3 Estate Planning Tips to Consider When Creating Your 2022 Cash Flow Game Plan

There’s a lot to consider when it comes to estate planning in the new year — especially when it comes to tax deductions.

If you are unsure about how much money you will need to allocate towards taxes and charitable contributions when planning for the year, look no further! 

Larry Heller, CFP® informs you about common mistakes that are made when estate planning. Read on to learn about some important tips that can help you save on taxes and make sure your money is going to the right places. 

1. Know Your Tax Bracket

One of the biggest mistakes you could make at any stage of estate planning is not knowing the tax bracket you fall under — both now and in the future. This can determine how little or how much you are responsible for paying, depending on your income. 

If you are unsure about your tax bracket, there is a possibility you are paying too much each year, which can drastically affect your income in the future. 

Unfortunately, many people and their accountants do not look at future tax brackets and rates, which can severely affect your deductible taxes. 

It is very possible that you may be in a lower tax bracket from when you retire, changing the dollar amount that will have to be paid. 

So, if you don’t have any estate planning done yet, this is the perfect time to look into roth conversions and how it may affect you. 

2. Understand the Difference between Standard versus Item Deductions

If you are charitably inclined, you might have a large portion of your estate going towards charitable donations. In this case, it is very important to understand the difference between standard deduction and item deductions. 

The first step is understanding your tax bracket and where your level of income lies within your state’s regulations. 

If you are living in a state that has standard deduction rather than itemized deductions, you can contribute a large amount of cash without it getting deducted from you. 

To make the most of your donations, you can partake in a donor advised fund. This allows you to make one big contribution in the span of one year, get the deductions from it and give it to the charities over the course of a lifetime. 

Creating a donor advised fund can be a little bit tricky, but not to worry, we can help you with that! 

3. Keep your Beneficiary Designations, Insurance Policies, and Retirement Accounts Updated 

In most cases after creating a will, people will push it to the side and not think about it for years to come. 

This is the number one mistake you can make. 

Not updating your estate when it comes to beneficiaries, your power of attorney, healthcare proxies and charitable contributions can cause your assets to be placed in the wrong hands. 

There are countless stories of people coming to us with ex-spouses or missing children still named as beneficiaries. 

Additionally, due to the extensive amount of paperwork required to fulfill insurance plans, charitable contributions and any other asset allocation requests, it is extremely important to let your trustees, your executor and/or your close family members know where your documents are. 

To learn more about estate planning and how to make the most of your charitable contributions, listen to episode 98 of Retire Right Podcast or contact us via our contact page.