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By Nancy Burner, Esq.

Clients often ask how they can ensure the home in which they live or their vacation home can be protected against the cost of long-term care.  These assets are often worth much more to our clients than the cash value; they represent hard work to pay off the mortgage and are wrapped in memories.

Prior to the sophistication of trust law, many individuals would pass a residence to their beneficiaries by executing a deed with a life estate. For the owner, this would mean retaining the right to live in the home until death, but upon their demise, the property would be fully owned by the beneficiaries.

Because they retained a lifetime interest in the property, they would still be able to claim any exemptions with respect to the property. Moreover, when the owner died, the beneficiaries would get a “step-up” in basis, which eliminates or lessens capital gains tax due if they did sell the property.

The negative aspect to this kind of transfer is loss of control. Once the deed is transferred to the beneficiaries, they have the ownership interest. If the original owner wanted to sell the property or change who receives it upon their death, they would have to get the permission of those to whom they transferred the property. Another negative aspect is that if the individual is receiving Medicaid benefits and the house is sold, a share of the proceeds, the life estate interest, would be paid out to the individual and could put their Medicaid benefits in jeopardy.

A better option for protecting a residence is by executing an irrevocable Medicaid Qualifying Trust, which can transfer real property at death. Like the deed with a life estate, this trust grants all the tax benefits and exclusive occupancy during life, i.e., STAR exemption, veteran’s exemption, capital gains exemption.

This method is superior to the deed with a life estate because if the property is sold during your lifetime, the full amount of the proceeds are protected within the trust and will pass to your beneficiaries upon your death. The trust also gives the ability to change the beneficiaries at any time, leaving some control in the hands of the original owner of the property.

A person’s residence is their most treasured and often most monetarily valuable asset. It is important to meet with an experienced attorney to ensure protection of your home or vacation home.

Nancy Burner, Esq. has practiced elder law and estate planning for 25 years. The opinions of columnists are their own. They do not speak for the paper.

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By Linda M. Toga, Esq.

The Facts: My daughter told me that I should have a health care proxy.

The Question: What is a health care proxy and should I have one?

The Answer: A health care proxy is a legal document recognized in New York  State by which competent adults appoint a person to make medical decisions for them in the event they are unable to make those decisions themselves.

Unlike a power of attorney that may be effective immediately upon signing, a health care proxy does not become effective unless and until you are no longer able to make health care decisions. Although only one person can act as your health care agent at a time, in your health care proxy you should name an alternate agent in case the first person you name is unavailable.

In a health care proxy you may give your agent unlimited authority or you may list the circumstances under which your agent can act. However, if you want your agent to be able to make decisions concerning artificial nutrition and hydration, you must specifically state in your health care proxy that your agent has the authority to make decisions about these life-prolonging treatments. You must also mention the Health Care Insurance Portability and Accountability Act, or HIPAA, in your proxy. Most health care proxies prepared prior to 2003 are no longer valid because they lack the required HIPPA language.

Most people assume that health care proxies are only used in cases where an elderly patient is unable to make end-of-life medical decisions. However, health care agents may also play an important role when a younger patient is temporarily unconscious. Since people of all ages may lose consciousness or even slip into a coma as a result of a serious illness or injury, I recommend that every adult sign a health care proxy to avoid conflict between family members and to ensure that their wishes are honored.

It is important to discuss your wishes with the agents you name in your health care proxy so that they know what types of treatments and procedures you find acceptable and which ones you may not want to receive.

Although New York State passed a statute in 2010 called the Family Health Care Decisions Act (the FHCA), which gives people the authority to make health care decisions for loved ones who did not sign a health care proxy, having a health care proxy is preferable because it gives you control over who will be making decisions on your behalf.

If your health care provider relies upon the FHCA to identify the person who will decide whether or not to provide life-sustaining treatments, the statutory decision maker may not know your wishes and may not be able to make the hard choices that are often faced by health care agents. In contrast, if you named a health care agent in a health care proxy and discussed with that agent your wishes, it will be easier for the agent to take the necessary steps to honor those wishes.

Linda M. Toga, Esq. provides legal services in the areas of litigation, estate planning and real estate from her East Setauket office.

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By Jonathan S. Kuttin

Soon after the wedding is over — and the chaos of planning has subsided — many newlyweds start asking themselves questions related to their financial situation. Should we buy a home? Should we merge accounts? Who pays the electric bill? How much should we be saving for a rainy day? Can we afford to take a trip? It’s smart for newlyweds to take some time to focus on establishing their new financial lives together.

