Generally, taxpayers aim to minimize their taxes, and likewise, financial advisers and C.P.A.s provide guidance to help you avoid triggering a taxable event. However, you may find more than a few recommending you consider a Roth conversion, before year-end.

If you convert pre-tax money in an IRA to a Roth IRA, you will have to pay taxes at your current marginal rate on the amount converted. Yes, that could mean a higher federal and state bill for 2012. However, with the increasing likelihood of rising tax rates next year, accelerating income into this year may be a beneficial move for certain investors.

Currently, there is no income limit for a Roth conversion. Therefore, it may be beneficial to convert funds in a pre-tax IRA to a Roth, to potentially avoid higher future tax rates on your eventual withdrawals. Qualified withdrawals from a Roth IRA are free from federal income tax. Additionally, withdrawals are not required, so a Roth may result in additional money being transferred to your heirs.

Furthermore, in 2013, investors are scheduled to see a 3.8% Medicare surtax on investment income for those with modified adjusted gross incomes (MAGI) above $200,000 for individuals and $250,000 for married filing jointly. While a Roth conversion in 2013 would not be considered investment income, it could increase your MAGI above the threshold, subjecting other investment income to the Medicare surtax. This surtax, combined with potentially higher marginal rates, makes 2012 attractive for conversions.

If this is something you’d like to consider, talk to your financial adviser or C.P.A. sooner than later as your window for a conversion is narrow. An expert can help you estimate how a conversion will affect your taxes and your investments.

William G. Lako, Jr., CFP®, is a principal at Henssler Financial, and a co-host on Atlanta's longest running, most respected financial talk radio show "Money Talks," airing Sundays at 10 a.m. on Talk 920 AM, WGKA.

You can’t help who you fall in love with. Sometimes the love of your life comes with less than stellar credit. Thankfully, you are not responsible for your future spouse's bad credit or debt. However, their credit problems could result in denied loans or lines of credit you apply for together after you are married.

It’s a wise financial move to discuss credit issues before you are married, because debt problems and spending habits can result in stress in a marriage. You should start by ordering both your credit reports from www.annualcreditreport.com. With your history in front of you, you should be able to have an open discussion on past finances, and learn why or how your future spouse got in trouble with their credit.

If the outstanding debt is significant and will affect your financial future as a couple, you may consider going through credit counseling together. CredAbility, formerly Consumer Credit Counseling Service of Greater Atlanta, offers a free counseling session. Attending the counseling session does not affect your credit score or credit report. Their website at www.credability.org also has an online course designed to show you how to identify areas of concern and reduce financial stress before you walk down the aisle. CredAbility’s other services include debt management plans that can provide you a way to pay down outstanding debt. However, note that CredAbility cannot repair your credit or settle debt for pennies on the dollar.

Another consideration is to keep you and your spouse’s credit separate until your spouse's credit record improves. Once you get married, it may be wise for each of you to use separate checking accounts and credit cards to maintain your own active credit record. Perhaps this could allow your spouse the necessary time to repair his or her credit with continuous, on-time payments.



You can apply for credit by yourself rather than applying for joint credit after you're married. However, this solution is not without drawbacks. For example, you may have to postpone applying for a mortgage loan, as you may need your spouse’s income to qualify for a large loan amount.

William G. Lako, Jr., CFP®, is a principal at Henssler Financial, and a co-host on Atlanta's longest running, most respected financial talk radio show "Money Talks," airing Sundays at 10 a.m. on Talk 920 AM, WGKA.

The Medicare open enrollment period began Oct. 15, 2012, and runs through Dec. 7, 2012. Changes made during open enrollment become effective January 1, 2013. If your health-care needs changed during the past year, the open enrollment period provides you with an opportunity to switch Medicare health and prescription drug plans to better suit your needs.

During this period you can:

• Change from Original Medicare to a Medicare Advantage Plan.

• Change from a Medicare Advantage Plan back to Original Medicare.

• Switch from one Medicare Advantage Plan to another Medicare Advantage Plan.

• Switch from a Medicare Advantage Plan that doesn’t offer drug coverage to a Medicare Advantage Plan that offers drug coverage.

• Switch from a Medicare Advantage Plan that offers drug coverage to a Medicare Advantage Plan that doesn’t offer drug coverage.

• Join a Medicare Prescription Drug Plan.

• Switch from one Medicare Prescription Drug Plan to another Medicare Prescription Drug Plan.

• Drop your Medicare prescription drug coverage completely.

