Living Trust Planning | Estate Planning Attorney

Tag: taxes

  • 14 Ways to Show Your Finances Some Love This Year – Part 2

    14 Ways to Show Your Finances Some Love This Year – Part 2

    Last week we explored 7 ways to show your finances and your family some love with smart, tax-advantaged financial tips for the new year:

    1. Make a Qualified Charitable Distribution (QCD)
    2. Front-load Your 401(k) Contributions
    3. Set Up an IRA for a Child
    4. Make Donations During Spring Cleaning
    5. Give the Gift of Appreciated Stock Shares
    6. Establish a 529 College Plan
    7. Make a Roth Conversion

    This week, we’re continuing the financial love with 7 more tips you can use to benefit your family this month and the year ahead.

    8 | Spread The Love With The Annual Gift Exclusion

    Don’t underestimate the power of spreading love through financial generosity. Did you know you can gift up to $18,000 per person to an unlimited number of people each year? This allows you to share your wealth with family and friends in a tax-efficient manner. These gifts not only escape taxation but also foster stronger connections and deepen relationships with your loved ones. Whether it’s helping with educational expenses, supporting a dream vacation, or simply offering a helping hand, annual exclusion gifts embody the spirit of giving and strengthen the bonds that matter most. With the sunset of the estate tax exemption set to occur in 2025, now is the time to make gifts if you have a taxable estate. Contact us to discuss options as there are far better ways to gift than outright.

    9 | Use Up Your Lifetime Gift Tax Exemption

    Use up your lifetime gift tax exemption: It’s not just about securing your own financial future but also about ensuring your loved ones thrive. By leveraging your lifetime gift tax exemption, currently standing at $13.61 million per person, you can minimize estate taxes and provide a significant financial boost to your heirs during your lifetime. Whether it’s funding education, helping with a down payment on a home, or simply offering financial support, using this exemption allows you to share your wealth and make a lasting impact on those you cherish most. The exemption is set to sunset in 2025, so if your estate is greater than $5M, now is the time to plan. Contact us ASAP, as this planning does take time.

    10 | Allocate More Funds To The Generation-Skipping Tax Exemption

    As you plan for the future, it’s essential to consider the next generation. By allocating additional funds towards your generation-skipping transfer tax exemption (of up to $13M), you provide a seamless transfer of assets to your grandchildren or future beneficiaries. This strategic move not only minimizes tax implications but also lays the groundwork for preserving your family’s wealth for generations to come.

    11 | Make an Extra Mortgage Payment

    Your home is more than just a place to live—it’s also a valuable asset that can offer tax advantages. By making an extra mortgage payment on your primary home loan, you can increase your mortgage interest deductions on your tax return. Not only does this reduce your taxable income, but it also accelerates your path to homeownership, saving you money in the long run.

    12 | Complete Repairs on Rental Property

    Investing in your rental property not only enhances its value but also offers tax benefits. By completing repairs on your rental property, you can offset rental income on your tax return while providing a better living environment for your tenants. It’s a win-win situation that improves your property’s profitability and strengthens your relationship with your renters.

    13 | Create a Lifetime Asset Protection Trust

    Planning for the unexpected is an act of love towards your spouse and children, and when you know the right tools to use (like we do) you can make sure your family is provided for and protected for generations to come. One of my favorite ways to do this is using a lifetime asset protection trust. This tool allows you to protect the assets you leave for your children from any future financial trouble, like lawsuits or divorces.

    14 | Create Your Estate Plan

    Finally, don’t overlook the importance of estate planning in showing love to your family. By finalizing your will, revocable trust, power of attorney, and advance medical directive, you ensure that your wishes are carried out and your loved ones are protected in the event of incapacity or death. It’s a vital step towards providing peace of mind for you and your family, allowing you to focus on enjoying life’s precious moments together. Remember, a plan is more than a set of documents. It’s a lifetime of wise decisions about your life and legacy.

    Show Your Love Where It Matters Most

    The month of love might be over, but it’s never too late to make loving financial and planning decisions for your loved ones – and yourself!

    We know the value of planning for the future. We also know the value of planning for the life you want today and the legacy that extends far beyond your assets.  

    Schedule a complimentary 15-minute call to learn how we can help you create a Life & Legacy Plan that will take care of everyone and everything you love.

    This article is a service of Jeannette Marsala, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session.

