As we approach the end of 2024, it’s crucial to review your estate and tax planning strategies to ensure you’re maximizing your financial benefits. Here are some key areas to focus on:
1. Health Savings Account (HSA)
- If eligible, maximize contributions to your HSA, which offers triple tax benefits: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses
2. College Savings: 529 Plan
- If you have children, contribute up to $18,000 per beneficiary in 2024 without triggering gift tax reporting and to reduce your NY State taxable income
3. Maximize your 401(k) / IRA Contributions
- Contribute the maximum amount to your 401(k) for 2024, which is $23,000 if you’re under 50, or $30,500 if you’re 50 or older
- Take required minimum distributions (RMDs) if you’re 73 or older to avoid penalties
4. Annual Gifts and Estate Tax Exemptions (applicable if your total assets are $7MM or above)
- Utilize your annual gift tax exclusion of $18,000 per recipient in 2024 ($36,000 for married couples).
- Consider using the lifetime gift and estate tax exemption of $13.61 million ($27.22 million for married couples) before potential significant changes in 2026.
- Be aware of New York’s estate tax “cliff” effect for estates exceeding $7.29 million in 2024
5. Additional Tax Planning Strategies
- Harvest tax losses to offset capital gains.
- Consider Roth IRA conversions if you expect to be in a higher tax bracket in the future.
- Charitable donations: consider donating appreciated securities instead of cash to maximize tax benefits and avoid capital gains taxes
- For business owners: Consider prepaying deductible expenses or deferring income if you expect to be in the same or lower tax bracket next year
6. Review Your Estate Planning Documents
- Review your will, trusts, and powers of attorney – to ensure that they are up to date, reflecting any recent life changes or shifts in your financial situation. If you feel that changes are needed, book an appointment with us.
- Review beneficiary designations on retirement accounts, life insurance policies, and other financial assets to ensure they align with your current wishes
- Create a list of all of your assets (bank accounts, life insurance policies, retirement accounts, brokerage accounts, cryptocurrency, real estate, etc), print it out and store it together with your original estate planning documents. Make sure to tell your loved ones about it.
End of year is always a good time to review your financial picture, estate and gift planning. This is only the beginning of what can be accomplished. If you have any questions or would like assistance in your estate and gift planning, please feel free to contact Katya Sverdlov, CFA, Esq. at ksverdlov@sverdlovlaw.com