Wednesday, September 10, 2008

What happens ‘If you died tomorrow...?

What happens ‘If you died tomorrow...?’

The untimely deaths of Bernie Mac (age 50), Issac Hayes (age 65) and Ohio Cong. Stephanie Tubbs Jones (age 58) are poignant examples of the fragility of our existence in the world. Our undefined timeline on earth will by definition leave our mission incomplete, our relationships unfinished and create a general sense of loss when our life ends.

If you died tomorrow, what will be your legacy and what will happen to your estate? What is your legacy? A legacy is something handed down from one generation to another. A legacy can be either of a spiritual or material form and include lessons, principles and insights on life and living. Every one leaves a legacy. Our very existence has had an impact on the world in one way or another. A formal way of recording a legacy is through an Ethical Will, which is focused on conveying the writer’s values and principles to the next and subsequent generations.

Creating your own Ethical Will allows you to tell your life story, identify what values are important to you and to communicate your legacy to the next and possibly subsequent generations. The State of your Estate Your estate is everything you own or have an ownership interest in. This includes tangible assets such your home, automobiles, jewelry, collectibles, personal property, etc.

It also includes your intangible assets such as bank accounts, stocks, bonds, pension plans, life insurance, etc. When you die, your estate is still here and has to be distributed either according to a plan you created or one directed by the state government. A basic estate plan consists of a Will, durable power of attorney and a health care directive. These documents will help minimize confusion and conflicts during a time of family stress.

You should also make sure that the named beneficiaries on pension plans, insurance policies, IRA’s and similar contracts are current. A Will directs what will happen to an individual’s assets when they die. An executor is appointed to make sure that the Will is processed correctly and that its terms are carried out. In addition, if there are minor children, a guardian should be named for their care until they become adults.

If a person dies without a Will, their death will be considered “intestate.” State laws of descent and distribution will determine how their estate will be distributed to surviving relatives. If there are no living relatives, the property will go to the state. Also, if there are minor children, the state will appoint a guardian.

A durable power of attorney allows an individual to appoint someone to handle their financial affairs, should they become incapacitated or unable to manage their finances. Having a valid durable power of attorney can help the family avoid having a guardian or conservator appointed by the court during an individual’s illness. The most common health care directive is the living will.

If an individual is terminally ill and cannot make medical decisions on their own, a living will describes the type of medical care they do or do not want to prolong life. Also, in some states, an individual can appoint someone to make medical care decisions. Live as if you are going to die tomorrow and plan as if you are going to live forever. Begin today to make sure that the legacy and estate that you leave is in accordance with your desires.

Arrange a meeting with your attorney to get the process started.

www.ruffcommunications.com

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Who Pays the Most Income Tax?

Higher income earners pay the most, Treasury says

By Robert Longley, About.com

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Feeling overtaxed? Under the U.S. income tax system, most of the taxes collected are supposed to be paid by the people who make the most money. Thanks to President Bush's tax cuts, that is exactly the way the system works, says the U.S. Treasury Department.

According to the Office of Tax Analysis, the U.S. individual income tax is "highly progressive," with a small group of higher-income taxpayers paying most of the individual income taxes each year.

In 2002 the latest year of available data, the top 5 percent of taxpayers paid more than one-half (53.8 percent) of all individual income taxes, but reported roughly one-third (30.6 percent) of income.

The top 1 percent of taxpayers paid 33.7 percent of all individual income taxes in 2002. This group of taxpayers has paid more than 30 percent of individual income taxes since 1995. Moreover, since 1990 this group’s tax share has grown faster than their income share.

Taxpayers who rank in the top 50 percent of taxpayers by income pay virtually all individual income taxes. In all years since 1990, taxpayers in this group have paid over 94 percent of all individual income taxes. In 2000, 2001, and 2002, this group paid over 96 percent of the total.

Treasury Department analysts credit President Bush's tax cuts with shifting a larger share of the individual income taxes paid to higher income taxpayers. In 2005, says the Treasury, when most of the tax cut provisions are fully in effect (e.g., lower tax rates, the $1,000 child credit, marriage penalty relief), the projected tax share for lower-income taxpayers will fall, while the tax share for higher-income taxpayers will rise.

The share of taxes paid by the bottom 50 percent of taxpayers will fall from 4.1 percent to 3.6 percent.

The share of taxes paid by the top 1 percent of taxpayers will rise from 32.3 percent to 33.7 percent.

The average tax rate for the bottom 50 percent of taxpayers falls by 27 percent as compared to a 13 percent decline for taxpayers in the top 1 percent.

The White House has announced it will lobby Congress to pass legislation making most of President Bush's tax cutting measures permanent.

Source: U.S. Treasury, Office of Tax Analysis

Also See:

2005 Tax Season: Easy Filing, Tax Law Changes Tax Stress Relief Tips Famous Tax Scams

Military Tax Guide -- For Federal Income Tax for Tax-Year 2003 -- Useful Publications

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Wednesday, September 10, 2008