Shah Law Firm, PLLC

Estate Planning strategies - trust the process (and not like Sean McDermott). The mindset for a good estate plan is completely different than thinking about income tax. Like it or not, most look at income tax with a one-year outlook. A good estate plan has to be done over a few years. Look for a rock star tax attorney and CPA like Neeraj Shah, and you will be sure to be in good hands. In the meantime, here are a few planning moves to consider.

General Planning Advice and Responsible Actions:

1. Beneficiary Designations. Individuals usually get caught up with wills and trusts when they think about estate planning. The forgotten step and the most critical step in my point of view is beneficiary designations. The older you are, the more critical it is to make sure that your beneficiaries are accurately stated. As one gets older, more money is moved into assets with beneficiary designations like IRAs or 401ks. We procrastinate looking over beneficiary designations because we forget about it or life happens. Make sure your beneficiary designations are accurate and consistent with your estate plan and values.
2. Personal Contact Information and Records - We have an estate plan to prepare one for death or incapacity. Incapacity is a state when someone cannot manage his or her affairs. Having your personal contact information and records in order will be so helpful for you and your loved ones. Consider documenting the following information: 1) family advisors such as attorney, accountant, financial advisor, insurance agent and physician, 2) essential documents such as will, revocable trust, irrevocable trust, power of attorney and living will, 3) business documents or agreements, 4) financial information such as  bank accounts, brokerage accounts and certificate of deposits, 5) safe deposit box location, 6) insurance information including home, health, life, long-term care and disability, and 7) funeral or cremation wishes.

Retirement and Tax-related Information:

1. Required Minimum Distributions (RMDs) - You cannot keep retirement funds without being taxed indefinitely. The IRS requires you to take a minimum distribution every year. Not taking the required minimum distribution results in significant penalties. Letting your loved ones know of this compliance requirement and having the contact information to your financial advisor and accountant can prove to be helpful.

Wealth and Estate Planning Year-end Strategies:

1. Annual Exclusion - The annual exclusion increased to $17,000 for 2023. This means that each person can give this amount without considering their lifetime exclusion. Married couples can give double this amount in total. It is a very efficient way to move dollars from one generation to the next - you will be rewarded for your disciplined strategy!
2. Annual tax-free gift. Most people are short-term when it comes to taxes. They look at current income tax. One tax that many forget is the estate tax. If you are in comfortable position financially and are looking to move assets to your children efficiently, then make it a habit to leverage the annual gift tax exclusion.
3. Tax Cuts and Jobs Act - the party may come to an end. The gift and estate tax exemption was doubled in 2018. This increase is about to sunset in 2026 - unless Congress acts. Those who want to leverage the higher exemption amounts should consider making inter vivos gifts (during one's life) soon.
4. Direct Payment of Tuition and Medical Expenses - direct payments for tuition and medical expenses are not considered taxable gifts. These transactions do not eat into your annual exclusion, nor does it impact your lifetime exclusion. It's a freebie!