You should begin by evaluating your current plan. You may want to consider your satisfaction with the coverage, the level of care you're receiving, the premium costs, and out-of-pocket expenses. Also consider any changes to your health, and determine if your current plan will cover needed treatments. You could find switching to a different Medicare plan may work better for your needs or budget.

In 2013, Medicare Part B will add coverage for preventive services and treatments with no co-payment or deductible required. Some of these preventive services include screening for cardiovascular disease, diabetes, depression, bone mass measurements, and certain cancers. Part B will also cover pap tests and pelvic exams, mammograms, and vaccines for flu and pneumonia.

Also in 2013, if you reach the coverage gap in your Medicare prescription drug coverage (Part D), you’ll pay only 47.5% of the cost for covered brand-name drugs and 79% of the cost for generic drugs. The coverage gap will be after you and your drug plan have spent $2,970.

Comparing Medicare plans can be complicated. You may consider talking to a financial adviser, calling 1-800-MEDICARE, or by visiting the Medicare website, www.medicare.gov. 

William G. Lako, Jr., CFP®, is a principal at Henssler Financial, and a co-host on Atlanta's longest running, most respected financial talk radio show "Money Talks" airing Sundays at 10 a.m. on Talk 920 AM, WGKA.

It is increasingly common to find that your aging parents are having health problems, suffering mental lapses, or just slowing down with age. People often do not follow their parents' day-to-day activities, and many live miles apart, even in different states. You should have a plan in place if a parent were to have an accident or suddenly fall ill. You may consider having someone close by check on them on a routine basis.

If the problems they are having are not getting better, your next step is to talk with your parents and any siblings. You may consider having a family meeting to discuss day-to-day operations of an aging loved one's household and finances. You should understand where your parents’ assets are, what the income sources are, and what the cash flow situation is like. This can help determine what assets are available for possible health and nursing care in the future.

One option is to suggest your parents move into your home to avoid using your parents' assets to pay for a nursing home or other facility. This can also alleviate the chance of your parents receiving inadequate care from strangers. However, the costs associated with feeding, clothing and caring for aging parents can be expensive—especially when it affects your ability to work full time because you need to be home with your parents.

If your parents' care is more than you can handle, you may consider an assisted-living arrangement. “Assisted living” is a broad term that includes a range of facilities and services designed to help seniors who cannot live independently. Depending on your parents' conditions and needs, you may consider continuing care retirement communities, retirement communities, active senior communities, nursing homes or special care facilities for conditions like Alzheimer’s or dementia.

Talk to your parents' physicians or other care providers for recommendations that might best meet your parents' needs. Finally, if you have an employee assistance program at work, contact your human resources department for help and suggestions. These decisions are never easy, but it is considerably easier before care is necessary.

William G. Lako, Jr., CFP®, is a principal at Henssler Financial, and a co-host on Atlanta's longest running, most respected financial talk radio show "Money Talks" airing Sundays at 10 a.m. on Talk 920 AM, WGKA.

In the past few weeks, we’ve covered the importance of having a Last Will and Testament and the benefits of having a living trust. But what if you are incapacitated as a result of illness, accident or advanced age and you lack the mental capacity to make or communicate responsible decisions about your own health care?

Generally, medical professionals are bound to make every effort to save and maintain your life. However, you can and should take steps now to control your future healthcare decisions with an Advance Directive for Healthcare.

On July 1, 2007, the new Georgia Advance Directive for Healthcare replaced the Georgia laws on the Living Will and the Durable Power of Attorney for Healthcare. The Georgia legislature passed a model form essentially combining these two documents into one and addressing other areas that were not previously addressed in either document. The new Advance Directive for Healthcare deals with the same basic issues as the Durable Power of Attorney for Healthcare, but it also includes more specific language to deal with a number of issues that can arise, such as your preference regarding organ donation, burial or cremation, and whether you would want any feeding tubes, artificial hydration and/or certain life sustaining procedures such as a ventilator and CPR if you are determined by your physician to be in a permanent state of unconsciousness.  It also now includes language regarding federal HIPAA laws related to the privacy of your personal medical information. 

If you already have a Living Will and Durable Power of Attorney for Healthcare, there is no requirement that you update them to the Advance Directive.  The former are still valid and enforceable under Georgia law unless you revoke them.  It is generally advisable, however, to have forms in place that closely resemble the “model” form as that is what most hospitals and doctors will be familiar with.  As time goes on and as the previous model forms become less and less familiar to medical professionals, it will be more important to update to the Advance Directive for Healthcare.

