While this time of year can be extremely busy, carve out some time to make sure your affairs are in order. Review the following checklist and make note of the items you need to address.
Checklist:
____ Execute on your gifting strategy. The annual gift tax exclusion for gifts to individuals is $15,000 per person this year. This is a “use or lose it” exclusion. If you intend to use it, make the gifts prior to December 31, 2021. Take note that assets gifted in your lifetime retain their original basis. Assets inherited at death receive a step-up in basis. Consult with knowledgeable estate planning attorneys to determine which assets are best to gift during your lifetime.
____ Make your charitable donations. Required Minimum Distributions (RMDs) are back in 2021 for those over the age of 72. Each IRA owner may contribute up to $100,000 from his or her IRA directly to charity. This strategy reduces your taxable income. If you are under the age of 72 or do not have an IRA, you may want to consider “bunching” your charitable donations. With income rates likely increasing in 2022, have your advisory team evaluate whether bunching would be more beneficial for you in 2021 or 2022. Charities must receive your gift by December 31, 2021 for it to be counted on your 2021 tax return.
_____ Any gifts to a 529 plan must be deposited early enough to be recorded on a 2021 statement in order to capture the annual gift tax exclusion.
_____ You have a little more time to make IRA distributions, but make sure you have this on your list. Plan to make your 2021 IRA contributions prior to April 15, 2022. Contribution limits are currently $6000 per person (with a $1000 catch up contribution for those age 50+).
_____ Check your year-to-date contributions on your 401(k) and other retirement accounts to ensure you are on track to maximize your allowable deferral.
_____ Check your balance on any Flexible Spending Accounts (FSAs) to make sure you use any funds that you will otherwise lose if not spent in 2021.
_____ If you are on Medicare Part D, the open enrollment dates are October 15 – December 7, 2021 so hurry to make any needed changes.
_____ Review beneficiary designations on all life insurance policies, retirement accounts and annuities to make sure they do not require any changes.
_____ Read over your will and/or trust documents, power of attorney documents and advance directives to determine whether any updates are needed.
For assistance with your 2021 end-of-year estate planning and financial planning checklist, contact the experienced estate planning attorneys at Stouffer Legal in the Greater Baltimore area. You can schedule an appointment by calling us at (443) 470-3599, emailing us at office@stoufferlegal.com, or register for an upcoming free webinar using the link below:
https://attendee.gotowebinar.com/register/483002683038496012
https://attendee.gotowebinar.com/register/2975170032206802443
https://attendee.gotowebinar.com/register/2024991874688696592
https://attendee.gotowebinar.com/register/4513474760412467725
