People who suffer a serious financial setback or fail to set aside enough for taxes have more options than they realize when it comes to paying Uncle Sam. If you aren’t able to borrow or come up with the cash to pay your taxes, the next best step is to apply for the IRS’ installment payment plan.
HOW IT WORKS:
You commit to pay a specific amount each month until the debt is wiped out. To start the process, fill out IRS Form 9465, Installment Agreement Request, and staple it to the front of your Form 1040. For more information, go to www.irs.gov and type “can’t pay taxes” into the search field.
Want your heirs to be comfortable?
Too many people think of estate plans as a series of expensive documents for the superrich. As a result, they never get around to having them drawn up, which is a serious financial mistake. Everyone needs basic estate planning. Without these documents, your heirs could wind up spending a fortune trying to collect assets you wanted them to have. Estate-planning essentials:
Will.
This document states who you want to receive specific assets.
Beneficiary forms.
Assets in your retirement plans are counted as part of your estate at death—but who gets them is determined by your account beneficiary forms, not your will. Call financial institutions to be sure beneficiary forms are filled out correctly and up to date.
Durable power of attorney.
This document names someone to legally manage your affairs if you become incapacitated.
Living will.
This document tells healthcare professionals which medical procedures you do or do not want if you are incapacitated.
Durable power of attorney for health care.
This document names someone to make medical treatment decisions if your physician declares you incapacitated.
Letter of instructions.
While not legally binding, this letter tells surviving heirs who you want to receive assets of modest or sentimental value. It also can express how you want children raised by guardians. Such personal letters go far to limit family feuds and estate litigation.
Trusts.
If you want assets left to heirs protected from taxes and spending abuse, consult an attorney to set up a trust. A trust can outline who is to receive assets, when they will get them, and under what specific conditions.
Protect your will from greedy relatives
While you can’t stop heirs or relatives from legally contesting your will’s validity upon death, you can discourage such actions.
WHAT TO DO:
Simple solution—add an in-terrorem clause to your will. This clause says that anyone who contests your will loses what you left him or her.
Greater protection—set up a living trust that will receive your assets upon death, making it more difficult to challenge a will or claim you were incompetent when the will was drawn up and signed.
