End-of-Year Check-In: Are Your Investments Aligned with Your Estate Plan?

As the year winds down, it’s the perfect time to reflect on your financial goals and ensure your investments and estate plan are working together seamlessly. If you’ve experienced significant financial or personal changes this year — or even if you haven’t — an end-of-year check-in can help you maximize tax benefits, avoid costly mistakes, and keep your legacy on track.

Here are a few key areas to review before the clock strikes midnight on December 31.

1. Review Your Beneficiary Designations

Beneficiary designations on accounts like 401(k)s, IRAs, and life insurance policies override what’s written in your will or trust. This means outdated designations can cause unintended consequences.

Example: Imagine you remarried but forgot to update the beneficiary on your IRA. If your ex-spouse is still listed, they’ll inherit the account — even if your estate plan says otherwise. Double-check that all beneficiary designations reflect your current wishes.

2. Maximize Tax-Advantaged Gifting

The end of the year is your last chance to take advantage of the annual gift tax exclusion for 2024, which allows you to gift up to $18,000 per recipient without incurring gift taxes.

Example: If you want to reduce the size of your taxable estate, you could gift $18,000 to each of your three children and their spouses. If you’re married, you and your spouse can combine your exclusions to gift $36,000 per person, transferring up to $216,000 out of your estate in one year.

3. Consider Charitable Giving

Donating appreciated assets or setting up a Donor-Advised Fund (DAF) can reduce your taxable income while supporting causes you care about.

Example: If you donate stock valued at $50,000 (originally purchased for $20,000) to a DAF, you avoid paying capital gains tax on the $30,000 appreciation and get a charitable deduction for the full $50,000, all while leaving a charitable legacy.

4. Align Your Investments with Your Estate Plan

Your estate plan and investment strategy should work hand-in-hand to protect and transfer your wealth efficiently. Consider whether your assets are properly titled and whether trusts could help reduce taxes or simplify transfers.

Example: If you’ve invested in rental properties, placing them in a revocable living trust can keep them out of probate, ensuring your heirs receive them quickly and efficiently.

Finish the Year Strong

A little year-end planning can go a long way toward securing your financial future and protecting your legacy. Whether you need to update beneficiary designations, make tax-savvy gifts, or ensure your investments align with your estate plan, taking action now can save you time, stress, and money later.

Contact us today to schedule your end-of-year estate planning review. Let’s make sure 2025 starts off right!

Charitable Planning: Beyond Tax and Legal Strategies

The following is a guest post by Erinn Andrews of The Give Team.

What life experiences shaped who you are and what you care about? What values guide how you raise your family and what legacy do you hope to leave behind? How do you give back? Do you volunteer, help family members in times of need, donate to your kid’s school? There are many different ways individuals give back and practice their culture’s traditions of generosity and care.

Charitable planning often comes up in the context of estate planning as we think about trusts, bequests, annuities, and strategies to potentially reduce your estate’s tax burden. In short, charitable giving in an estate planning context often amounts to testamentary giving—giving after we die. However, there’s more to charitable planning than many of the “tools” we traditionally think about in this context.

For charitably inclined clients in the busy life phase of growing their wealth and their families, here are some simple and effective ways to be thoughtful about giving back without having to carve out lots of extra time.

Vision/Strategy: Spend an evening on your own or with your partner talking about what values are important to you. What causes and populations do you care about? What geographies are priority areas?

Budget/Vehicle: The next time you meet with your financial advisor, ask them to help you figure out which types of assets you should be donating to charity (hint: if you have appreciated assets like stock, it’s often advantageous to donate that rather than cash). Ask your advisor if a donor-advised fund might be a good charitable vehicle to keep track of your donations in one place. And ask Shafae Law about what other tax strategies and estate planning strategies make sense for your situation!

Family Engagement: Discuss whether you want to involve your family, if at all. Do you want to give your kids a gift-giving budget, find volunteer opportunities, etc.? How would you like to instill your values in your children?

Grantmaking: Chances are, there are many amazing nonprofits out there working on the topics you care about. Explore going beyond the “usual suspects” (like your alma mater, kids’ school, religious institution, and large-brand-name-nonprofit). There are lots of local, often smaller, community-based nonprofits doing incredible work where your donations can go extra far. You might do online searches for foundations that support causes you care about to learn about the great nonprofits they’re funding. You can take advantage of the due diligence these funders have already conducted to know these are likely very strong organizations.

