Could Your Tax Plan Harm Your Family?
We all know how important reducing taxes can be for our family finances, especially in these difficult times. But are some tax strategies better than others? Are there some that can provide benefits to our children for generations to come while others may actually hurt our loved ones when they need the money most?
The answer is a resounding yes!!! Most tax plans focus only on you and your current situation. Tax planners often don’t take into account the trouble that a temporary tax plan can cause your spouse, your family or even yourself years down the road. Let me tell you a quick story to illustrate this point.
John, one of my early clients at ProVision, was advised to defer as much money as possible into his retirement years by contributing as much as possible to the pension plan of his corner grocery store. It seemed like a great idea at the time. But years later, when his family needed the money after he died a sudden death, they found out that they had to pay enormous taxes use the money in John’s pension plan. In the end, this client’s temporary tax plan ended up preventing his family from living the comfortable lifestyle they were used to.
This all could have been avoided and the family spared this crippling tax burden if the client’s tax strategist had focused their efforts on permanent tax benefits. Don’t let this happen to your family. A ProVision tax strategy includes several ways to permanently reduce taxes so spouses and family members are not subject to huge taxes when their loved one dies.
Permanent tax strategies can include employing children and contributing their nontaxable wages to a Roth IRA, using a corporation to make medical expenses deductible and converting taxable income from ordinary income to capital gains.