What are the pros and cons of merging finances? How you go about commingling finances is something that all new couples should carefully consider. Some couples merge everything, others prefer to keep things separate, and some choose a combination of the two. The most important factor is that both spouses feel comfortable with the arrangement and that you have a process set up to ensure you pay your bills on time and maximize your finances.

Start by having a conversation about money habits and styles. How have you handled money in the past? Is one of you a spender and the other a saver? If two individuals have very different ways of managing money, keeping some accounts separate and preserving some independence can be a way to maintain a healthy relationship while protecting your joint financial wellness. If you’re on the same page — both savers, for example — togetherness in all things financial can create some efficiency.

In addition to careful budgeting, a good compromise is to have one checking account in which a couple deposits their income and then a separate account for each holding an agreed-upon amount that comes from the shared pool that each spouse can spend as he or she wishes — no questions asked. It’s also important that the couple agree on how much money they will save together and to establish an auto-transfer from the shared pool so that saving is easy and automatic.

Equally critical is for couples who are blending their finances to consider different “what-if” scenarios. Discuss how much each partner would be comfortable spending on things like new furniture, or how they would financially approach an unexpected situation such as a relocation.

How can you ensure you don’t go over budget? Having one joint household budget makes it easier to monitor spending and stay on track. First, create a monthly and annual budget, taking into consideration your income, monthly fixed expenses (like rent or mortgage, utilities, insurance and basics like groceries) and your savings goals. Then determine how much you can afford for discretionary expenses (like clothing, travel and entertainment). If one person is “in charge” of the budget or finances, it is important for the other person to communicate about his or her unplanned purchases. But, even the best laid plans can go astray — be sure to have overdraft protection in place to cover any purchases that fall through the cracks.

Who does what? Communicate openly and often about your money. Financial disagreements or misunderstandings can fester, so making sure you keep the lines of communication open is important. Have a clear process for who does what and when. One individual may have more of a propensity or interest in financial management; if that’s the case and both spouses support that arrangement, it may be the best for your family — but make sure that both parties are informed about their financial situation. It can be helpful to have a set time each month to pay bills, do record keeping, and discuss overall financial issues. Consulting with a financial advisor early in your relationship is another way to create a mutually agreeable plan and to have regular sessions to track your progress toward financial goals and talk about money.

Jonathan S. Kuttin, CRPC®, AAMS®, RFC®, CRPS®, CAS®, AWMA®, CMFC® is a Private Wealth Advisor specializing in fee-based financial planning and asset management strategies and has been in practice for 19 years.

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By Nancy Burner, Esq.

The New York State estate tax exclusion amount has increased again, as of April 1, 2015, to $3,125,000.00.

This is an increase from the $2,062,500 exclusion amount which was in effect from April 1, 2014 to March 31, 2015. The exclusion will increase again, each April 1st, in 2016 and 2017. On Jan. 1, 2019, the basic exclusion amount will be indexed for inflation annually and will be equal to the federal exclusion amount.

The New York State and federal exclusion amount is estimated to be $5,900,000.00 in 2019.

The exclusion and the time frame for each increase are as follows:
From April 1, 2015 through March 31, 2016 – $3,125,000.
From April 1, 2016 through March 31, 2017 – $4,187,500.
From April 1, 2017 through December 31, 2018 – $5,250,000.
From January 1, 2019 forward – Will match the federal exemption indexed for inflation.

An item still of particular concern to many is the “cliff” language contained in the law.  If the estate is valued between 100 percent and 105 percent of the exclusion amount, the amount over the exclusion will be taxed.

In 2015, the 105 percent amount is $3,281,250.00.  However, once an estate exceeds the exclusion amount by more than 5 percent, not just the amount in excess of the exclusion amount is taxed, but, rather, the entire estate is subject to estate tax.

Practically, this means that taxable estates greater than 105 percent of the exclusion amount receive no benefit from the exclusion amounts shown above and will pay the same tax that would have been paid under the prior estate tax law.

New York repealed its gift tax in 2000.  This meant that as a New York resident, if you made lifetime gifts to friends or family members, the gift was not taxed or included in your New York gross estate for purposes of calculating your estate tax. With the estate tax law as enacted in 2014, there is a limited three year look-back period for gifts made between April 1, 2014 and Jan. 1, 2019. This means that if a New York resident dies within three years of making a taxable gift, the value of the gift will be included in the decedent’s estate for purposes of computing the New York estate tax.  The following gifts are excluded from the three year look back: (1) gifts made when the decedent was not a New York resident; (2) gifts made by a New York resident before April 1, 2014; (3) gifts made by a New York resident on or after January 1, 2019; and (4) gifts that are otherwise includible in the decedent’s estate under another provision of the federal estate tax law (that is, such gifts aren’t taxed twice).

