Three Year-End Planning Opportunities for Individuals

by Jordan Reback, MBA, Nisivoccia LLP | November 29, 2023

As taxpayers and their families approach the end of 2023, many may be asking, “What should I be doing?” or “What can I do?” Year-end planning, specifically as it relates to charitable giving, estate planning and financial planning, are tremendous areas to take advantage of planning opportunities.

1. Charitable Giving

There is a reason why seasonality impacts not just the financial markets, but also the charitable markets as well. Spending time with family and friends allows people to talk about everything from where they will be spending their holiday season to which charities they may be donating to by the end of the calendar year.

The IRS requires charitable organizations to send out disclosure statements/charitable donation letters when contributions exceed $75. If donations are below $75, taxpayers may not receive a copy of a letter from the organization, so it’s important for accountants to inform their clients to keep copies of their bank statements or receipts to substantiate the donations made.

Additionally, donating clothes, books, household items and even your personal time means the world to those in need, but also provides clients a way to benefit personally.   

2. Estate Planning

As time passes, we continue to realize the importance of family and spending as much time with them as possible. Conversations pertaining to wills and inheritances may be uncomfortable, but they are important. It may or may not be surprising that 67-70% of individuals in this country do not have a will. This is a staggering number. Setting up a will to make sure one’s assets, possessions and children are cared for in the way they desire is pivotal. Signed, handwritten wills may work, but there is always the possibility that legitimacy may come into question, so it is best that an attorney be used.  

Married couples who have tied the knot recently may be surprised to know that preparing joint wills after marriage may be best as avoiding ambiguity and confusion help couples steer clear of tension or friction amongst themselves.

In addition to wills, making gifts to individuals is a great planning tool to preserve wealth in a family. The various ways families can distribute assets (transferring cash, equities and an ownership percentage in a business) to younger generations should be considered during estate planning meetings with clients. 

3. Financial Planning

As clients discuss financial planning and wealth preservation with friends and family, everything from U.S. Treasuries, stock market equities and muni-bonds may be recommended. Over 40 years, we have seen interest rates trend to zero, but now the Federal Reserve has increased interest rates to 5.5% to stem inflation.

As a result, for the first time in a very long time, individuals and businesses have an alternative. Equities have been sold and money is now earning at least 5% in U.S. Treasuries, CDs and money market accounts. There is a big concern regarding inflation having an impact on a portfolio’s annual return for the next 10 to 15 years as the U.S. continues to transition manufacturing out of China and back to the U.S. (onshoring). As history has shown us, during inflationary periods, there is margin compression in stock market equities. Individual Retirement Accounts (IRAs), 401(k)s and 529 plans may not perform as well, as passive investing historically struggles during inflationary periods. CPAs should speak to their clients about being more active regarding their portfolio, and recommend the use of a wealth management expert, if applicable. 

Jordan R. Reback

Jordan R. Reback

Jordan Reback, MBA, is the tax supervising senior at Nisivoccia LLP.

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