End-of-Year Planning Tips
The following tips will give you a head start on end-of-the-year organizing.
- Review your current will and trusts. Wills and trusts may need to be updated because of frequent tax law changes to the federal estate tax exemption amount. If estate tax planning is not a factor for you now, make sure your executor and trustee designations are accurate.
- Take inventory and make a written record of the contents of any safe-deposit box. Give a copy to a trusted family member and note any items that you are holding for someone else that do not belong to you. Ever wondered what crucial documents you should keep in your safe-deposit box? See our must-have list.
- Review and update beneficiaries of your life insurance policies and retirement plan assets. Also review contingent (backup) designations and settlement provisions. If you have a taxable estate, consider shifting ownership of your life insurance to an irrevocable trust or to your heirs.
- Name designated heirs to receive bank account proceeds at your death. Naming heirs as "joint owners" is generally too risky and may create gift tax issues. Instead, consider using a "payable on death" (POD) designation to redirect an account without unnecessary probate problems. This method is less complicated, but it still does not solve tax problems and is only advisable in cases where estates are not subject to estate taxes.
- Make sure your durable power of attorney for health care and living will are current. Are these medical documents updated and on file with family members and health care providers? Have decisions on anatomical gifts been discussed with your family?
- Review and revise existing business buy-sell agreements. Prepare agreements if there are none. If you have one in place, it is prudent to review and/or update every year or two. Buy-sell agreements are critical to preserve the value of a family business.
- Be careful with annual exclusion gifts to your heirs. Remember, gifts of appreciated assets made during your lifetime retain your cost basis in the hands of the recipient, so there may be capital gains taxes due if the asset is eventually sold by your heirs. The $13,000 annual exclusion, however, is a meaningful tool to reduce the value of an appreciating estate.
- Offset your capital gains with losses. As volatile as the market can be, many portfolios may have gains and losses. If you plan to make gifts of stock to Lawrence University, it is best to make those gifts with stocks that are worth more than you originally paid for them. If the stock price has declined or has not changed much from its original cost basis, it may make more sense for you to sell and donate the cash proceeds.
- Finish charitable contributions by Dec. 31. As you think about special holiday gifts for family and friends, remember that making year-end gifts to Lawrence can be a heartwarming experience that also offers you tax benefits. Regardless of the gift arrangements you choose, your generosity comes with many rewards.
We Can Help
If you're still in the planning stages, please ask us for help. We can confidentially address your financial and personal goals with regard to your charitable giving interests, what you want to give, the timing of your gift and how the gift can be made. Simply contact the Office of Development at 920-832-6551 or email@example.com.
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The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.