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Life Events

How can I get the “best buy” when buying a new car?

First, decide on the size and type of car you want, and decide what options you want (e.g., automatic, air conditioning, anti-lock brakes).
Second, find out what the car dealer is paying for the car(s) you’re interested in-the invoice cost. Why is this important? The spread between the invoice price and the sticker price is the amount that can be negotiated.
There are two different ways to go about getting this information. The first (and best) way is to use an auto pricing service provided by a consumer group or an auto magazine. For example, Consumer Reports New Car Price Service (800-933-5555), which costs $12-$14 per model, gives you a complete run-down of the invoice price and the sticker price, adjusted for various options, and any rebates or factory incentives, and it tells you how to use the information in negotiating your new car’s price. Using an auto pricing service is the best way because it will provide you with the most up-to-date information.
The second way is to use books or pricing guides found on the Internet, such as The Complete Car Cost Guide ($39.95) or Edmund’s New Car Prices. These books, which you may be able to get at the library, will provide you with an estimate of the information you need, instead of the exact information.
You’re almost ready to start negotiating, except that if you have a trade-in, you’ll want to find out what it’s worth, too. You can do this by looking up your used car in the N.A.D.A Official Used Car Guide, available at the library.
Third, start negotiating with dealers. Now that you know the invoice price, use that information to bargain for the lowest possible mark-up over the dealer’s cost.
Tip: Generally, $300 to $500 over the dealer’s cost is a reasonable mark-up, unless the car you want is either hard to get or an extremely popular, exotic or sporty model.
Resist any attempts by dealerships to sell you undercoating, rust-proofing, or other extras. However, depending on the repair history of your model, you might want to invest in the extended warranty.

How should I negotiate for a new car?

Remember that you are not only shopping for a car; you are choosing a dealer, with whom you will have a long-term relationship as you’ll bring your car in for servicing. So if you don’t like the dealership, go elsewhere.
The last Saturday of September, October, or December is generally a good time to get a good bargain on a car.
Find out about financing alternatives before you begin shopping for a car. If you know what banks are charging, you will be prepared when the dealer talks about financing.
Here are some main points you’ll want to get across during your negotiations.

  • That you know the exact model you want, and which options you want
  • That you are comparison shopping, and will obtain price quotes from other dealers
  • That you will not discuss financing or trade-ins until the dealer has made you an offer (do not mention a trade-in until you have finished negotiating the price of your car)
  • That you know how much the car cost the dealer

Finally, even if you get what sounds like a good price, go to other dealers to get quotes.

What are the major differences in legal treatment between married and unmarried couples?

There are several differences in legal treatment. Specifically, unmarried couples do not:

  • Automatically inherit each other’s property. Married couples who do not have a will have the state intestacy laws to back them up; the surviving spouse will inherit at least a fraction of the deceased spouse’s property under the law.
  • Have the right to speak for each other in a medical crisis. If your life partner loses consciousness or capacity, someone will have to make the decision whether to go ahead with a medical procedure. That person should be you. But unless you have taken care of some legal paperwork, you may not have the right to do so.
  • Have the right to manage each other’s finances in a crisis. A husband and wife who have jointly owned assets will generally be affected less by this problem than an unmarried couple.

What are the tax implications of marriage?

Once you are married you are entitled to file a joint income tax return. While this simplifies the filing process, you may find your tax bill either higher or lower than if each of you had remained single. Where it’s higher it’s because when you file jointly more of your income is taxed in the higher tax brackets. This is frequently referred to as the “marriage tax penalty.” Tax law changes intended to reduce the marriage penalty became effective in 2003, but don’t eliminate the penalty for taxpayers in the higher brackets.
You can not avoid the marriage penalty by filing separate returns after you’re married. In fact filing as “married filing separately” can actually increase your taxes. You should consult your tax advisor as to the optimal filing status for your situation.

What are the tax implications of divorce?

After divorce each individual will file their own tax return. However, there are several areas where transactions between former spouses can result in tax consequences. The most common areas are:
Child Support
Child support is not deductible by the payer and is not taxable to the recipient. A payment is considered to be child support if it is specifically designated as such in a divorce or separation agreement or if it is reduced by the occurrence of a contingency related to the child (such as attaining a certain age).
Alimony is deductible by the payer and is taxable to the recipient. Alimony is a payment made pursuant to a divorce decree other than child support or designated as something in the instrument as other than alimony. Similar treated is accorded separate maintenance payments made pursuant to a separation agreement. In order to qualify, payments must also cease upon the death of the recipient and must not be front-loaded.
Property Settlements
Property settlements are not taxable events when pursuant to divorce or separation. Transfers of assets between spouses in this event do not result in taxable income, deductions, gains or losses. The cost basis of the property carries over to the recipient spouse. Be careful in a divorce, your spouse may give you an equal share of property based upon fair market value, but with the lower basis. This can result in a higher taxable gain upon a sale of the asset.

Can I deduct the cost of getting a divorce?

Generally, no. However, fees paid specifically for income or estate tax advice pursuant to a divorce may be deductible. Also fees made to determine the amount of alimony or to collect alimony can be deducted. These deductions would be miscellaneous itemized deductions subject to the 2% limitation.

Who is entitled to deduct the dependency exemption of a child after divorce?

Generally, the custodial parent is entitled to the deduction. However, this is often negotiated in the divorce settlement. If the parents agree in writing, the non-custodial parent can take the deduction.

What papers will I need if a family member dies?

Here is a list of the papers that you will probably need:

  • Certified copies of the death certificate (at least 10). You can purchase them through the funeral director or directly from the county Health Department.
  • Copies of all insurance policies — which may be in the deceased’s safe deposit box or among his or her personal belongings.
  • Social Security numbers of the deceased, the spouse, and any dependent children.
  • Military discharge — if the deceased was a veteran. If you cannot find a copy, write to The Department of Defense, National Personnel Record Center, 9700 Page Boulevard, St. Louis, MO 63132.
  • Marriage Certificate — if the spouse of the deceased will be applying for benefits, Copies are available at the Office of the County Clerk where the marriage license was issued.
  • Birth Certificates of dependent children. Copies are available at either the State or the County Public Health offices where the child was born.
  • Will — This may be with the deceased’s lawyer.
  • Complete list of all property — including real estate, stocks, bonds, savings accounts and personal property of the deceased.

Tip: If the death is not unexpected, you should try to gather these papers in advance (other than the death certificate, of course) to lessen the strain at the time of death.

Must I pay taxes on the proceeds of a life insurance policy payable to me?

Generally, no. Proceeds of life insurance policies are not taxable income unless the recipient paid for the right to receive them. For example, if you purchased a policy as an investment.
If I receive distributions from a retirement plan or an IRA of the deceased, must I pay income taxes on the distribution?
Generally, yes. This is known as income in respect of a decedent. Since the deceased has not paid income tax on the distribution, the tax is owed by the recipient. If the value of the account was included in the decedent’s estate tax return, you may be entitled to a deduction for a portion of the estate taxes paid.