A number of recent changes to some of the critical moving parts of estate planning make updating your estate plan in the first quarter of the New Year a good idea. Another good idea: make a "to-do" list on New Year's Day.
Think of New Year's Day as an annual reminder to update your estate plan – even if all you do is make a list of the things you mean to do in 2016. A recent article in The Business Investor's Daily, "5 Changes to Make to Your Financial Plan Now," provides a framework to get things rolling.
Make gifts to family. Plan to give gifts of cash or tangible property of up to $14,000 per person because there's no limit on how many gifts you can make, and there is no gift or estate tax. Couples can combine their gift giving to $28,000 per person. This is an easy way to reduce a potentially taxable estate. Establish a long-term strategy and give annual gifts to your beneficiaries.
Give to charity. You can also make a donation to a charity, and if you tend to make significant charitable donations, consider establishing a family foundation. To avoid capital gains tax, you should consider donating appreciated assets like stocks. A donor-advised fund is another way to receive a charitable deduction today, avoid capital gains tax and retain the authority to determine its future use.
Check your beneficiaries. This applies not just to your personal estate plan but also to the benefits you have from your employment, like life insurance and retirement assets.
Set up a meeting to address your health care proxies, powers of attorney, and an updated will. Now's the time to schedule a meeting with your estate planning attorney to create or update these documents.
Apply for Social Security and set up life insurance. If you are or will be 62 before the end of 2015, apply for your Social Security benefits. The latest federal budget bill took direct aim at and eliminated a Social Security claiming strategy, so this is a "sooner rather than later" task. And don't forget to update or buy life insurance.
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Reference: Business Investor's Daily (December 18, 2015) "5 Changes to Make to Your Financial Plan Now"