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What Is A ‘Power of Attorney For Property’ And Why You Need One

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Just south of ‘Sawmill Creek…..
Hi Attorney Kevin Pritchett here

“What Is A Power of Attorney For Property?”   
  A Power of Attorney For Property is a document you sign that gives the person you designate the power to handle business matters for you in the event you are unable to make decisions for yourself.

     A Power of Attorney For Property is only applicable while you are incapacitated and alive. Once you become able to handle your affairs, the person named is no longer entitled to handle your affairs.  Alternatively if you die, the document is no longer valid.

“Ok..But Why Do I Need A Power of Attorney For Property?”
    Glad you asked!!      Let’s assume you have dementia and are no longer possessed of a mental state considered necessary to knowingly handle your business affairs.  In other words, in this example, you do not have the mental capacity to transact your business affairs. 

       With a valid Power of Attorney For Property
the person you name in that document to handle your business affairs can carry on for your benefit without your heirs having to file a petition in Probate Court to be named as a guardian.

Eliminates The Expense And Delay of Probate
     Without this Power of Attorney For Property in the same situation above, your family would have to file an expensive and time consuming petition with Probate Court for someone to be named administrator or guardian so as to transact your business. 

Besides the expense of hiring a Probate Attorney ($2500 to $5,000 minimum Retainer plus ongoing hourly legal fees), the case could take 12-18 months to resolve.   Add THAT potential cost up at $375/hour!!!

Reach Out To Me If You Have Questions.  
If you have comments or questions about any of this…send me an email :
ironkop@gmailcom
or if reading on my blog or Facebook page leave your questions or comments below.

Remember…..
“Things Don’t Get Better With Neglect…..”  

Kevin Pritchett, Esq
Law Office of Kevin Pritchett, Inc
ironkop@gmail.com
www.KevinPLaw.com
312-505-1957

” Will Social Security Run Out Of Money?”

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Just south of ‘Sawmill Creek…..
Hi Attorney Kevin Pritchett here
     Before I answer the question of

“Will Social Security Run Out?

I have to explain how Social Security is funded and hence how you are taxed for it.

How Much  Social Security Tax Will You Pay?   
Social Security taxes are paid on amount of all wages earned.  In 2018 the maximum income for social security tax is $128,400 and the maximum tax on that amount is 6.2%.  So if someone earned the maximum of $128,400 they would pay $7960.

Medicare Tax
    There is an additional 1.45% tax to fund Medicare.  This tax is uncapped so no matter what your earned income you pay this 1.45%.

     If you earn over $200,000 you pay an additional 9% for single filers and heads of households and that 9% is assessed on earned income over $125,000 for married filers filing separately and over $250,000 for married couples filing jointly.

Employers Social Security and Medicare Contributions
    In addition to the part employees pay Employers pay 12.4% of employees salary for Social Security and  2.9% for Medicare.

Self Employed Contributions
   Self employeds who earn $128,4400, or more
would have to pay the whole $15,921.60.

However, these self employeds can deduct half of the
Social Security taxes paid to reduce their
adjusted gross income. 

Projected Social Security Trust Fund Shortfall
     Here’s the issue regarding your retirement planning…according to Social Security Administration due to rising costs and diminished revenues, by 2034 there will be projected shortfall in the Social Trust Fund. 

     As a result either benefits will be reduced ortaxes will be increased…neither situation is good news.

Take Home Message On Social Security 
DON’T RELY ON SOCIAL SECURITY ALONE FOR YOUR RETIREMENT NEEDS!!!!

    You need to plan your savings so that you receive GUARANTEED, LIFETIME INCOME  no matter what SOCIAL SECURITY OR STOCK MARKET DOES!!!

     Don’t believe me……just talk to any number of your friends who are still working past 65 because they lost money in the 2008 recession!!!

    There are things you can do to protect your retirement income…

Reach Out To Me If You Have Questions. 
If you have comments or questions about any of this…send me an email :ironkop@gmailcom
or if reading on my blog or Facebook page leave your questions or comments below.

Remember…..”Things Don’t Get Better With Neglect…..”

Kevin Pritchett, Esq
Law Office of Kevin Pritchett, Inc.  
ironkop@gmail.com
www.KevinPLaw.com
312-505-1957

Business Structure Part 2: Which Business Entity Structure Is Right For You?

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Just south of ‘Sawmill Creek…..
Hi Attorney Kevin Pritchett here

Business Structure Part 2
“Which Business Entity Structure Is Right For You?”

