Your Year-End Estate Planning Checklist
Rembolt Ludtke Estate Planning Practice Group
Tim Moll
As we approach the end of 2023, there are a number of potential planning steps you should consider prior to December 31.
- Retirement Plans: Complete all required minimum distributions. For those over 70½, consider a charitable rollover.
- Roth Conversion: Consider whether this could be the appropriate time to roll some retirement assets into a Roth IRA.
- Charitable Gifts: Consider direct gifts to reduce taxable income and benefit charity. Consider gifts of appreciated stock (to avoid capital gain and obtain a tax deduction) or gifts of grain (to exclude grain from income). Consider using donor advised fund to front-load charitable deduction to offset income. Consider charitable trust planning to defer gains on sale of assets.
- Family Gifts: Consider annual exclusion gifts to benefit family and move assets out of donor’s estate. Annual exclusion gifts can be doubled in a single transaction by completing gifts on December 31 and January 1 of the following year. Consider gifts of entity interests to obtain discounts. Consider establishing life insurance trusts now to use this year’s annual exclusion for premiums.
- Harvest Gains/Losses: If significant gains or losses have already been recognized for the year, consider additional transactions (such as sales of portfolio assets) to create losses (to offset gains) or to create gains (to utilize the losses). NOTE: The last trading day for 2023 is December 29.
- Bracket Planning: Take action to sell assets or otherwise accelerate gains/income to fill up tax brackets or to take advantage of current tax rates (current rates expire after 2025).
- Year-End Deductible Purchases: For farmers and business owners, complete purchase of depreciable assets and place them in service prior to the end of the year to offset income.
- Medical Deductions/Deductibles: Consider incurring medical expenses this year for elective procedures if (a) insurance deductibles have been satisfied so insurance will cover procedures this year that may be subject to a deductible in next year; or (b) if current medical expenses exceed 7.5% of AGI this year and would create a tax deduction if incurred this year.
- Pass Through Entity Tax Election: For persons who operate a Nebraska business taxed as a partnership or S corporation, consider electing to pay current and/or past Nebraska income tax obligations related to the business directly to the Department of Revenue. This reduces federal flow-through income and allows the business owners to avoid the $10,000 cap on state and local tax deductions.
- Review Portability Election Decisions: For clients who have lost a spouse within the last five years, consider whether a portability election is appropriate to claim the deceased spouse’s federal estate tax exemption.
The Rembolt Ludtke Estate Planning team is available to assist you on all of your estate planning matters. Visit our website to view attorney bios, read more about our practice group, or to schedule a meeting with one of our team members.
This article is provided for general information purposes only and should not be construed as legal advice. Those requiring legal advice are encouraged to consult with their attorney.
