6 IMPORTANT END OF YEAR PLANNING TIPS, STRATEGIES & ACTIONS For 2016 & 2017

There is not much time left to complete important end‑of‑year tasks (including gifts). 

So let’s prioritize and make a few suggestions. 

Not all of these will be right for you but better to know about them and to make an informed decision.

1. Gifts to children, grandchildren and others.

First, if you wish to make gifts to children, grandchildren or other members of the family (even friends and non‑related family members can be included) the Internal Revenue Code allows you to gift, in 2016, up to $14,000.00 per person per each. 

NOTE:  The same will be true for 2017.

A married couple could, therefore, conceivably give $28,000.00 each to a child and/or grandchild. 

SECRET TIP: Make sure that the checks are cashed before the end of the year or the IRS can argue that it was not completed in 2016

If you’re making a gift of appreciated stock or other appreciated assets be sure to consult us or your tax advisor as your children will get your basis in the property.  Once again, these gifts need to be completed before the end of the year. 

SECRET TIP: Be sure to consult your estate planning attorney and/or accountant as many gifts require the filing of a Form 709 gift tax return on or before April 15 (or October 15th if you apply for an extension of time to file).

SECRET BONUS TIP:  You can make additional gifts for education but make sure that tuition checks are made out directly to the school.  Call your attorney or tax advisor for more specifics.

2. Want to make a larger gift?

If you’re planning on making a large gift before the end of the year, or at any time next year, remember that in addition to the annual gift tax exclusion that you get to give every year you can also give up to $5,450,000.00 during your lifetime or at death. 

This will adjust to $5,490,000.00 in January of 2017.

However, any such gifts require that a gift tax return be filed and they reduce the amount available to you to shelter in your estate at the time of your death. 

So if you’re considering a larger gift give us a call and we can give you advice about the best way to structure it. 

3. Is it time to graduate from a will to a trust? 

While this doesn’t technically need to be done by the end of the year it’s a good idea to put this on your list of New Year’s resolutions. 

Should you change your estate planning from simply a will to a revocable living trust? 

This decision is an important and complicated one but we could help you to simplify. 

Basically, if you: 1) have real estate in multiple states; 2) have assets in excess of $3 million dollars; 3) have a family member or other person who is expecting an inheritance and who you’re disinheriting; 4) if you’re quite elderly and want someone to manage your assets; or 5) you wish to organize your affairs now to simplify and save your heirs money including minimizing probate fees and other expenses then a revocable living trust might be a solution to you. 

Want to know more about what Trustees of a revocable trust must know and do?

We are just about to publish a Trustee Manual of over 170 pages of advice, checklists, and step by step actions for trustees.  Get one for your heirs.  The pre-publication and client discounts are available if you call 610-933-8069 to get on the list.  We will not charge you until the manual ships to you or the person you're giving it to.

If you need help deciding call 610-933-8069.  Existing clients can have a complimentary consultation on this issue.

4. Do you need a nursing home trust?

You should also consider using an irrevocable trust for nursing home planning during the next year. 

If you have assets that exceed what you need to live and you may be facing nursing home care in the future you may want to preserve and protect some of those assets for your spouse and/or heirs. 

While it’s possible to do emergency nursing home planning, much more can be done by planning in advance. 

If you want to know more about elder law planning and Medicaid trusts visit us at www.PaElderLAwSolutions.com and order our reports.

You can also call for a complimentary phone consultation.

5. The Clark estate and IRAs. 

If you have left your IRAs to one or more children or grandchildren and their children or grandchildren are currently the direct beneficiaries, it’s definitely time to consider using stand alone trusts when your IRA assets exceed $200,000.00 or $300,000.00 per child/beneficiary. 

These trusts can help to give back the protection that the Supreme Court took away AND can protect your hard earned IRA assets for your children or grandchildren to grow for their own retirements. If you need one of these trusts to protect your heirs from losing an inherited IRA to a lawsuit or divorce please call to schedule a consultation.

6. Do an insurance check up.

Remember to check your car and homeowner’s insurance policies to make sure that your underinsured and uninsured motorist coverage is sufficient.  This coverage affects you if you’re hit by a driver who does not have adequate insurance and we find many of our clients have very minimal coverage and this very inexpensive insurance can be easily increased. 

Make sure that you have a personal umbrella liability policy to protect you in the event of a car accident or other lawsuit. 

These policies can provide $1, $2, $3, $4, or $5 million dollars and even more on top of your homeowners or car insurance. 

They could be vital in protecting your assets in the event of a serious accident or other liability.  Be sure to check with your insurance advisor.  

Our insurance book is available by clicking here.

7. BONUS END OF YEAR POINTER - Do a beneficiary Review Of Life Insurance, IRA's and Other Accounts.

If it's been a while, consider doing a full review to make sure that your life insurance, annuity, and other account beneficiary designations are correct.  

Failure to do this properly might override your wills and/or trusts and create very serious tax problems for your heirs.

It's a good idea to review both your primary and contigent beneficary designations and to note that they may be different for life insurance as opposed to retirement and deferred tax accounts such as IRAs, 401(k)s and 403(b)s.

 

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