End of Year Thoughts

As we approach the end of the year, we want to thank each of you for your business and referrals. We really appreciate all of you. We also want to point out some items that you should consider as we approach year end.

1. Take your required minimum distribution for the year, either from your own retirement plan or from your inherited individual retirement account. The penalty rate is steep…50%.
2. Take advantage of the “free” gifting of $14,000 to any one individual per year. Once the year is finished no further ability to use that “free” gift for 2016. You can make such gifts in 2017 (the amounts are the same) but once 2016 is over, the opportunity is lost for 2016 gifts.
3. Take advantage of the “free” IRA distribution to a charity. If you are over 70 1/2 and charitably inclined, you can rollover up to $100,000 to your favorite charity. You do NOT have to report the distribution as income on your tax return. You can direct a trustee to trustee transfer to the charitable organization. This is a great way to benefit the charity and avoid income tax on such distributions.
4. Take advantage of family time to discuss any estate planning issues with your family. Are those children able to handle the duties of the agent under a power of attorney, personal representative and/or trustee? Are they willing?
5. Take advantage of family time to discuss the division of the tangible personal property (TPP). While these are not always easy discussions, in our experience, feelings over TPP can be much more intense than feelings over the stocks, bonds and cash. After a parent’s death, children’s emotions can be very intense and issues between siblings that have festered over the years may create conflicts. You do not want your children dealing with these issues at the already difficult time of your death. A separate writing, listing distributions of TPP, is an easy document to complete.
6. Take advantage of your CPA’s expertise. Discuss business and personal tax planning you can implement prior to year end to save income taxes.
7. Take advantage of an expiring tax benefit. Review IRS Notice 2016-72, issued on November 28. If you have a distressed principal residence and need to refinance, any forgiven debt may be excluded as discharge of indebtedness income. This benefit expires December 31, 2016. This favorable provision  has been renewed several times but it is not known whether Congress will renew it again.
8. Take time to review your estate planning documents when you have some down time. Be sure that the documents reflect what you REALLY want and the individuals named are whom you really want named.
9. Take time to carefully review your assets and determine whether certain assets should be sold to take advantage of losses or gains in this taxable year (see 6 above).
10. Take time to consider ALL of your family. Have you made provisions for your dogs, cats, hamsters,gerbils, snakes, ferrets, birds and all the animals in your home that make your house a home? Do not assume that a loved one will take on the responsibility of your beloved pets.
11. Take time to be sure that all distributions from estates and/or  trusts have been properly made in accordance with the terms of the estate and/or trust and coordinate, with your CPA and attorney, the proper time to make distributions and pay expenses for the best income tax outcome.
12. Take time to consider charitable gifting prior to year end.
13. Take a look at your digital assets and passwords. Does anyone know how to access your laptop, ipad, itunes, bank accounts, brokerage accounts or other digital assets if anything happens to you?

ADVICE:  Enjoy the holidays with your family, whether biological, friend or furry family. Have a WONDERFUL CHRISTMAS AND A GREAT HOLIDAY SEASON!

WORD OF THE WEEK:  Discharge of indebtedness income… Any time you owe a debt and all or a portion of that debt is discharged by the lender (and such discharge is not a gift), the Internal Revenue Code (the “Code”) includes the amount of such discharge in taxable income under Section 61 of the Code.  Fortunately, Congress also created Section 108 of the Code which provides certain exceptions, such as insolvency and discharge for certain forgiveness of principal residence debt (see 7 above).

GENEROSITY IS A KEY TO HAPPINESS …REACH OUT AND HELP SOMEONE TODAY! 😎