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Estate Planning & Business Transition Checklist

Estate Planning & Business Transition Checklist

December 13, 2023

The end of the year serves as a natural checkpoint for many financial and personal processes, and with the arrival of the final months of the year, proactive preparation becomes essential. Whether you are an individual looking to optimize your estate planning or a business owner contemplating a seamless transition, the steps you take now can pave the way for a more secure and prosperous future. Let’s delve deeper into these vital year-end considerations.

Year-End Giving

Annual Exclusion: Remember, there's an annual gift tax exclusion. For 2023, you can gift a specific amount per recipient without it counting against your lifetime gift and estate tax exemption. This is a strategic way to mitigate your taxable estate over time.

Educational and Medical Gifts: Payments made directly to educational institutions or medical facilities on behalf of someone else aren't considered taxable gifts, offering another avenue to gift without tax implications.

Estate Planning

Review Beneficiaries: Life changes. Ensure that your wills, trusts, and beneficiary designations on insurance policies and retirement accounts reflect your current wishes.

Evaluate Trusts: If you've established any trusts, review them to make sure they still align with your objectives. Changes in tax laws or family circumstances might necessitate adjustments.

Consider Estate Tax: With potential changes in estate tax laws, it's crucial to be proactive. Consult with an estate planning attorney to discuss appropriate strategies that may help mitigate future estate tax burdens.

Year-End Charitable Giving

Itemized Deductions: Charitable contributions can lead to substantial itemized deductions on your tax return. Evaluate potential donations and their impact on your taxable income.

Donor-Advised Funds: Consider contributing to a donor-advised fund, which allows you to make a charitable contribution, receive an immediate tax deduction, and then recommend grants from the fund over time.

Year-End Planning for Income Tax Issues

Deferring Income: If you anticipate being in a lower tax bracket next year, consider deferring income to January or later.

Accelerate Deductions: Conversely, if you expect a higher tax rate next year, try to accelerate deductions into the current year.

Harvest Tax Losses: Offset capital gains by selling off underperforming or loss-bearing investments.

Business Transition Planning

Value Assessment: Understand the current value of your business. Having a professional valuation can provide clarity as you consider transition options.

Succession Plans: If you're considering retirement or transitioning out of your business, have a clear succession plan in place. This involves choosing successors and ensuring they're adequately trained.

Tax Implications: Different transition strategies, whether it's an outright sale, a gradual transition, or passing it to heirs, have varied tax implications. Consider consulting with a financial professional to help you develop a suitable strategy.

Planning Today Matters

As the year draws to a close, taking a proactive stance on these considerations can help you work towards aligning both your personal and business affairs with your long-term objectives. Estate planning and business transitions, though complex, are foundational elements in safeguarding your legacy.

By focusing now on year-end preparations, you're potentially setting the stage for a smoother and more financially efficient transition into the coming years. Always consult with qualified professionals to help you make decisions that are tailored to your unique circumstances.


Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

The tax-loss harvesting and other tax strategies discussed should not be interpreted as tax advice and there is no representation that such strategies will result in any particular tax consequence. Clients should consult with their personal tax advisors regarding the tax consequences of investing.

This article was prepared by FMeX.

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