William G. Lako, Jr., CFP®, is a principal at Henssler Financial, and a co-host on Atlanta's longest running, most respected financial talk radio show "Money Talks" airing Sundays at 10 a.m. on Talk 920 AM, WGKA.

Last week I discussed the importance of having a Last Will and Testament in place as part of your estate plan. Another estate planning tool you should explore is a living trust. A living trust allows you to retain control of the trust property while you are alive. Should you become incapacitated and unable to handle your financial affairs, trust assets will not be subject to a court supervised guardianship or conservatorship, because the named trustee will have the legal right to step in and take control of trust assets. Additionally, once you die, the property held in the trust passes to your heirs outside of probate.

A living trust is revocable, which gives you the flexibility to make changes to it by removing or adding property, changing the provisions and beneficiaries, or terminating it if it no longer meets your needs. Living trusts are fully revocable and amendable.

When stripped of all the legal jargon, a trust is simply a contract, where a person, a grantor or donor, agrees to transfer assets to trustee for the benefit of a beneficiary, or multiple beneficiaries, who then receive the assets as stipulated in the contract. A trustee, who may or may not be the grantor, manages the trust assets and ensures the terms of the trust are faithfully carried out. The trustees are the legal owners of the trust property, but they are obliged to hold the property for the benefit of one or more beneficiaries, who can be individuals or organizations.

When you pass away, the assets in the living trust are distributed by the trustee according to the terms you establish in the trust. This means these assets are not part of your probate estate. An advantage to having assets in a trust is that your beneficiaries may receive them faster, rather than waiting the months or years it may take to settle your estate. However, a living trust does not avoid estate or income taxes, nor does it protect your assets from potential creditors.

William G. Lako, Jr., CFP®, is a principal at Henssler Financial, and a co-host on Atlanta's longest running, most respected financial talk radio show "Money Talks" airing Sundays at 10 a.m. on Talk 920 AM, WGKA.

Many people think estate planning is unnecessary unless they have a significant estate to leave to their heirs. That, of course, begs the question, “what is significant?”  The answer to that depends on who you ask.  Although it is often true that the purpose of estate planning is to deal with complex issues, such as establishing trusts and minimizing estate taxes, estate planning for wealthy and less wealthy individuals alike deals with the same basic issues.  Those issues deal with certain lifetime goals such as ensuring that someone you choose has the ability to make medical decisions for you or handle your financial affairs in the event you become unable to do so yourself.  And they also involve basic goals for when you pass away such as making sure your loved ones are properly provided for according to your wishes.

Whether you are financially wealthy, less wealthy, or not very wealthy at all, a Last Will and Testament is a basic document that all adults should have.  The basic purpose of your Will is to serve as your final directive as to how your assets are to be disposed of after your death.  It answers the basic questions of to whom and how.  It also answers the all-important question of who you want to be in charge to ensure that your final affairs are properly taken care of.

If you were to die without a Will, the state steps in and dictates how your property will be distributed according to the intestacy laws of each state.  Under Georgia’s intestacy laws, your spouse and children are first in line to inherit your estate. Your spouse will inherit everything if you have no children. If you have children, they will share your estate equally with your spouse provided you have two or less children. If you have more than two children, then your spouse receives 1/3 and your children split the rest.  Next in line are grandchildren, great-grandchildren, etc., followed by your parents.

The disadvantage of not having a Will is that your property may not be distributed according to your wishes. Other drawbacks include having the state determine who will handle the administration of your estate and who will take care of minor children.  And keep in mind that the administrative burdens, reporting requirements, costs and expenses are typically substantially more for your heirs to deal with if you die without a Will.

An estate planning attorney can help you implement a Will, as well as explore trusts and other sophisticated tax and estate planning techniques.

William G. Lako, Jr., CFP®, is a principal at Henssler Financial, and a co-host on Atlanta's longest running, most respected financial talk radio show "Money Talks" airing Sundays at 10 a.m. on Talk 920 AM, WGKA.

In Georgia, you must have proof of financial responsibility for your vehicle. In layman’s terms, that means you have the funds to cover damages your vehicle causes to other vehicles or other people. For most drivers, that means you carry auto insurance. However, there is often a large gap between the amount of coverage you’re required to have and the amount of coverage you really need.

It is highly recommended that you carry a broader scope of coverage and higher coverage limits than the required state minimums. This means weighing how much coverage you need against what you can afford; your ability to weather any financial risk, such as lawsuits, and whether you have assets you want to protect.