    Today, I’ll cover the ‘Sub Chapter S’
 Corporation structure. Let’s dive in.
Sub Chapter S Corporation
     The  most simple corporation structure is the Sub Chapter S Corporation.

       Like all corporations, the Sub S gives you :

TAX ADVANTAGES
and
LIMITED LIABILITY.

Pros of Sub Chapter S :
==organizing business activity separately

==provides limited liability. Protects your business   
losses and liabilities from your personal assets.

==significant business deductions allowable

== no tax at the corporation level

==income and deductions are ‘passed through’  to the
individual

Cons of SP:
==limited number of shareholders allowed
(100)==shareholders must be individuals (and certain
types of trusts)

==must hold annual meetings and keep corporate   
formalities like minutes, resolutions, notice for   
meetings etc.

==annual cost to state for annual report filings

Take Home Message For Sub Chapter S
A Sub Chapter S corporation is the easiest
of the entity structures to use.  You get to ‘pass through net income ( your gross income subtract business expenses including reasonable salary and what’s left over is what’s taxed…not at a corporate level but at your individual level.

    This ‘pass through’ characteristic gives you MUCH greater control over what amount of income is ultimately taxed and in what deductions you have available to offset income.

     As opposed to W-2 employee income where you get taxed IMMEDIATELY and you keep what’s left…with a Sub S you deduct off of the gross income and you get taxed on what’s left…huge difference!!!!More money in your pocket !!!

Real Estate Investors and Sub Chapter S
    If you own INVESTMENT real estate  that you
buy, fix and flip, a Sub Chapter S Corporation is the preferred structure. 

    For example,  the short term gains you make in a ‘fix and flip’ (gains earned in less than 12 months) which are taxed at the highest rate: ordinary income, can be greatly offset by the costs and other business related expenses allowed in a Sub Chapter S
corporation.  
  
     Since there is no corporate tax in a Sub S this net income is passed through to your individual tax situation and you pay less tax over all than you would if you earned that same income as a sole proprietor or in another type of corporation that had a tax at the corporate level…make sense?

     Next time, I’ll go over Limited Liability Companies

Reach Out To Me If You Have Questions.  
If you have comments or questions about any of this…send me an email :ironkop@gmailcomor if reading on my blog or Facebook page leave your questions or comments below.

Remember…..
“Things Don’t Get Better With Neglect…..”

Kevin Pritchett, Esq
Law Office of Kevin Pritchett, Inc.
312-505-1957  
 ironkop@gmail.com
www.KevinPLaw.com

GUARANTEED INCOME FOR LIFE…

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Just south of Saw Mill Creek…

Hey Kevin Pritchett here:

Recent stock market gyrations got you worried? 
Don’t lie…you KNOW you’re worried…and you SHOULD BE!!

Can you...
–afford to lose 10%…20% or more of your retirement portfolio?

–devote the time it would take to recover
   any losses (aka postpone retirement…aka WORK LONGER????

I KNOW you can’t…NOBODY can!!

Profit From Market Upsides And Eliminate Losses From Downturns

     Rather than wring your hands, continue to do
nothing and/or live in constant fear…you can
implement simple, safe, proven strategies that
can give you access to all market upsides and
eliminate any losses from market downturns.

What if you could:

==benefit for ALL stock market gains
==LOCK IN YOUR GAINS when the market
drops

==KEEP ALL YOUR GAINS AND NEVER LOSE A DIME
FROM ANY STOCK MARKET LOSSES

     Over the last 20 years I’ve helped HUNDREDS
of people and business owners and others create safe plans that allow them to GROW THEIR ASSETS, create GUARANTEED INCOME STREAMS YOU CAN’T OUTLIVE, generate TAX FREE INCOME streams at retirement (and have their business pay for it…legally) and as a result,
sleep worry free when the markets gyrate.

For all the details WATCH THE VIDEO ABOVE OR
CLICK HERE

Remember…….
“Things don’t get better with neglect….”

Kevin Pritchett, Esq
Law Office of Kevin Pritchett
312-505-1957
P.S.
You KNOW you need growth but you’re scared
to death of losses…find out how you can grow your
money and eliminate the losses when the
market turns…CLICK HERE

Business Structure Part 1: ‘What Business Entity Structure Should You Use?’

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Just south of ‘Sawmill Creek…..
Hi Attorney Kevin Pritchett here
Business Structure Part I”Which Business Entity Structure Is Right For You?”
     As you can see from the chart above the answer to the “which entity structure’ should I use?” question is REALLY about…..

TAXES
     More specifically, saving taxes.  Also

PERSONAL LIABILITY

  Starting with this newsletter, I will explain each of the business structure types revealing the pros and cons of each focusing on taxes and personal liability.