  • 14 Ways to Show Your Finances Some Love This Year – Part 1

    14 Ways to Show Your Finances Some Love This Year – Part 1

    Ah, February – the month of love, where hearts flutter and chocolates abound. But amidst the romantic whirlwind, there’s a different kind of love that deserves our attention: the love we show ourselves and our family through thoughtful financial planning.

    Now I know what you’re thinking – that doesn’t sound as fun or showy as a fancy night out or a bouquet of flowers (or a night in with Netflix). But trust me, making smart planning decisions with your assets is one of the best gifts you can give – and a gift that keeps giving over time.

    This week, we explore seven tax planning tips that not only secure your financial future but also spread love and prosperity to those you cherish most.

    1 | Make a Qualified Charitable Distribution (QCD)

    Want to spread love to a charity you’re passionate about? Is your retirement account looking good? Consider making a qualified charitable distribution from your account directly to charity. Not only does this fulfill your required minimum distributions, but it also exempts the amount from your taxable income. By giving back to causes close to your heart, you can make a meaningful impact while reducing your tax burden.

    2 | Front-load your 401(k) contributions

    Show love to your future self by maximizing your 401(k) contributions early in the year as opposed to spreading them out evenly over 12 months. By reaching the 2024 limits of $23,000 sooner, your investments will have more time to grow, potentially enhancing your retirement nest egg even more. It’s a proactive step toward securing financial stability for yourself and your family down the road.

    3 | Set Up an IRA for a Child

    Want to inspire financial skills in your kids while getting a tax advantage? Teach the next generation the value of financial planning and responsibility by setting up and contributing to an IRA for a child with earned income. Whether it’s from babysitting or odd jobs, every dollar invested grows tax-free, providing a solid foundation for their future financial well-being.

    4 | Make Donations During Spring Cleaning

    Ah, the annual ritual of spring cleaning. This year, let’s infuse this mundane task with a dose of love and generosity. As you sift through your belongings, consider the items that no longer serve you but could bring joy to others. From gently used household furnishings to clothing and books, each item holds the potential to make a difference in someone’s life.

    Here’s the cherry on top: for items in good condition, you may claim a charitable deduction on your 2024 income tax return, making your act of kindness even sweeter. So as you purge the old and welcome the new, keep receipts of your donations – it may add up to some real tax savings.

    5 | Give the Gift of Appreciated Stock Shares

    Strengthen familial bonds while supporting charitable causes by giving appreciated securities and stock shares directly to your sibling’s favorite charity. By donating your appreciated stock instead of selling it, you can potentially avoid recognizing the gain as your income, maximizing the impact of your charitable giving while minimizing your tax liability.

    6 | Establish a 529 College Plan

    Invest in the educational future of your loved ones by setting up a 529 plan. While the contributions you make to a 529 account aren’t tax deductible, contributions to these plans grow tax-free and can be withdrawn tax-free when used by your loved one for qualified education expenses like housing, books, tuition, and more. Whether it’s for your child, grandchild, niece, nephew, or another family member, a 529 plan is a gift that keeps on giving.

    7 | Roth Conversion

    Show love to your retirement savings by considering a Roth conversion on a traditional IRA. If your traditional IRA has declined in value, now is the ideal time to convert it to a tax-saving Roth. Doing so can reduce your income tax liability later on and let you potentially enjoy tax-free withdrawals in retirement. It’s a strategic move that can optimize your retirement income while minimizing tax obligations.

    Let Us Help You Show Your Finances Some Love

    February offers a perfect opportunity to demonstrate love not only through romantic gestures but also through practical Life & Legacy Planning. By incorporating these tax planning tips into your overall planning strategy, you can secure a brighter future for yourself and your loved ones while making a positive impact on your community.

    We’re here to guide you through every step of your planning journey, from taking inventory of what you have and what’s important to you, to the practical steps of how to plan for the life and legacy you dream of.

     Schedule a complimentary 15-minute call with our office today to learn more.

    This article is a service of Jeannette Marsala, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session.

  • Year-End Tax Planning Starts Now: 8 Things To Do Now to Lower Your 2023 Taxes – Part 2

    Year-End Tax Planning Starts Now: 8 Things To Do Now to Lower Your 2023 Taxes – Part 2

    Last week we looked at four different ways to lower your tax liability for 2023, from adjusting your tax withholding to strategically planning your medical procedures. In this week’s blog, we discuss four more tax-saving methods you can use right now to owe fewer taxes come April 2024. 

