Year End Planning Ideas


Volume 3 • Issue 11 • December 2013

The Counselor is a monthly newsletter of Hallock & Hallock dedicated to providing useful information on estate planning, business succession planning and charitable planning issues. This month's issue will discuss year end planning ideas.  If you are interested in learning more about the ideas discussed in this newsletter please contact us for an initial consultation.

With 2013 drawing to a close and 2014 right around the corner, it is a good time to look at planning strategies you should be considering before the end of the year.

1. Annual Exclusion Gifting – Each person is entitled to gift up to $14,000 per person, per year ($28,000 for a husband and wife) free from gift tax implications. If you don’t use it, you lose it. This powerful planning strategy can be enhanced by gifting interests in a partnership, LLC or other entity where the opportunity exists to claim a discounted value.

2. Charitable Gift from Your IRA – In 2013, an individual age 70½ or older can make direct charitable gifts from an IRA (Roth or Traditional), of up to $100,000 to public charities. The distribution cannot be to a donor advised fund, supporting organization or most private foundations. These distributions, which can include your required minimum distribution, are made tax-free. There is no charitable deduction, but not paying tax on the otherwise taxable distribution is the equivalent of a charitable deduction. This opportunity is scheduled to phase out at the end of 2013.

3. Buy-Sell Agreement Valuations – Many Buy-Sell agreements require an annual agreement by the owners as to the value of the company. Failure to properly value the company as required by the agreement may result in a serious discrepancy (high or low) in the value given upon the occurrence of a triggering event.

4. Annual Review of Estate Planning Documents – Things are always changing. Things change in our personal life because of births, deaths, disabilities, divorces, etc. Laws are also very likely to change from time to time. The last 15 years have been a roller coaster when it comes to the impact of income and estate tax laws on estate planning. Many older plans have been prepared to avoid an estate tax through the mandatory use of the credit shelter trust. But, based upon the current estate tax exemption of $5.25 million per person (this is going up to $5.34 million on January 1) most individuals do not have a potential estate tax problem. However, because the plan has not been updated to reflect these increased exemption amounts, these same individuals may end up paying capital gains tax unnecessarily. Regular annual review and updating of your trust will go a long way toward making sure your trust works as well when it needs to as the day you signed it.

5. Annual Business Review Meeting – The annual business review meeting is an opportunity to review your organization’s legal documents to ensure that they are complete, up to date and in compliance with current law. It is also an opportunity to review your exit goals to determine what actions can and should be taken in the coming months to help achieve those goals. This is a meeting that should include your insurance, financial, legal and tax advisors.

We hope 2013 has been a great year for you and that 2014 is even brighter. Please call us if you would like assistance with any of the strategies mentioned in this newsletter. Merry Christmas and Happy New Year.

This Newsletter is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.