As tax time arrives with myriad financial and tax documents, don’t forget to tune up your estate plan.
Tax season is the perfect time to think about your full financial picture and how proper estate planning can provide you with peace of mind, potential tax savings, and knowing your heirs and the charities you support are accounted for in the future.
Here are six reasons that make tax season one of the most ideal times to create or update your estate plan.
1. The big picture view
With all your tax and financial documents in one place, tax season offers a chance to see the big picture view of your finances. Having a “30,000-foot view” of your finances will help you ensure all your assets are included in your estate plan and designated as you wish.
2. Reduce next year’s taxes
Taking a big tax hit this year? Next year doesn’t have to be the same. By conducting a review of your financial plan, you may find that a planned gift such as a charitable gift annuity or a gift of appreciated securities could provide you with a generous income tax deduction.
3. Possible estate tax woes
Unless Congress votes to extend it, the increased estate and gift tax exemption will sunset at the end of 2025. Currently set at $13.6 million, the estate tax exemption will likely be reduced to around $6 million. Anything over that amount will no longer be passed tax free to your heirs. Start thinking this tax season about possible charitable workarounds, such as a charitable lead trust.
4. Get the pros involved
Many people are already talking to their tax and financial advisors during this time of year. When you sit down with your advisors to talk taxes, it’s also the perfect time to have them review your estate and financial plan, perhaps alongside a legal advisor and charitable planning representative.
5. Transfer assets efficiently
Tax season is a reminder that any assets you leave to family after your lifetime may incur a significant tax bill. However, through proper charitable planning, you could possibly reduce the tax burden on your heirs by considering a retirement plan gift to charity or creating a charitable lead trust.
6. Changes in tax law
Tax laws are always changing. While that may impact your tax return from year to year, sometimes the effect on your estate plan can fly under the radar. Our team of gift planning specialists can work alongside your legal and financial advisors to ensure your estate plan is fully tax advantaged.
Read more about planned gifts and the tax benefits they offer, or request more information.
