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Letter to the editor

Financially, we resolve to do these things

We asked: What's your financial resolution for the new year?

By Helen Huntley, Times Personal Finance Editor
Published January 13, 2008

We asked

What's your financial resolution for the new year?

Start getting rid of all the stuff we have and buy or accumulate less, resulting in less clutter and saving more money.

Nancy Schreimann, Tarpon Springs

Increase my 401k deduction.

Floyd Mounts, St. Petersburg

Reduce my equity exposure from 80 percent of my portfolio to 60 percent and increase my bonds and other fixed income.

Sam Lasley, Clearwater

Use a more formalized (Quicken) approach to my personal budget in 2008. Tracking where exactly our money goes will allow myself and my family to make an informed decision on where we should be allocating our budget.

Scott Strepina, Tampa

You asked

We are over 701/2 and take required minimum distributions from our IRAs. We wish to minimize our distributions by making our grandchildren the heirs to our trust fund. This way the distribution will be calculated on the balance in the account divided by the lifespan of the grandchildren instead of our expected lifetime. How do we set it up without legal fees?

What you propose won't reduce your required distributions, but might be a good idea. IRA expert Ed Slott points out that it would benefit your grandchildren after your death by allowing them to stretch out distributions and extend the tax deferral for decades. "There is no tax benefit to the IRA owners during their lifetime other than knowing they are providing an incredible legacy for their loved ones," he said.

It's always a good idea to see a lawyer to create or change a trust.

I paid some of my father's medical bills after he died. Can I deduct them?

Only if he was your dependent. If he was, medical expenses are deductible to the extent that they exceed 7.5 percent of your adjusted gross income.

I advised my bank that I wanted my adult children to be beneficiaries of my accounts. They titled them "in trust for" even though I do not have trusts set up for my children. I requested my bank to change "in trust for" to "payable on death." They insist it's the same "according to regulations." Who is right?

With both titles, the money in the accounts will pass to your named beneficiaries at your death without the need for probate. The "in trust for" designation, also known as a "Totten Trust," is an informal version of a revocable trust that has been legally recognized for bank accounts. However, Florida law specifically provides for "payable on death" accounts, so in my opinion, the bank should title the accounts that way if that's what you want.

Next week's question

Has the downturn in the economy affected your income?

To ask a question, make a comment or answer the Money Question of Week, e-mail hhuntley@sptimes.com or write Helen Huntley, P.O. Box 1121, St. Petersburg, FL 33731. Visit her MoneyTalk blog (blogs.tampabay.com/money) for more money information.

[Last modified January 11, 2008, 21:46:49]