Estate Planning Strategies to Utilize Before the End of the Year

With the end of the year quickly approaching, it is a good time to make some important estate planning decisions before 2020 rolls around. This article reviews some of the often overlooked but particularly powerful estate planning strategies that you might consider putting into practice.


Convert Traditional IRAs into Roth IRAs


Several years ago,  converting a traditional IRA to a Roth IRA was not always an available option. Instead, this was limited to the modified adjusted gross income of $100,000 or less. This restriction, however, has since been removed. Consequently,

many people have realized that the tax rates on conversions done this year can be preferable to higher future tax rates that might be placed on an account’s earnings. It might be a better idea to convert an IRA this year instead of doing it sometime later.


Utilize the Home Sale Gain Exclusion Break


Home prices have been increasing over the last several years. Fortunately, gains of up to $500,000 are available on the sale of a principal residence for qualified married couples and $25,000 for unmarried single individuals. To qualify for this break, a person must have owned and used the home as a principal residence for at least two years during the five years ending on the sale date. By utilizing this strategy, it is possible to achieve a substantial financial break.


Take Advantage of the 0% Tax Rates on Investment Income


Following the Tax Cuts and Jobs Act, the federal income tax rate on long term capital gains as well as qualified dividends  is currently 0% for many people. Even if your income is too high to benefit from this higher rate, you might still have beneficiaries who want to take advantage of the 0%. In these situations, it might be a good idea to give these beneficiaries some assets that they can sell and then pay 0% on the federal income tax. It is important to understand, however, that if you transfer securities to a child there is the possibility that the “kiddie tax” could be placed on these assets, which would defeat the purpose of this transfer in the first place. 


Remember Opportunity Zone Investment


One of the advantages of the recent tax form was that it created incentives to encourage investment in areas needing development. If you are debating selling assets that would generate large capital in 2019, you can defer the gain by investing an equal amount in an opportunity zone fund within six months of the sale. It is possible to have up to 15 percent of the gain forgiven entirely.


Speak with an Experienced Estate Planning Lawyer


These are just some of the estate planning strategies that you might decide to utilize this year. If you have questions or concerns about the estate planning process, one of the best steps that you can take is to speak with an experienced estate planning attorney. Contact Ettinger Estate Planning today to schedule a free case evaluation.

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