why-is-everyone-afraid-of-the-gift-tax/843/ [4/14/10]

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

If you have been named as trustee of a trust , you may find that the job isn’t quite as easy as you thought it would be, especially if you have multiple beneficiaries and/or difficult heirs.

In fact, it is a common misconception that the biggest task of a trustee is the financial aspect of their role, but in reality the people that the trustee deals with can be just as much of a challenge.

How to Make Your Role as Trustee Easier

One of the most important things you can do in your role is to communicate with the beneficiaries of the trust. Most people don’t have a clue as to how a trust works, or what a trustee does. Due to the fact that a beneficiary may not understand the mechanics of a trust and your role as trustee, they could be uncooperative. Without the cooperation and support of the beneficiaries of the trust, the trustee’s job can be a lot more difficult than it has to be.

There are some steps you can take to ensure that you and the trust’s beneficiaries are on the same page.

The first thing you will want to do is contact the beneficiaries of a trust as early in the process as possible; at this point do everything you can to educate these people as to what your role of trustee entails. Be upfront with the beneficiaries on subjects such as how long it is likely to take to administer the trust, and always answer questions in a courteous manner. It is also important that you not try and hide the trust document or any of the assets from the beneficiaries, as this will create distrust.

Although the law does require that a trustee keep beneficiaries informed on what is happening with the trust, you will want to do at least this much and a lot more. Look at the beneficiaries more like partners, and they will be a lot happier with how you are handling your role.

Keeping beneficiaries informed is vital; anytime that you take an action that will have an effect on the beneficiaries, you will want to let them know. If you do want to take action and you know that it is not something a beneficiary wants to do, it is a good idea to either get written permission from the person prior to taking action, or to go to court and get approval from a judge.

If you are both a trustee and a beneficiary of the trust, you will have to take extra precautions against potential disputes. It is important that you are fair with all beneficiaries and you will not want to take any action with the trust that you might benefit from at another’s expense.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.