Good news for folks who are planning ahead and trying to maximize the savings in their estate while minimizing taxation: on May 21, 2012, Governor Bill Haslam signed a law passed by the General Assembly repealing the gift tax and phasing out the inheritance tax in Tennessee. This opens up options that were previously unavailable or which would have been made less appealing by the risk of high taxation on gift-giving and inheritance.
For the past three weeks we have been examining the Social Security nitty-gritty, especially focusing on when you should take benefits and options for married couples to maximize their benefits. Today is our last installment of the Social Security series, and I would like to address another aspect of Social Security benefits that might affect your financial planning strategy: taxation of benefits.
For the last two weeks we have covered the basics of Social Security options and started discussing the optimal time to claim benefits. This week we move on to another factor which can broaden the array of Social Security options available to you: marriage.
As discussed last week, there are several factors to consider when deciding when to start receiving Social Security benefits. The amount of benefits you receive varies depending on whether you choose to receive benefits before, at, or after your FRA (Full Retirement Age). Choosing to receive benefits early reduces the monthly amount you receive, while delaying your receipt of benefits maximizes your monthly benefit.
In our May newsletter we discussed some of the issues related to Social Security benefits and when to start collecting them. Most people who are at or near retirement age are aware that there are different options for collecting benefits, but they may not know the full array of options or which ones are best suited to their particular situation and needs. For the next three weeks I will be posting additional blogs about some of the ins and outs of Social Security planning, particularly as related to the timing of receiving benefits and additional options that are available to spouses and former spouses.
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