Six Year-End Estate Planning Steps

1. Review Your Documents

Review your current estate planning documents, especially if there has been a major life event such as a marriage, divorce, retirement, or birth of a child or grandchild. Review your will or trust for formulas or amounts that may no longer accurately reflect your wishes for disposition of your property. Review all beneficiary designations to ensure that they do not conflict with the terms of your will or trust.

2. Plan for Basis Step-Up

As federal estate tax exemptions increase, estate taxes affect a smaller percentage of Americans. However, capital gains taxes affect many of us.  Minimizing overall taxation as part of wealth planning often involves preserving and managing the step-up in income tax basis of family assets.

3. Consider Annual Exclusion Gifts

When appropriate, annual exclusion gifts are a simple but powerful estate planning technique. For 2016, you can make an unlimited number of gifts of up to $14,000 per recipient without any gift tax consequences. Over a number of years, these gifts can result in substantial estate tax savings.

4. Consider Tuition + Medical Gifts

Also when appropriate, you can make gifts in unlimited amounts on behalf of others, by paying their tuition costs directly to the school or their medical expenses (including health insurance premiums) directly to the health care provider.

5. Make Year-End Charitable Gifts

If you have not reached your annual charitable contribution percentage limitations, consider additional contributions to charities before year end. With higher income tax rates, charitable income tax deductions have become more valuable.

6. Take Advantage of the Charitable IRA Rollover

Once you reach age 70 ½, you can transfer up to $100,000 per year from your traditional IRA account directly to a public charity without recognizing that distribution as income.  As an added benefit, the charitable distribution counts toward your annual required minimum distribution.