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Top Strategies for 2011 Mid-Year Tax Review and Life-Care Planning

There are many reasons to consider a mid-year tax and financial review.  At this time last year, income tax planning was particularly challenging.  As a result of mid-December’s last-minute legislation, which renewed many already expired deductions, there is much less uncertainty involved in tax planning for 2011.

As such, you might consider that a mid-year review provides you more time to plan as well as to implement tax or other savings steps.  In this newsletter, we shall discuss important mid-year tax and financial planning topics.  Another very important area to consider is your Life Care Plan.

2011 Mid-Year Income Tax Plan

Federal Income Tax Rates.  The same 6 federal income tax rates that applied in 2010 will continue to apply through 2012.  So, depending on your taxable income, you’ll fall somewhere between the 10% and 35% bracket.

Long-Term Capital Gains & Qualifying Dividends.  Long-term capital gains and qualifying dividends will continue to be taxed at a minimum rate of 15% through 2012; if your income (including any long-term capital gains and qualifying dividends) puts you in the 10% or 15% income tax bracket in 2011 and 2012, a special 0% rate will usually continue to apply.

Alternative Minimum Tax (AMT).  While regular income tax rates and the maximum rates that apply to long-term capital gains and qualifying dividends were extended through 2012, the latest AMT “fix” (increased AMT exemption amounts) is effective only through 2011.  So, if you may be subject to the AMT this year, you alreadt know what the relevant exemption amounts will be ($74,450 for married filing jointly, $48,450 for unmarried individuals, $37,225 for married filing separately); howeve, the AMT for 2012 is unclear.  There will probably be another AMT fix later in the year, but for now, AMT exemption amounts will show sharp decreases in 2012, significantly increasing the number of taxpayers caught in this parallel tax system.

Life Care Plan  

Life-Care Planning is a new area of law that helps families respond to the challenges of long life, illness and disability.  A life care plan includes the following:

  • Legal care, wills, trusts, powers of attorney and advanced directives; Medicaid planning; guardianships; and protection of the elder’s right to safe and effective care.
  • Care coordination, including locating in-home care, nursing home care, family education and decision-making support – for the rest of your loved one’s life.

Learn more about the benefits and our recommendations for the best way to approach your life-care plan.  It is critically important for seniors and their families to begin talking about a life-care plan because circumstances in life can change quickly, and if there are no plans in place, a stroke, dementia or other life-changing situation could occur suddenly, robbing you of your ability to make end-of-life financial and estate planning decisions.  A properly executed life care plan preserves the wishes of the planner and gives his/her family peace of mind, knowing those provisions will have already been secured.  Obviously, this kind of forward thinking goes hand in hand with conducting a mid-year financial and tax review.

Client Workshop for Life-Care Planning

On July 26 at 2PM at The Wellesley College Club we are inviting our clients and their guests to learn more about life-care planning from three guest speakers on topics including:  aging at home, assisted living options and financial considerations for retirees.

Where To Begin?

A good way to start your mid-year planning is to identify personal circumstances that may have changed:  marriage, divorce, births, deaths, retirement, career change, changes in income or anticipated changes in income and expenses, including medical expenses, investment performance, etc.

Improved Tax Planning

A mid-year check up on your tax liability will provide more tax-planning opportunites for you than rushing to plan for your taxes at year’s end.  Using last year’s tax return, you can make adjustments to your income and deductions for this year.  By then it’s too late.  If you owed taxes or received a refund last year, you might want to adjust your estimated tax payments or withholdings or your retirement plan distributions.  This is also an excellent time to make sure you’re saving necessary receipts and other documents now to avoid a scramble at the end of the year.  Consider the contributions you are currently making to your retirement plan.  Have you evaluated your required minimum distribution requirement?  If you have a traditional IRA, would now be the time to convert it or part of it to a Roth?

Life Planning for Financial Considerations

If you have already retired, will your current plan provide you with enough income over the long term?  If you are concerned about running out of funds, you may consider a lifetime annuity which will pay you and your spouse for the rest of your life.  You may also want to evaluate whether a reverse mortgage makes sense for you.  What are your Social Security strategies?  Would you benefit from using the “file-and-suspend” option?  These are just some of the considerations to review as part of your life care plan.


Would now be a good time to consider rebalancing your portfolio?  Are your investments safe and productive?   Maybe now is the time to consider a review of your investments not only to make sure they are coordinated with your trust, but also to see if they fit your current needs and long-term health plan.

What About Insurance?

Do you know the terms and the amounts of all your coverages:  house, life, auto, etc.?  Has your insurance kept up with your personal circumstances?  What about life insurance?  Long-term care insurance?  If you’re married, have you considered sharing a long-term policy instead of purchasing two individual ones?

As you can see, there are so many different areas that you can review and improve if you really undertake a review of your “financial and tax situation.”  Certainly leaving all this work to the end of the year is risky, particularly with so many things changing these days and so many different strategies and programs potentially available to you that could significantly improve your financial and/or tax picture.

For additional information and education about your tax, financial and life care plan options, call us at 781-237-2815, or attend a Trust, Estate and Asset Protection workshop by calling 800-964-4295 (24/7) or registering online (  We are hosting educational workshops at 10AM and 2PM on the following dates:

Thursday, August 18

Thursday, September 15

Thursday, September 29

To learn more about tax planning, retirement strategies and estate planning, visit our website to watch Dennis Sullivan discuss these topics on the national talk show, “Leading Experts.”