The New York State estate tax law does not contain a portability provision, like in the federal estate tax law. Portability is a provision in the federal estate tax law that allows the unused estate tax exemption of a married taxpayer to carry over to his or her surviving spouse. Without portability, the manner in which a married couple holds title to their assets may continue to have a significant effect on the amount of New York State estate tax ultimately payable upon the survivor’s death.

This New York estate tax law is working to close, and eventually eliminate, the gap between the New York and federal estate tax exclusion amounts.  For the next four years, however, as the exclusion amount increases and the 3-year look-back for taxable gifts applies, tax planning will still be complex. That being said, it is important for anyone considering whether to make changes to their estate plans or gifting strategies to see an estate planning attorney specializing in these matters.

Nancy Burner, Esq. has practiced elder law and estate planning for 25 years.

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Smithtown Comptroller Donald Musnug outlines his capital budget suggestions before the Town Board on Monday. Photo by Phil Corso

Smithtown’s new comptroller is calling on the town board to borrow money to fund upcoming capital projects.

Donald Musgnug, who was sworn in as town comptroller in February after his predecessor, Lou Necroto, took a job with the county, provided his first capital budget recommendations report on Monday and pushed for borrowing money to pay for improvements. He listed several bullet points justifying his recommendation, as the town gears up to fund projects like an animal shelter renovation, LED streetlight retrofittings and marina bulkhead improvements.

“Interest rates are at historically low rates and the town is fiscally strong,” Musgnug said. “Now is the time to borrow, when rates are low, and thankfully we are in a position to do so.”

The comptroller said he expects replacing aging and otherwise deteriorating equipment would reduce the amount of money set aside in future budgets for repairs and maintenance. In reference to an upcoming streetlight project that would bring LED lighting to Smithtown’s streets, Musgnug said the town would offset the costs of future projects in the form of savings.

“Taking advantage of new technology, such as in the case of LED bulbs for streetlights and the municipal solid waste facility, will reduce utility costs [and] repair costs and improve safety,” Musgnug said in his report. “Because the town’s finances have been conservatively managed over the years, there is little room to cut operating budgets, making the goal of staying within the New York State tax cap increasingly difficult in light of rising compensation, health care and pension costs.”

In the upcoming year, Musgnug said most of the budgetary requests are equipment-related and should be done in the near future as assets deteriorate due to age and usage.

The streetlight project, he said, would total $5.6 million but could be offset by a possible $750,000 grant from the state.

“It should also be noted that … we expect to reduce utility costs and repairs by $350,000 as a result of the streetlight LED retrofit, which will offset the cost of borrowing, which is $270,000 per year,” Musgnug said. “So we actually more than offset the cost of installation.”

The comptroller also said the town should anticipate equipment purchases and construction in 2016, mostly because of the first phase of Smithtown Animal Shelter renovations as well as upgrades at the town marina, which collectively require about $3.1 million in financing.

The following year, he said, those projects would require about $6 million in funding overtime to complete.
After the comptroller’s report, Councilman Ed Wehrheim (R) said he was impressed by the thoroughness of Musgnug’s pitch and wants to make sure the town follows through on capital projects after setting aside funding for them.

“Overall, I think it’s excellent,” he said. “In past years, we borrowed money and put up capital projects, but they never got done. Let’s make sure someone oversees these.”

In his report, Musgnug said even if the town chose to borrow more money as recommended, it would still see its overall debt steadily drop because of its conservative fiscal management policies.

“You should be commended for putting the town into a position where it can borrow significant sums of money and still have declining debt service payments [for which] it must budget,” he said.

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By Linda M. Toga, Esq.

The Facts:  I am the owner of a family-operated business. My wife and my son John are employed by the business. My other son, Tony, has no interest in being involved with the business. When my wife and I die, I want John to inherit the business, which is my largest asset. However, I want Tony to inherit assets of equal value.

The Question: Are there specific issues I need to address when developing an estate plan?

The Answer: Absolutely. For starters, you need to take an objective look at your business and decide if the business can continue to operate without you.

