Online Legal Service Provides Guidelines for What to Consider as Year Comes to Close, Including Estate Tax Planning and Incorporation Filings
SAN FRANCISCO, Calif. (December 15, 2010) — With the end of 2010 rapidly approaching, individuals, families and small businesses need to understand their legal responsibilities to ensure they are safeguarding themselves against potential risks while preparing for what’s ahead.
According to Charley Moore, founder and chairman of Rocket
Lawyer™, “The end of the year is a great time for individuals and small businesses to get their legal life in order – and this year it’s vitally important because of the uncertainty around estate taxes and potential changes to tax rates. Although the thought of seeking legal advice can seem daunting and expensive, online services like Rocket Lawyer are making it easier than ever for people to ensure they’re legally prepared and protected for the New Year.”
Rocket Lawyer enables small businesses and individuals to take a proactive approach to their legal needs with tools for creating, managing and reviewing important tasks and documents on an ongoing basis - from incorporating their business and developing business and employment contracts to getting their Will and estate planning done quickly and cost-effectively. Rocket Lawyer’s Legal Health Score™, provides members with a customized list of action items to ensure their legal well-being. Those who need additional help also have access to Rocket Lawyer’s extensive database of lawyers.
Although every year-end offers tax planning opportunities for people to maximize deductions, the uncertainty about the federal estate tax laws means that there is even more at stake as the New Year approaches. Because of changes written into the law in 2001, the estate tax disappeared in 2010, and is scheduled to reappear in 2011 at the lower 2001 exemption levels. Unless Congress acts to change the estate tax laws, married couples with an estate valued at over $1.35 million would see an increase in their estate taxes in 2011. This week, Congress is considering a bill that would reinstate the estate tax in 2011 that would mean a 35 percent tax on estates worth more than $10 million for couples. Rocket Lawyer is following the tax compromise bill closely, and will post updates on the estate tax changes to its Legally Easy and Rocket Lawyer Press blogs.
“There are no guarantees in life, and one certainly cannot count on Congress to do what might seem sensible to you and I,” said Attorney at Law Gregory Herman-Giddens, JD, LLM, CFP, who is one of the thousands of Rocket Lawyer network attorneys across the country. “For those with assets over $1 million, it’s simply not worth taking the risk that your heirs could end up paying hundreds of thousands of dollars in estate tax that could have been easily avoided by working with an estate attorney.”
The estate tax changes aren’t the only legal and financial issues people need to act on before the end of 2010. Rocket Lawyer suggests the following tips to help businesses and individuals maximize their legal and tax advantage before next year.
- 1. Refresh your estate plan. An estate plan that was written last year may not be up to date today because of recent law changes. Each person’s situation is different, so it’s important to seek legal counsel to find out the best approach for restructuring your estate plan. The last thing you want for your loved ones are unexpected tax implications when your assets are distributed in the future.
- 2. Create essential documents now. Every adult, even those who don’t have a large enough estate to be affected by potential estate tax thresholds, should have a Last Will and Testament, Living Will, and a Power of Attorney. Anyone can easily create, E-sign, and share these documents, as well as request a legal review from an attorney with an affordable Rocket Lawyer Legal Plan.
- 3. Incorporate your business. Incorporating is almost always a good idea because it shields the business owner’s personal assets from business liabilities. Since it’s nearing the end of the calendar year, business owners should consider filing now and requesting a Jan 1 incorporation date. This way you avoid filing two tax returns in one year (one for the time period before the incorporation effective date, and one for the remainder of the year for the new business entity). Filing now also helps avoid the rush in January when many people start thinking about taxes and business liability. It’s easy and affordable to incorporate a business with Rocket Lawyer.
- 4. Maximize your retirement contributions. Expecting any year-end bonuses or cash gifts? If you have an IRA, you should contribute up to the maximum contribution per year to get the full tax benefit. For the 2010 calendar year, you can add up to $5k if you are 49 years or younger, and up to $6k for those ages 50 and above. If you don’t put in the maximum amount, it doesn’t “roll over” into the next year - and you lose the chance to add those funds, so now is the time.
- 5. Get your credit set for the holidays. Most Americans will be working their credit cards over the holiday season, so make sure you have a plan for how much you’ll spend, your purchase method, and how you’ll pay it off if you’re using a credit card. Some people may choose to open a new credit card with a special low interest rate and pay it off over several months, or split purchases on different cards. Plan now to avoid getting buried in payments in January.
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