When the calendar turns to January, the clock is reset for many estate planning opportunities.
McManus & Associates Founding Principal and AV-rated Attorney John O. McManus recently shared his recommended estate planning checklist for January to maximize the value of your assets, cover your financial bases, take advantage of current exemption levels, and get a head start on deadlines.
Listen to the discussion and see an outline below:
1. Fund your children’s trusts so that the trusts can benefit from a full year of appreciation.
2. Make charitable gifts to your foundation so that it will also benefit from appreciation during the year.
3. Review the grants made by your foundation to confirm that they are qualified 501(c)(3) organizations; start researching new charities to expand your class of grantees (while still maintaining your donative intent).
4. Consider making gifts to 529 plans for your children and or between your grandchildren to take advantage of a full year of appreciation.
5. Meet with McManus & Associates or your accountant as soon as possible to provide critical financial information to begin your tax returns.
6. Make substantial gifts a part of your estate plan, thereby empowering your spouse before Congress reduces the gift tax exemption from $11 million.
7. Consider hiring your children and spouse or other family members for the family business and pay an amount that will fund a Roth IRA.
8. Perform an audit of your life insurance policies, including their cash values and performance, as well as their suitability and sufficiency of coverage.
9. Review your beneficiary designations (which will override any testamentary direction under your will) to make sure they coincide with your intentions (as provided in your will).
10. Review your medical coverage and plan choices; also, review your tax withholdings if you expect your income to change significantly.
11. Schedule a meeting with McManus & Associates to review your fiduciaries and agents named in your estate plan to determine their suitability and continued qualifications.
Scrambling as we approach April 18th? Here are three last-minute tax strategies to harness for proper management of the deadline.
If you need additional time to file your personal income tax return, file an extension:
The deadline to file your tax return is April 18, 2016 (April 19, 2016, if you live in Maine or Massachusetts).
If you cannot file your return on time, apply by the due date of the return for an extension. You can receive an automatic six-month extension for your personal income tax return if you file Form 4868 by the tax filing deadline. (If you are mailing the extension, you should mail it certified with a return receipt, so that you have proof of the mailing date.) The extension gives you until October 17, 2016 to file your 2015 return.
This extension is for filing only and does not allow you more time, without penalty, to pay your tax liability for 2015. Although the extension will be allowed without payment, you will be subject to interest charges and possible late payment penalties on 2015 taxes not paid by April 18th (or April 19th in Maine or Massachusetts).
If the amount paid with Form 4868, plus withholding and estimated tax payments for 2015, are less than 90% of the amount due, you will be subject to a late payment penalty (one-half of 1% of the unpaid tax per month).
When tackling a jigsaw puzzle, you’ve likely taken the “divide and conquer” approach, separating the larger puzzle into more manageable sections. Eventually, you bring the different areas of focus together to put the finishing touches on the full image.
Wealth management is the same. Estate planning emphasizes an array of complex matters spanning death taxes, asset protection, incapacity, guardianship and family missions. Compartmentalizing can be helpful, but advisors must remember to bring the pieces of the puzzle back together in the end. It’s critical that strategies to maximize the value of your clients’ estates are coordinated with their retirement, financial and income tax planning.
McManus & Associates can prepare your Income Tax Returns. For many years, the firm has been completing tax returns for clients and has learned that keeping income tax planning under the same roof enables a more refined level of specificity in estate planning for your family. Want to hear more about how you can benefit from McManus & Associates’ Income Tax Planning Practice? Listen to the firm’s recent conference call with clients (link below) and contact us at 908-898-0100/212-753-9000.
State laws vary rather widely regarding the jurisdiction of trusts and trust assets. Certain jurisdictions have laws that are generally more favorable in their treatment of trusts for purposes of asset protection, access to trust-owned assets and creditor protection. As part of McManus & Associates’ Educational Focus Series, Founding Principal John O. McManus shares expert guidance on the top 10 things to consider when deciding where to site your trust.