Even though your wife and son are employed by the business, if you are the person with the knowledge, expertise and contacts upon which the business depends, there may not be much value to the business after your death. In that case, having John inherit the business may result in him actually being short changed with respect to your estate.

If the business cannot thrive without you, instead of inheriting a valuable asset, John could find himself struggling to keep the business afloat and possibly be faced with winding down the business and looking for a new job.

If you determine that the future success of the business is not dependent upon your involvement, you need to determine the best method for calculating the value of the business upon your death. The valuation should take into consideration how John’s involvement with the business may have increased its value over the years.

If, for example, John worked without pay or at a reduced salary, or if he worked more hours than nonfamily employees because it was understood that he would one day inherit the business, then the value of the business should be adjusted down to reflect that fact. If it is not adjusted, John will inherit a business whose value was in part created by him, and Tony will inherit equally valuable assets without having contributed to their value.

Once you have determined how the value of the business will be calculated, you need to consider the value of all of your other assets. If the business is your most valuable asset but the combined value of your other assets is comparable to the value of the business, you can simply leave the business to John and the rest of your estate to Tony.

However, if there is little else in your estate other than your business, such a distribution will not result in equal shares passing to your sons. To address this problem, you can buy a life insurance policy and name Tony as the beneficiary. If you buy a policy with a death benefit that is comparable to the value of your business, when you pass Tony will receive funds equal in value to the business that you leave to John.

Linda M. Toga, Esq. provides legal services in the areas of litigation, estate planning and real estate from her East Setauket office.

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By Jonathan S. Kuttin

The opportunity for same-sex couples to legally marry has expanded to 37 states and Washington D.C. with more likely on the horizon. The social and emotional benefits of living in a legally recognized union have been widely discussed. But what does legal marriage mean for your finances when you’re a same-sex couple?

There are a number of immediate and long-term benefits.

More protection for your shared assets. With the repeal of Section 3 of the Defense of Marriage Act (DOMA), certain federally mandated financial benefits previously reserved for heterosexual married couples now also apply to legally married same-sex couples. Some pertinent provisions include:

• Marital deduction for gift and estate taxes. Spouses married in a state recognizing same-sex marriages (who are also U.S. citizens) can pass property to one another without incurring gift tax while living and estate tax after death. This provision of tax law is significant because it means bypassing potential gift and estate taxes levied upon nonmarried couples who transfer property or other assets to each other.

• Social Security benefits. If you or your spouse dies, your marriage certificate and the duration of your marriage are used in determining if the surviving spouse will be the beneficiary of the deceased spouse’s Social Security benefits. In some cases, same-sex couples may need to reside in certain states that recognize the marriage. To further protect your Social Security benefits, the Social Security Administration encourages all same-sex couples to apply for benefits to preserve any claim.

• Beneficiary status. Your spouse will be recognized as your beneficiary on your insurance policies, retirement plans and items of property. This is true as long as he or she is your named beneficiary — make sure to update all of your beneficiary designation forms once you’re married. It’s also important to keep in mind that the spousal consent rules for retirement plans that require the spouse to provide written consent if the primary beneficiary named is someone other than the spouse, applies to same-sex married couples.

• Shared work benefits. Many companies provide spouse benefits that have significant value. For example, your marital status may afford you or your spouse reduced cost health and life insurance through an employer.

• Combined household efficiencies. Don’t underestimate the financial benefit of pooling your income and sharing the expense of running a household. While you can cohabit without marriage, your marital status may improve your ability to sign a lease or close on a loan (assuming you both have good credit and contribute income).

• Income tax perk or penalty? Depending on your combined income, and each spouse’s income, your legally recognized same-sex marriage may or may not improve your income tax situation. If one spouse does not work or has a low annual income, your combined income as joint filers may be taxed less than the separate incomes of two single filers. However, if you and your spouse are both high earners, together you may land in a higher tax bracket (or be subject to additional taxes or phase-outs) than you would if you each filed as single individuals, potentially resulting in a larger tax liability from filing jointly.

• Get professional advice. Merging your finances as a legally married same-sex couple can be tricky because of variations in state laws and other legal considerations. A same-sex couple’s marriage may be respected for purposes of some laws but not recognized for purposes of other laws. Your situation may be complicated if you previously utilized trust documents to “work around” inequities before marriage was a viable option.

While you may not be able to avoid a steeper income tax rate as married joint filers, you can employ other strategies to minimize your tax burden and untangle complicated trust work-arounds. Seek out professionals such as a tax advisor, lawyer and financial advisor to work through the complexities that can arise when same-sex couples merge their financial lives. Together you can explore solutions to help build a secure financial future.