    Today, I’ll begin with ‘Sole Proprietor’ structure. Don’t worry…you won’t have to be a CPA or Tax Geek like me to understand…I’ll keep it super simple and common sense…fair enough? Let’s dive in.

Sole Proprietorship (SP)
     SP is the most basic way to conduct
business.  You conduct business in your own name (even though you can and should register your sole proprietor business with a dba or ‘Doing Business As’ registration with the County Clerk where you conduct business.

  Pros of SP:
==organizing business activity separately
==inexpensive and simple to start==no annual meetings
or other corporate formalities
==limited business tax write offs

Cons of SP:
==not able to claim totality of available business   
deductions
==no personal asset protection…i.e. someone   can sue
your SP and ALL your personal assets   not just the SP
assets are at risk

Take Home Message For SP
A SP is how many people begin operating
business because of its simplicity and low cost. 

     However, in my opinion (and in my over 30 years of legal practice) the cons of personal liability and limited tax deductions clearly outweigh the cons.

     Next time, I’ll go over the different types
of corporations and other entity options.

Reach Out To Me If You Have Questions.  
If you have comments or questions about any of this…send me an email :ironkop@gmailcom or if reading on my blog or Facebook page leave your questions or comments below.

Remember…..
“Things Don’t Get Better With Neglect…..”

Kevin Pritchett, Esq
Law Office of Kevin Pritchett, Inc.
312-505-1957
ironkop@gmail.com
www.KevinPLaw.com

What Is A ‘Roth IRA’?

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Just south of ‘Sawmill Creek…..
Hi Attorney Kevin Pritchett here
“What Is A Roth IRA?”
   There are two basic types of IRA retirement accounts. 
  ==The Regular IRA 
  ==The Roth IRA

   A Regular IRA:
   ==$6,000 annual deposit limit ($1,000 catch up if over age 50)
   ==money grows tax deferred during your working years 
==at retirement you get taxed on withdrawals  ==withdrawals prior to age 59 1/2 incur tax penalty

A Roth IRA:
 ==$6,000 annual deposit limit($1,000 catch up if over age 50)
==  money grows tax deferred
==  NO TAX on withdrawals!!!
== INCOME LIMITS:
      If you are single, you must have
    a modified adjusted gross income
    under $135,000 to contribute to a
    Roth IRA for the 2018 tax year, but
    contributions are reduced starting at
$120,000. If you are married filing jointly,
    your MAGI must be less than $199,000,
    with reductions beginning at $189,000.

True TAX FREE Income
    If you meet the income guidelines the Roth IRA is one of only two strategies that allow you to achieve truly TAX FREE GROWTH AND TAX FREE INCOME.

Converting A Regular IRA To A Roth IRA
   A question I get all the time is

“Kevin,  can I convert my regular IRA into a Tax Free Roth IRA?”  
    The answer is YES!!!  There is of course a catch…..Every dollar you convert from a Regular IRA to a Roth IRA is taxed as ordinary income. Even with this conversion tax, it almost ALWAYS makes sense to convert…..the real barrier is the psychological impact of paying the tax.

     In future newsletters I’ll discuss this topic of Roth Conversion in more detail.

Reach Out To Me If You Have Questions.  
If you have comments or questions about any of this…send me an email :ironkop@gmailcom or if reading on my blog or Facebook page leave your questions or comments below.

Remember…..
“Things Don’t Get Better With Neglect…..”

Kevin Pritchett, Esq
Law Office of Kevin Pritchett, Inc.
312-505-1957 
ironkop@gmail.com
www.KevinPLaw.com

What Is A ‘Power of Attorney For Health Care’ And Why You Need One?

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Just south of ‘Sawmill Creek…..
Hi Attorney Kevin Pritchett here:

“What Is A Power of Attorney For Health Care?”  
   A Power of Attorney For Heath Care is a document you sign that gives the person you designate the power to make medical decisions for you in the event you are unable to make decisions for yourself.

     A Power of Attorney For Health Care is”Durable” if it stays in effect even after you become incapacitated.

“Ok..But Why Do I Need A Power of Attorney For Heath Care?”
    Glad you asked!! 
   
Let’s assume you suffer a stroke or massive heart attack and you are incapacitated.  You’re on life support, a machine to help you breath and your medical prognosis is uncertain.

    What should your family do? 
==Keep you on all life support indefinitely?

==Take you off life support?  If so, when?

I Personally Had To Live This Nightmare
    I can tell you from personal experience(having had to make this agonizing decision for my mother, my father and my sister,its a living Hell not knowing.

