Use ‘umbrella’ policy for a financial rainy day
Question: What is an umbrella insurance policy? Do I need one?
Answer: Think of umbrella insurance as extra protection for your savings and other assets. If you’re sued for damages that exceed the liability limits of your car insurance or homeowner’s insurance, for example, this type of policy kicks in. It’s low cost and virtually everyone with assets to protect needs one, in my opinion. Talk to your insurance agent for options.
Question: I recently retired and realize that since I’m not having taxes withheld from my Social Security check, I might end up owing taxes when I file my return. Should I start making quarterly estimated payments?
Answer: You have two options when it comes to Social Security. You can either have taxes withheld from your monthly check or pay quarterly estimated taxes. It’s quite simple to have taxes withheld – you simply file a one-page Form W-4V with your local SS office requesting the percentage of taxes you would like withheld. If you prefer quarterly estimates, you file Form 1040ES with quarterly coupons or you can pay online. And remember anywhere from 0 to 85 percemt of your SS is subject to tax, depending on your total income. So talk to your tax preparer about the correct amount of withholdings or payments.
Question: What is the difference between a joint account with rights of survivorship and a joint account with tenants in common?
Answer: a JTROS account means that the entire account is owned by both persons, so at the first person’s passing, the second person automatically assumes ownership of the entire account. With JTIC, each person owns a percentage of the asset, and their respective share is passed to their heirs in accordance with their will.
It’s an important distinction.
Have Questions? Send your financial questions to Yvonne Marsh, CFP®, CPA at questions@marshpros.com, or submit them at www.marshwealth.com and she will review your question for possible inclusion in a future column.