Jonathan S. Kuttin, CRPC®, AAMS®, RFC®, CRPS®, CAS®, AWMA®, CMFC® is a Private Wealth Advisor with Kuttin-Metis Wealth Management, a private advisory practice of Ameriprise Financial Services Inc. in Melville, N.Y. He specializes in fee-based financial planning and asset management strategies and has been in practice for 20 years.

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By Nancy Burner

Retirement can be an exciting new chapter in someone’s life, but it can also be stressful. The change of lifestyle and income source can lead to anxiety for many individuals reaching retirement. There may be a fear that there is not sufficient income to meet monthly needs or sufficient resources to last the remainder of his or her life.

The reality is that people are living longer and require stable income to meet their daily expenses. A person can maximize benefits and income while preserving assets for the next generation provided that the proper planning has been put into place.

One key strategy in planning for retirement income is maximizing your benefit under the Social Security system. Social Security income will play a major role in monthly income for many retired seniors and should not be overlooked or ignored. Knowing the appropriate time to start taking the benefit will impact the amount of income a person will receive.  “Full retirement age” will depend on when the individual was born.

For those born in 1954 or before, the full retirement age is 66 years old. For those born after 1954 but prior to 1960, the full retirement age gradually rises a few months at a time. For example, someone born in 1957 has a full retirement age of 66 years and 6 months. Anyone born in 1960 and later has a full retirement age of 67 years old.

Taking Social Security prior to the “full retirement age” can result in reduction penalties that could potentially cost the individual almost half of what might have been earned if the individual had waited. Once a person reaches “full retirement age,” it may be advantageous to wait a few years longer until 70 years old to begin collecting Social Security. Unfortunately, the only way to determine if waiting until age 70 is beneficial would be to know how long you are going to live.

Social Security Administration determines your benefit based on the average life expectancy. If the person outlives the average life expectancy, then it was a better choice to wait until 70 to begin the benefit. Nevertheless, no one knows how long they will live, but the reality is that people are living longer and it is essential to make sure you have sufficient income to support your daily needs regardless of how long you live.

It may be much easier said than done to wait to take Social Security. In a perfect world, everyone could wait until the perfect age to start taking Social Security in order to maximize their benefit. The reality may be that income is needed sooner than the ideal age. In this circumstance, there are several tactics that can be used in order to get income, but preserve your Social Security income and allow it to grow until you reach 70 years old.

It is essential to understand that a person may be entitled to Social Security benefits based on a spouse, ex-spouse, deceased spouse or deceased ex-spouse’s earning record. Once a person reaches “full retirement age,” but has not reached age 70, it may be advantageous to use a restricted application and apply only to claim a spousal (or ex-spousal) benefit and wait until 70 to collect your own benefit. This would enable you to start getting Social Security income, but preserve your benefit to allow for the possibility of a higher income. It is important to consult a professional in your area regarding different tactics that can be used to maximize your retirement benefits.

Retirement should be the time in your life where you can relax. The stress of not having enough income to meet necessary daily expenses can be avoided with having the proper plan in place to meet your income needs and give you peace of mind.

Nancy Burner, Esq. has practiced elder law and estate planning for 25 years. The opinions of columnists are their own. They do not speak for the paper.

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By Linda M. Toga

The Facts: I recently listed my house for sale with a real estate agent and signed a brokerage agreement. Someone offered the full asking price for the house. My attorney forwarded a contract of sale to the potential buyer’s attorney.

Although the potential buyer had the assets needed to purchase my house, he insisted that costly repairs be made to the house and he did not want to close on the transaction for six months. Since I refused to do the repairs and to wait to close, the deal fell through. The agent is now claiming she is owed the commission since she found a buyer who offered to pay me the full asking price for my house.

The Question: Does a real estate agent earn a commission simply by bringing in a potential buyer who agrees to pay the asking price?

The Answer: Although it is impossible to definitely answer your question without reviewing the brokerage agreement you signed, it would be very unusual if a commission was earned based solely on a potential buyer agreeing to the purchase price. When it comes to residential real estate, commissions are generally earned only when the agent produces a buyer who is “ready, willing and able” to purchase the property.

This standard requires that the seller and the buyer not only agree on the price to be paid, but also on other terms such as the condition of the property, what personal property or fixtures may be included in the sale, financing and the date of possession. A buyer may be ready and willing to purchase but, if he lacks the resources, he won’t be able to make the purchase, precluding the agent from earning a commission.