     With a Power of Attorney For Heath Care you literally tell your designated representative what YOU want them to do.    Typically the form you complete states YOUR wishes and desires.  

Eliminates The Agony of Not Knowing What To Do
       A properly drafted Power of Attorney For Health Care gives your designated person your EXACT wishes and eliminates the agonizing guess work a family member would otherwise have to go through trying to decide what to do.

Reach Out To Me If You Have Questions.  
If you have comments or questions about any of this…send me an email :ironkop@gmailcom or if reading on my blog or Facebook page leave your questions or comments below.

Remember…..
“Things Don’t Get Better With Neglect…..”

Kevin Pritchett, Esq
Law Office of Kevin Pritchett, Inc.
ironkop@gmail.com
www.KevinPLaw.com
312-505-1957

“Do I Pay Tax On My Social Security Benefits?”

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Just south of ‘Sawmill Creek…..
Hi Attorney Kevin Pritchett here
“Are My Social Security Benefits Taxed?”    
There’s good news and bad news….

     The good news:  If you don’t have any other income other than your Social Security, chances are you won’t pay much tax.

The bad news:  If you’re like MOST people
and you’re receiving other income other than just your Social Security, your Social Security benefits WILL be taxed..and in some cases up to 85%!!

Social Security Benefit Tax Rates    
To determine the percentage of your Social Security benefits that are taxable , calculate your “provisional income,” which is your adjusted gross  income (not counting Social Security benefits), plus any nontaxable
interest and half of your Social Security
benefits.

     If that total is less than $25,000 if you’re
single  or $32,000 if married filing jointly, your
Social Security benefits are not taxable. 

     If your provisional income is more than $34,000
on a single return or $44,000  on a joint return,
85% of your benefits may be taxable.

Social Security Taxes Are Different
An entirely different issue, and one that infuriates many people, is the amount of Social Security tax you pay on your regular income.

    The issue of course is

  “If I pay tax on  my income initially to fund my
Social Security, why should I pay tax on it again?“

     This is an entirely different tax and issue…more on this in a later newsletter.

Reach Out To Me If You Have Questions.  
If you have comments or questions about any of this…send me an email :ironkop@gmailcomor if reading on my blog or Facebook page leave your questions or comments below.

Remember…..
“Things Don’t Get Better With Neglect…..”

Kevin Pritchett, Esq
Law Office of Kevin Pritchett, Inc.  
312-505-1957
ironkop@gmail.com
www.KevinPLaw.com

2019 Qualified Retirement Plan Contribution Limits

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just south of ‘Sawmill Creek…..
Hi Attorney Kevin Pritchett here

2019 Qualified Retirement Plan Contribution Limits
A ‘Qualified’ Retirement Plan is a plan==savings program just for retirement==money placed in grows tax deferred==special tax rules apply to each type  of qualified plan

2019 Qualified Plan Contribution Limits
The saying ‘there’s no free lunch ‘applies equally to Qualified Retirement Plans.

    While Uncle Sam allow your money to grow tax deferred, they at the same time place limits on the amount of money you can put into each type of Qualified Plan in any given year. 

      In 2019 here are the maximum amounts you can contribute per year per person in each type of Qualified Plan:

Traditional and Roth IRA
IRA:  $6,000 per person per year;
        $7,000 over 50
Roth IRA:  $6,000 per person per year;
                 $7,000 over 50

401k /403b/457 Plans401k/403b/457: 
$19,000 per person; age 50 catch up:  $6,000

   Employer match or profit sharing contributions
aren’t included in these limits. 401k and 403b
share the same limit.

    The 457 plan limit is separate.
You can contribute to both a 401k/403b plan
and a 457 plan.

Total Employer Contributions In
Defined Contribution Plans

Total Employer+ Employee Contribution:  $56,000

     The total employer plus employee contributions
to all defined contribution plans by the same
employer will increase by $1,000 from $55,000
in 2018 to $56,000 in 2019.

The age-50-or-over catch-up contribution is on top of this limit.

Income Limits  
Of course NOTHING from the government is easy.  There are income limits associated with each type of Qualified Plan.…something about there being ‘no free lunch!’

Reach Out To Me If You Have Questions.
   If you have comments or questions about any of this…send me an email :ironkop@gmailcom or if reading on my blog or Facebook page leave your questions or comments below.

Remember…..
“Things Don’t Get Better With Neglect…..”

Kevin Pritchett, Esq
Law Office of Kevin Pritchett, Inc.
312-505-1957
ironkop@gmail.com
www.KevinPLaw.com