With only a few weeks left in the year, is your estate plan in order? There’s little time left to make changes that minimize taxes and help you better plan for the future. Here are a few things to consider in your year-end estate planning.
1 – Gift Tax Exclusion
Every year, you’re allowed to gift up to $15,000 per person without any gift or estate tax consequences. By gifting funds to loved ones over time, you reduce the value of your estate and allow them to receive money tax-free. Ask your financial advisor whether you should make any last minute monetary gifts. The limit is based on the calendar year, so come January 1st, you can make additional cash gifts to the same individuals.
2 – Maximize Retirement Contributions
How much have you contributed to your 401k and other retirement accounts? If you haven’t maximized your contributions, there’s still time to set aside a little more for retirement. 401(k), 403(b), IRA and other accounts have different yearly limits, so consult with your financial advisor before making a change. Also, if you’re 50 years of age or older, you are allowed additional catch-up contributions. This can lead to significant savings, especially if it allows you to remain in a lower tax bracket for taxable income.
3 – Complete Asset Transfers
Asset allocations are an important part of tax and estate planning strategies. Before the year ends, consider how changes to your assets may help or hurt your tax liability for 2020. Also, is there anything you can do now that might help your financials next year? Whether it’s stocks, investments, or real estate, November and December are a great time of year to make beneficial last-minute moves.
Why Year-End Estate Planning Is So Important
There’s nothing worse than preparing your taxes in January only to realize that you missed opportunities to save money for the previous tax year. Get ahead of the game and evaluate opportunities now. With the help of your accountant, financial planner, and/or estate planning attorney, you can make smarter financial decisions.
Contact our team of Massachusetts estate planning attorneys to evaluate and adapt your estate plan.