Similarly, a buyer may have sufficient funds and be able to make the purchase but, if he is not willing to accept the house in its present condition, the sale will not proceed and the agent generally would not have earned a commission under most brokerage agreements.

Even if the buyer and the seller agree on all of the terms and a contract of sale is signed, an agent may not earn a commission if, for reasons beyond the seller’s control, the deal falls through.

In difficult real estate markets where there are many obstacles to closing, experienced real estate attorneys are often able to negotiate and find creative solutions to those obstacles that turn potential buyers into buyers who are ready, willing and able to close on a purchase. When that happens, both the seller and the buyer, as well as the broker, reap the benefits of the sale.

Linda M. Toga, Esq. provides legal services in the areas of litigation, estate planning and real estate from her East Setauket office. The opinions of columnists are their own. They do not speak for the paper.

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By Jonathan S. Kuttin

As more baby boomers reach retirement age, they’re realizing the valuable role Social Security will play as a source of lifetime income. Claiming Social Security benefits can be far more complex than you may realize. Here are seven essential things about Social Security to understand as you determine how Social Security will fit into your overall retirement income strategy:

You can start claiming benefits any time between ages 62 and 70: When you’re working and paying Social Security taxes (via your paycheck), you earn credit toward your Social Security retirement benefits. To qualify for these benefits, you need to contribute at least 40 credits to the system, which is typically 10 working years (although it does vary). Alternatively, if you have never worked and you’re married to someone who qualifies, you may earn a spousal benefit. When claiming your own benefit, you can begin receiving Social Security at age 62 or delay receiving Social Security up to your 70th birthday.

Full retirement age is changing: The age to qualify for a “full” retirement benefit from Social Security used to be 65. Now it is up to 66 (for those born between 1943 and 1954). It increases by two months per year for those born between 1955 and 1959. For those born in 1960 or later, full retirement age is currently defined as 67.

The longer you wait, the larger your benefit: The amount of your benefit depends on the age you choose to first begin receiving Social Security. For example, if you collect beginning at 62 and your full retirement age is 66, your benefit will be about 25 percent lower. On the flip side, your benefit will increase by about 8 percent each year you delay taking Social Security after your full retirement age up to your 70th birthday.

Spousal benefits give married couples extra flexibility: If both spouses worked, they each can receive benefits based on their own earnings history. However, a lower earning spouse can choose to base a benefit on the higher earning spouse’s income. A spousal benefit equals 50 percent of the other spouse’s benefit. Note that if you claim a spousal benefit before full retirement age, it will be reduced. The maximum spousal benefit you can collect is by taking the benefit at your full retirement age (based on the benefit your spouse would earn at his or her full retirement age).
You also can choose to collect a spousal benefit initially and delay taking your own benefit, allowing your benefit amount to increase. Then you can claim your benefit when you turn 70.

There may be a long-term advantage if a higher earning spouse delays Social Security: If the higher earning spouse is older (or has more health concerns that could affect longevity), it may make sense to delay taking Social Security as long as possible up to age 70. When the spouse with the higher benefit dies, the surviving spouse will collect the higher benefit that was earned by the deceased spouse. The higher the deceased spouse’s benefit, the larger the monthly check for the surviving spouse.

Claiming benefits early while still working can reduce your benefit: If you begin claiming Social Security before your full retirement age but continue to earn income, your Social Security benefit could be reduced. If your earnings are above a certain level ($15,720 in 2015), your Social Security checks will be reduced by $1 for every $2 you earned in income above that threshold. In the year you reach full retirement age, that threshold amount changes. $1 is deducted for every $3 earned above $41,880 up to the month you reach full retirement age. Once you reach full retirement age, you can earn as much income as you want with no reduction in your Social Security benefits.

Benefits you earn may be subject to tax: According to the Social Security Administration, about one-third of people who receive Social Security have to pay income tax on their benefits. You may want to consult a tax professional to determine what impacts this will have on your overall benefits.
These essential points are just a beginning. There’s much more to consider. Consult with your financial advisor, tax professional, your local Social Security office and/or Social Security’s website, www.ssa.gov, to find out more before you make your final decisions about when to first claim Social Security benefits.

Jonathan S. Kuttin is a  private wealth advisor with Kuttin-Metis Wealth Management, a private advisory practice of Ameriprise Financial Services, Inc. in Melville, NY. He specializes in fee-based financial planning and asset management strategies and has been in practice for 19 years.

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