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Show You ) And Your In Money .i&k 1 &ALr Tax shelters not for everyone By JUDITH G. RHOADES Copley News Service Q. I am a senior citizen, and I am paying much too much money in taxes each year. I want to buy a tax shelter. I have only a small amount of capital available avail-able for investment purposes. pur-poses. Please give me some suggestions. T.S., Long Beach, Calif. A. I have received several sever-al similar letters from readers who are senior citizens, cit-izens, who have very small incomes, to suggest tax shelters. It is always difficult diffi-cult to tell someone that the money they have, and their tax bracket make them very poor candidates for a tax shelter. It seems that many readers must be confusing tax shelter with afi investment that will provide some tax-free income. in-come. In a tax shelter, you can risk losing the entire investment in-vestment without worrying that you lost the money, because it can be written off. On the other hand, an investment in-vestment which provides you with tax-free income should also be one in which your money is invested into as safe an investment vehicle vehi-cle as possible. I discussed this problem with Carol O'Brien, assistant assist-ant manager and retirement retire-ment planning coordinator for Dean Witter Reynolds in Glendale, Calif. She suggested sug-gested government securities securi-ties which are partially tax-free, and also a municipal munici-pal bond where the income received would be tax-free. She also thought it would be a worthwhile for the po- tential investor to talk with a stockbroker to find out the latest investments available which offer safety safe-ty of principal and some tax-free income. These types of investments should provide you with more income and certainly . be safer than a true tax shelter which is for the in- '. dividual in the highest of tax brackets. A recent letter to the column asked how small . an estate had to be before it went through probate. The figure presently is $5,000 or less. Probate is the legal process by which whatever assets you have in life are transferred to your beneficiaries at your death. If you do a good job at estate planning, probate should be much easier for your beneficiaries. Keeping Keep-ing whatever you have in proper order (all stock certificates cer-tificates correctly owned, taking title to your home in the way in which is best for you, are just two examples) will help those who will become be-come responsible for your realty and personal things after your death. Good estate planning at whatever economic level you are can avoid many hassels when you are no longer around to transfer your assets to the person or persons you have selected to receive them. Q. Would it be possible for me to lose my money in my Investment Retirement Account (IRA) to creditors? credi-tors? K.C., Sacramento, Calif. A. The money in your IRA is your property. It belongs be-longs to you alone, and certain cer-tain laws keep it specially protected. As a general rule, it cannot be taken from you because you do not meet the terms of a contract, a loan agreement or because you break a law. If, however, you were to draw money from your IRA account, it would be treated as ordinary income, in-come, and would no longer come under that special protection. Judith Rhoades is a freelance free-lance writer who has spent 15 years in the securities industry. If you have any questions regarding finance, securities or the stock market, you may address ad-dress them to ber at P.O. Box 7012, Napa, CA 94558. Allow a minimum of eight weeks in which to receive your answer. Please enclose en-close a self-addressed, stamped envelope if you wish a personal reply. |
