Many people focus on tax planning at the end of the year which is one important issue.  However, the end of the year is also a good time to give some thought to other planning issues that should be considered.  It may be worthwhile to meet with your lawyer, accountant, investment advisor, insurance agent and similar professionals to consider if your plans need updating in some of the following areas:

Estate planning – periodic review of estate plans are important to be sure changes have not been overlooked in how your estate will be handled, planning complies with current laws or your financial situation has had a dramatic change.

  • Are gifting programs for charities and transfers of family wealth in need of review?
  • Should intra-family asset shifting, such as the establishment of 529 education plans for children or grandchildren, be considered?
  • Are beneficiary designations still correct and as desired?
  • Should trust arrangements be established or updated to comply with the best interests of the estate and beneficiaries?
  • Are Power of Attorney arrangements in effect and current as to wishes, including medical treatment elections?

Tax planning – year-end tax planning is important to make sure the timing of taxable distributions from retirement plans, tax deductible expenses, sale of capital assets, etc. are done with the consideration of effectively minimizing current and future taxes on income.

  • Should consideration be given to selling investments to recognize tax losses, either to offset capital gains or generate a loss to offset against ordinary income based on current tax laws?
  • Have Required Minimum Distributions been distributed properly from retirement accounts?
  • Does it make sense to make additional contributions before the end of the year, or prepay certain taxes deductible as itemized deductions?
  • Are estimated tax payments or withholding adequate to cover anticipated Federal and state income tax obligations?

Investments and financial advisory- while your portfolio and investment strategies, including retirement accounts, should be monitored regularly, many of us often neglect to focus on this during the year.  The end of the year can be an appropriate time to make sure to create a periodic review.  Among the questions you may want to consider include:

  • Do I have investments that are no longer performing as planned, or underperforming the market?
  • Do I have an asset allocation policy that needs to be adjusted?
  • Is my financial advisor providing the services and advice expected?
  • Are cash, checking and money market funds invested to provide for planned short-term needs?
  • Are after-tax rates of return considered in the evaluation of earnings rates?
  • Are asset preservation and transfer planning objectives being met?
  • Should mortgage refinancing be considered to take advantage of low mortgage interest rates?
  • Taking into consideration the low interest rates available for investments, should funds be used to pay down interest bearing credit cards or mortgages with interest rates higher than the rates on earnings?

Insurance – there are many aspects of insurance, including health insurance, life insurance, long-term care insurance, homeowners insurance and automobile insurance that need periodic review.  The considerations may include:

  • Do current life insurance policies provide desired amounts of coverage?
  • Are beneficiary elections current?
  • Should a life settlement structure be considered in lieu of continuing life insurance policies?
  • Have values of real estate and contents changed dramatically enough to warrant a change in coverage values?
  • Does the automobile policy accurately reflect the vehicles owned and should adjustments in deductibles and coverage limits be considered?
  • Evaluate daily living limits of long-term care policies, as well as other terms and conditions to consider current costs and situations.
  • And finally, is an updated list of assets, inventory of financial accounts, real estate and other investments, insurance policies and outstanding debts available and located where the appropriate person can easily locate the document?