If you were to critically injure or kill people in an accident, claims for medical bills, lost income, pain and suffering, in addition to property damage can easily surpass minimum coverage of $50,000 bodily injury protection per accident and $25,000 of property damage per accident. If the accident were serious enough, lawyers could go after assets you may accrue years after the accident.

According to the Georgia Department of Transportation's Crash Analysis, Statistics and Information Notebook of 2008, more than six million people were involved in a motor vehicle crash between 2000 and 2006. During that seven year period, crashes resulted in more than 2,500 injuries, on average, each week.

In general, to be adequately covered for an accident, you should also carry uninsured or underinsured motorist coverage. UM coverage insures against injuries you receive in an accident caused by an uninsured driver, an underinsured driver or a hit-and-run driver. Furthermore, this coverage covers bodily injury to your passengers and may cover earnings you or your passengers lose, as a result of the accident.

While we all hope that we never have to rely upon our policies, we are quite thankful we have insurance when disaster strikes. However, keep in mind, that you shouldn't buy more insurance than you can afford.

William G. Lako, Jr., CFP®, is a principal at Henssler Financial, and a co-host on Atlanta's longest running, most respected financial talk radio show "Money Talks" airing Sundays at 10 a.m. on Talk 920 AM, WGKA.

As September is Emergency Preparedness Month, I wanted to focus on some tools to help you keep your life organized. Should the spouse who handles a family’s financial affairs die, the surviving spouse should be able to refer to a book or document and easily find vital personal and financial information during a critical time. By documenting your records and where original files are located, you can also broach the subject of your family’s finances with elderly parents or adult children in a non-threatening way.

There are several commercially available products to help you stay organized. “Life Organizer: The Essential Record Keeper and Estate Planner” is a ring-bound book by Nancy Randolph Greenway that walks you through the process of documenting your financial life with an emphasis on estate planning. The organizer is divided into eight sections, including, Family and Beneficiaries; Property and Investment Records; Insurance; Retirement and Business; My Will, Trusts and Gifts, and Resources and Advisers.

TheLegacyDrawer.com offers organizer binders with more than 30 sections to organize your family’s personal records and financial information. The binders contain plastic sleeves for document storage. It also has practical tips and suggestions for organizing your important papers and information outside of the organizer, such as child identification information.

LifeatHand.com offers several organizer system options to fit your family’s needs, including lockable, heat and water resistant cases, portable travel versions, as well as, digital versions stored on an encrypted USB flash drive.

Regardless of what system you use, in an emergency, you or your loved ones should be able to grab your personal records organizer and document locator and have almost everything you would need to get your affairs in order.

William G. Lako, Jr., CFP®, is a principal at Henssler Financial, and a co-host on Atlanta's longest running, most respected financial talk radio show "Money Talks" airing Sundays at 10 a.m. on Talk 920 AM, WGKA.

The adorable four-year-old you used to read to every night is now in college. Naturally, you are worried if he will be able to handle living on his own and whether he’ll keep up his grades to maintain his scholarship. With all the worries a parent has, insurance issues may be far down the list. However, they should be dealt with before the need for insurance arises.

College students pack their dorms with expensive personal belongings, e.g., computers, TVs, game systems, etc. If something is stolen, your homeowners' insurance personal property coverage should extend to your child’s dorm room. However, you should check your policy closely for limits on children’s age or coverage. Generally, policies limit you to 10% of the coverage of your in-home possessions. So if you have $150,000 in insurance coverage for in-home possessions, your child’s coverage would be $15,000. The deductible applies as if there were a loss at your home.

If your student lives off-campus in an apartment or house, be aware that the landlord’s insurance only covers the damage to the property. Renter’s insurance in your child’s own name is needed to protect personal property.

Thanks to the Patient Protection and Affordable Care Act, your child can remain on your health insurance, as a dependent until age 26. You should be aware if your insurance carrier considers the college health care center out-of-network—if the health care center accepts your insurance at all. You may want to check if your employer plan will allow you to move your child to a preferred provider organization network. Generally, they have larger networks of doctors and care facilities. Additionally, if the student travels while in school, be sure their health insurance coverage extends to overseas travel.

Finally, if your child takes a car to college, your auto premium can change, depending on the college’s location, the parking provided, and the amount of claims the insurer has paid in that location. Notify the insurance company of your child’s new address, as states differ in minimum coverage requirements.

William G. Lako, Jr., CFP®, is a principal at Henssler Financial, and a co-host on Atlanta's longest running, most respected financial talk radio show "Money Talks" airing Sundays at 10 a.m. on Talk 920 AM, WGKA.