Year-End Financial Tips

Posted by Heidi Clute - November 8, 2011 | Filed under: Archived Articles

For many of us, the last page of the calendar is usually filled with professional and social obligations. The month of December is quickly approaching and signals the end of one year and the pending arrival of a new one; so it makes sense to set aside a few hours to firmly position your finances for the coming New Year and "tax season". Here are some year-end financial tips to help you strengthen your financial standing in 2012:

  1. It is important to realize that long-term capital gains tax rates will remain relatively low in 2011 and 2012. Therefore, you may wish to trigger these taxes before 2013, in anticipation of capital gains tax rates increasing. You may also want to trigger capital gains sooner than later if you think that you will be in a higher tax bracket going forward.
  2. If you are interested in providing a monetary gift, now is the time to determine exactly how much you would like to give, keeping in mind the annual gift-tax exclusion. The annual tax exclusion amount applies to a total gift to one person, not to a grand total of all gifts in a year. For 2011, an individual is allowed a gift of up to $13,000.00 tax free. Federally recognized married couples may exclude a gift of up to $26,000.00 to an individual. If you are doing a joint gift and either gift exceeds $13,000.00, special circumstances apply. Please refer to the gift splitting rules.
  3. When considering charitable donations, consider giving appreciated assets, such as stocks. The full value of appreciated assets may be deductible and you may be able to avoid paying capital gains tax.
  4. You may also wish to consider re-setting your cost basis with your appreciated assets- in other words, sell the assets with a gain and then buy them back at the current value. This way any further appreciations can then be deferred to other years.
  5. December is a great time to review your portfolio and decide if it is positioned where you want it to be. Market fluctuations may have affected your asset allocation, and it may be time to readjust. You can compare year-end financial and investment statements to the previous year, this will help to highlight changes to your financial situation. Review your retirement savings at this point too – does it make sense to maximize your contributions in the coming year or should you pay the tax now and build your after tax investments?
  6. Review your Trust(s), Will(s), Power of Attorney (POA), and Healthcare proxies to make sure they’re current and they still reflect your wishes.
  7. Remember that January is a fresh start. Set goals for the following year that match your dreams. Perhaps you wish to start a business, take a college course, or travel the globe. Take the right steps to make these dreams a reality. Make some of your financial goals easily attainable, some that require a little work, and some that are a stretch. This can be a challenging and fun exercise. Set checkpoints in the coming year which will trigger your review and remind you to keep working towards your financial goals and dreams.

Finally, feel free to visit and download “Your Financial Health Checkup” article to make sure you’ve addressed your financial well being completely. Having taken the time to organize your finances from this past year and into the next, perhaps you’ll feel more confident as you tackle the perennial struggle with other New Year’s Resolutions. Good luck and Happy New Year!

Heidi Clute, CFP® of Clute Wealth Management in South Burlington, VT and Plattsburgh, NY, an independent firm and registered investment advisor that provides strategic financial and investment planning for individuals and small businesses in the Champlain Valley region of New York and Vermont. Clute Wealth Management and LPL are separate entities. The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendations. LPL Financial does not offer legal or tax advice.

Securities offered through LPL Financial. Member FINRA/SIPC.

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