    Make Charitable Gifts

    Giving back to your community or supporting causes you care about is not only rewarding but can also provide tax benefits if your family’s tax deductions are close to exceeding the standard tax deduction. 

    The standard deduction for 2023 is $12,950 for individuals and $25,900 for married couples filing jointly. Remember that the total of your itemized deductions, including charitable contributions, must exceed the standard deduction for your filing status to provide a tax benefit. 

    If you’re nearing the top of the standard deduction threshold, this year may be a great time to contribute to a charitable organization that’s important to you. Doing so will help support a good cause and allow you to make itemized deductions for an extra reduction in your taxable income for the year.

    If you make any charitable donations, keep detailed records of your donations, including receipts and acknowledgments from the charities. If you donate non-cash items (such as clothing or household goods), make sure to document their fair market value. 

    If you aren’t sure how to document your donations or aren’t sure if a charitable donation will be advantageous to you this year, be sure to discuss this with your tax professional.

    Consider Tax-Loss Harvesting

    Tax-loss harvesting is a strategy designed to offset capital gains by selling underperforming investments. This technique can help you minimize the taxes you owe on your investment gains. 

    The first step is to identify investments in your portfolio that have experienced losses and then sell those investments to realize the losses. After all, you haven’t actually lost or gained capital until the money enters or leaves your portfolio.

    By selling underperforming investments, you can now use the lost capital to offset any capital gains from other investments that are doing well. Losses can be used to offset up to $1,500 for individuals filing separately or up to $3,000 for couples filing jointly.

    It’s important to remember that there are rules and limitations when it comes to tax-loss harvesting. Consult with a financial advisor or tax professional to ensure you execute this strategy correctly and in a way that aligns with your overall financial goals.

    Pay Your January Mortgage Payment in December

    If you’re a homeowner with a mortgage, making your January mortgage payment in December can provide a valuable tax advantage. Mortgage interest is deductible on your income tax return, and prepaying your January mortgage payment in December gives you an extra month of interest to deduct on your 2023 taxes.

    However, before implementing this strategy, check with your mortgage lender to ensure that they apply the payment correctly. Some lenders may automatically apply extra payments to your principal balance rather than counting them as interest for the next month.

    Max Out Your IRA (Individual Retirement Account) or Roth IRA

    Retirement planning is crucial for long-term financial security, and IRAs are excellent vehicles for saving for your golden years. For the 2023 tax year, the maximum contribution limit for both traditional and Roth IRAs is $6,500, with an additional $1,000 allowed for those aged 50 or older. It’s essential to understand the differences between these two types of IRAs to choose the one that suits your needs best.

    Traditional IRA contributions may be tax-deductible, potentially reducing your taxable income for the year. However, withdrawals in retirement are subject to taxation.

    Roth IRA contributions are made with after-tax dollars, so they don’t provide an immediate tax deduction. However, qualified withdrawals in retirement are entirely tax-free.

    By maximizing your contributions to your IRA of choice, you can secure a more comfortable retirement and possibly reduce your tax liability for this year.

    The Foundation of Life-Long Support and Security

    Proactive year-end tax planning can significantly impact your financial well-being. By implementing these eight tax-saving strategies, you may be able to keep more money in the bank and take a step toward a brighter financial future. 

    But good money management is only one part of the equation for a life you love and a legacy that will guide and support your family for generations to come. 

    Making the best strategic decisions to protect your family’s health, finances, and happiness is equally, if not more, important. If you want to make sure that both your financial and personal life are in order today and structured to give your family the best support possible tomorrow,  give us a call.

    We would be honored to help you protect everything you own and everyone you love through our heart-centered estate planning services.

    This article is a service of Jeannette Marsala, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.

  • Year-End Tax Planning Starts Now: 8 Things to Do Now to Lower Your 2023 Taxes – Part 1

    Year-End Tax Planning Starts Now: 8 Things to Do Now to Lower Your 2023 Taxes – Part 1

    It might seem a bit early to think about your 2023 taxes, but as the year draws to a close, it’s the perfect time to take a closer look at your financial situation and make some strategic moves that can help you minimize your tax liability come April.

