9 Actions Every Family Should Take

FamilyToday’s families take many different shapes, from more traditional “married with children” family units to less traditional households such as blended families, domestic partners with children and single parents. Unfortunately, our legal system and tax structure haven’t kept pace with the changing times, leaving members of nontraditional families without many of the financial and legal protections that are afforded to other families. This means you need a financial plan that takes extra steps to protect your future.

Here are nine actions you can take now to help create a more secure financial future for your loved ones:

  1. Choose the right tax status: Even if you don’t qualify for Married Filing Jointly status, you have other good options. You may still qualify for tax savings as a head of household. If you are eligible to use more than one filing status, take the time to compare your tax bill under different filing scenarios — or have your tax advisor do it — to see which approach saves you the most in taxes.
  2. Find tax breaks: Stepchildren raise tax considerations that require special attention. Determine who, among eligible family members, will declare any children as dependents before you fill out your tax forms. Take full advantage of the tax benefits that may be available to you through flexible spending accounts (health care and dependent care), health savings accounts and education savings plans.
  3. Get enough insurance: Life and disability insurance provide important protections in every family, especially if you’re the primary breadwinner. Insurance is also a valuable tool to use in estate planning for unmarried partners.
  4. Build emergency savings: A cash reserve that is equal to at least six months’ worth of living expenses is good planning for any family, but especially for single parents who don’t have a second income to fall back on in case of job loss, injury or other unexpected events.
  5. Document everything: You should keep documentation of all your important relationships to protect the parental, ownership and caretaking rights of your loved ones and for you to have the same protection. That means putting on paper such things as a will, a health care directive, a domestic partner agreement and guardianship arrangements.
  6. Build a bigger nest egg: Investing for your own retirement is crucial when you’re unmarried and don’t have legally protected joint ownership of assets with your partner. Unmarried partners can’t claim Social Security survivorship benefits, and divorced spouses may get only a part or none of an ex-spouse’s retirement accounts or Social Security benefits.
  7. Coordinate college savings: The cost of education for all family members is a key consideration. Coordinate education savings plans and expectations with partners, ex-spouses and extended family members to know how much you will be responsible for paying and how you plan to reach those goals as a family.
  8. Be aware of the gift tax: Transfers of property, cash and other assets between unmarried partners can trigger the federal gift tax if the value exceeds $13,000 in any given year. However, payments for tuition or medical expenses made directly to the education or medical provider are not subject to gift tax. Even the joint purchase of a home can trigger the gift tax if both partners don’t contribute an equal amount to the purchase price depending on state law.
  9. Designate beneficiaries: It’s best to avoid the chance of assets getting tangled up in probate court after a death or to have inheritances or an insurance policy payout go to someone other than the person you would like. So be sure to keep your beneficiary information up to date. A solid estate plan that utilizes a will and designates beneficiaries and powers of attorney can provide much-needed protection.

Don’t miss out on opportunities to help ensure your family’s financial well-being. Talk to your financial advisor about these and other actions you can take.

Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.

Neither Ameriprise Financial nor its affiliates or representatives provide tax or legal advice. Consult with your tax advisor or attorney regarding specific issues.


Submitted By:
Donna S. Cates, CDFA™, CRPC®
Financial Advisor
1500 Urban Center Drive
Suite 200
Birmingham, AL 35242
(O) 205-909-3126
(TF) 866-640-4052



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