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Estate planning tips for December

On Behalf of | Nov 28, 2022 | Estate Planning |

The end of the calendar year provides ample opportunity for Maryland residents to spend time with loved ones and take stock of where they are in their lives. It may also be an ideal time to review your estate plan and whether it still meets your needs.

Consider making a gift

The IRS allows you to make gifts of up to $16,000 per person per year without triggering and tax paying or reporting requirements. Making gifts allows you to see the impact that your generosity has made on your loved ones while also reducing the size of your estate for tax purposes. Distributing your assets today can also help to simplify the process of settling your affairs after you pass as there will be less to account for.

Consider creating a trust

A charitable remainder trust may be an ideal estate planning tool to help manage cash flow during times of high interest rates. Instead of borrowing money from the bank, beneficiaries receive distributions from the trust for a predetermined amount of time. At the end of the term, any money not distributed to beneficiaries is given to charity. An irrevocable life insurance trust may also be worth considering prior to 2026 when estate exemption rules are set to change. If no action is taken, exemption amounts will likely fall from the current level of $12.06 million per person.

Ideally, you will review your estate plan at least once a year even if nothing significant happens. Doing so can help to ensure that your will, trust or other plan components are structured properly and are still necessary. You can review plan documents on your own or with the help of an adviser if that makes the process easier.