    Year-end tax planning isn’t something you do at the last minute; it’s a series of thoughtful steps you can start taking right now. In this blog series, we’ll explain eight key actions you can take during this last quarter of the year to save money on your 2023 taxes.

    Let’s get started.

    Contribute to Your HSA (Health Savings Account)

    A Health Savings Account (HSA) can be a powerful tool for both managing your healthcare costs and reducing your taxable income. HSAs allow you to set aside pre-tax dollars to cover future qualified medical expenses. Contributions to your HSA are tax-deductible, and the earnings grow tax-free. To make the most of this tax-advantaged account, consider maximizing your contributions to your HSA before the year ends.

    For the 2023 tax year, you can contribute up to $3,650 if you have self-only health insurance coverage or $7,300 for family coverage. If you’re 55 or older, you can also make an additional $1,000 catch-up contribution. By increasing your HSA contributions, you not only reduce your taxable income this year but also build a valuable fund for future healthcare expenses.

    If your employer offers an HSA account, they may make an annual contribution to the account. If you’re self-employed or don’t have access to an employer-sponsored HSA, you can set up your own through most financial institutions.

    Even better, the money you contribute to your HSA never expires and can be used years into the future. Just keep in mind that if you’ve taken money out of your HSA this year to pay a medical expense, that withdrawal will be counted as income on this year’s income tax return. 

    Contribute to a 529 College Fund

    If you have aspirations of sending your children or grandchildren to college, establishing or contributing to a 529 college savings plan is a strategic financial move. While contributions aren’t deductible on the federal level, any earnings in the account grow tax-free as long as they’re used for qualified education expenses.

    In 2023, you can contribute as much as you like to a 529 plan, but contributions above $16,000 per year ($32,000 for married couples filing jointly) may be subject to gift tax. Nevertheless, contributing now can help you leverage potential state tax deductions while investing in your loved ones’ future education.

    Not sure your child or grandchild will attend college? Funds in a 529 account can also be used for vocational and trade school tuition and fees or elementary and high school tuition costs.

    Adjust Your Tax Withholdings

    If you’re an employee, form W-4 determines how much income tax is withheld from your paycheck each month. It’s essential to review and, if necessary, update your withholding information, especially if you’ve experienced significant life changes such as marriage, divorce, the birth of a child, or changes in your income during the year.

    Adjusting your tax withholdings can help you avoid overpaying taxes throughout the year, leaving you with more money in your pocket. On the other hand, failing to update your W-4 could result in underpaying your taxes, which means needing to make a tax payment instead of receiving a refund come tax season, as well as potential penalties. Consult with a tax professional or use the IRS’s online withholding calculator to determine the correct withholding for your specific circumstances.

    If you work as a 1099-independent contractor or own a business, you should meet with your tax professional to determine if you need to make any changes to the structure of your business, or establish retirement accounts, before the end of the year. If you need help knowing what to bring to your tax professional, or how to ask the right questions, give us a call. 

    Schedule Medical Procedures Strategically

    Medical expenses can add up quickly, and the tax code provides a deduction for qualified medical expenses that exceed 7.5% of your adjusted gross income (AGI) for the 2023 tax year. To maximize your deduction, consider scheduling necessary medical procedures before the year ends.

    While not every medical need can be planned ahead of time, if you know you’ll need or want an elective surgery, try to schedule it before December 31. Similarly, if you’ve met your out-of-pocket maximums for health or dental insurance, now is the time to get all members of your family in for any remaining check-ups or follow-up procedures.

    If you don’t think they’ll meet the threshold for medical deductions this year but anticipate a large medical bill like a birth or surgery next year, consider delaying any unnecessary medical work until January to take advantage of the medical expenses deductions next year.

    Be sure to keep detailed records of your medical expenses, including bills, receipts, and insurance statements, to support your deduction claims.

    Looking Out for Your Family and Your Finances

    Looking at your finances and seeing where you can save money on your taxes isn’t just about finishing the year off strong and getting organized for tax season. It’s about making strategic moves that position you for success now and help protect and support your loved ones in the future. 

    To make sure your family is cared for no matter what the future holds, schedule a complimentary call. We’d be happy to talk with you about how we guide our clients to create a plan that protects their assets and their family for years to come.

    And don’t forget to tune in for part two of our year-end tax planning series, where we’ll explore even more strategies to help you keep more of your money where it belongs – in your pocket. 

    This article is a service of Jeannette Marsala, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.

>