Some folks like to lead themselves through these steps, while others prefer to work with a trusted advisor to help them along the way. With GiveTeam, we walk individuals or couples through a 1-hour Reflection Session in which we discuss their values and develop a charitable mission statement. Then, a few weeks later, we schedule a 45-minute Delivery Meeting in which we present 9-12 US-based (often local) nonprofits we’ve hand-picked for you to consider funding based on your strategy. And just like Shafae Law, we charge a flat-fee for this service making it an incredibly accessible option for folks like yourself.

Whether you engage with a firm like GiveTeam or guide yourself through these suggestions, we encourage you to spend some time reflecting on what you care about and being intentional with your charitable planning, just as you are with your financial planning and estate planning. And then, come December, you can spend more time relaxing with family rather than rushing through your end-of-year checklist.

Erinn Andrews
erinn@thegiveteam.com
www.thegiveteam.com

Integrating Charitable Giving into Your Estate Planning

Charitable giving is a noble way to ensure your legacy lives on, impacting future generations and supporting causes close to your heart. When structuring your estate plan, there are several philanthropic vehicles to consider, each offering unique benefits and considerations. From bequests to sophisticated trusts and donor-advised funds, understanding these options can help tailor your charitable contributions to align with both your financial and altruistic goals. Here's how you can effectively incorporate charitable giving into your estate planning.

Key Charitable Vehicles in Estate Planning

1. Bequests: One of the simplest ways to make a charitable gift is through a bequest contained within your living trust. This method allows you to specify an amount of money, a percentage of your estate, or specific assets to be given to charity. Bequests are highly flexible, easy to arrange, and can significantly reduce the estate tax burden on your heirs.

2. Charitable Trusts: These are more complex instruments that provide valuable tax breaks and can be tailored to suit different goals:

• Charitable Remainder Trusts (CRTs) allow you to receive an income stream or allow your designated beneficiaries to receive an income stream for a period, after which the remaining assets go to your chosen charity.

• Charitable Lead Trusts (CLTs) provide an income stream to the charity for a set term, and thereafter, the remaining assets revert to you or pass to your heirs, potentially reducing or eliminating gift and estate taxes.

3. Donor-Advised Funds (DAFs): DAFs act as a charitable investment account. You contribute assets which immediately qualify for a tax deduction, and then recommend grants to charities over time. This vehicle is particularly useful for those who wish to remain actively involved in philanthropy without managing a private foundation.

4. Private Foundations: For those with substantial assets, starting a private foundation can be an effective but complex way to control charitable giving. Foundations can fund various charities, offer family members roles in its administration, and create a lasting institutional legacy. However, they require significant management and adhere to strict regulations.

5. Endowments: Setting up an endowment can provide a charity with a permanent source of income, as the principal is kept intact while investment income is used for charitable purposes. This option is appealing if you want to ensure long-term financial support for a charity.

Strategic Considerations for Charitable Giving

Tax Implications: Each vehicle has specific tax benefits and implications. For example, bequests can reduce the size of your taxable estate, while contributions to CRTs and CLTs may reduce both income and gift taxes. Understanding these nuances is crucial in maximizing the tax efficiency of your charitable efforts.

Timing of Impact: Some options, like direct bequests or contributions to DAFs, can provide immediate benefits to charities. Others, such as endowments or CLTs, are structured to give over a long period. Consider when you want your chosen charity to benefit from your gift.

Control and Legacy: Decide how much ongoing control or involvement you wish to have. DAFs and private foundations allow for continued involvement in donation decisions, whereas bequests and endowments are generally one-time arrangements.

Family Involvement: If involving family in philanthropy is important, consider vehicles that support this goal. DAFs and private foundations can engage multiple generations in charitable activities.

Charitable giving within estate planning is not just a way to reduce taxes—it's a strategy to make a meaningful difference in the world while honoring your values. Whether it’s supporting a local community, contributing to global causes, or advancing scientific research, the right charitable vehicles can integrate your philanthropic objectives seamlessly into your overall estate plan. As always, consulting with legal and financial professionals can provide guidance tailored to your personal circumstances, ensuring your charitable contributions are both impactful and aligned with your estate planning goals.