December is the month when we look back at the year that was and reflect. It’s a time when words like “festivus” and “twerk” are codified in the dictionaries of record and when videos of cats playing the piano are compiled into top-ten lists and reviewed one more time before they’re lost to the annals of history.
Not all end-of-the-year traditions are so trivial. The end of the calendar year has significant legal implications that may require your immediate attention. Meanwhile, December is a great time to look back and consider whether life changes necessitate any adjustments to your personal legal documents. A little self-reflection before the holidays will certainly result in a list of things to do before Jan. 1 and fertile ground for the inescapable New Year resolutions. To that end, here are a few things that you might try to address before the ball drops on time square:
Charitable donations — Most charities make hay during the holidays, so now’s the time to make that charitable contribution, especially if you need a tax deduction in 2013.
Annual exclusion gifts — An individual can give up to $14,000 per donee in 2013 without impacting his or her lifetime or estate exclusion. A married couple can give $28,000 per donee. Be careful if you use a check to make annual exclusion gifts because, unlike charitable donations, if the gift-check is cashed after Jan. 1, the date of the gift will not relate back to the date of its delivery. It will be deemed to be a gift given in 2014.
Political contributions — Federal law imposes annual limits on certain political party contributions. 2014 is an election year, so if you’re politically inclined, consider maxing-out those party contributions before the end of the year. And then do it again on Jan. 1 or thereafter.
HSA and FSA — Don’t forget to spend down your cafeteria plan, especially if your plan sponsor has not amended your plan to take advantage of the newly authorized limited carryover provisions.
Retirement plans — Under certain retirement plans and arrangements, the owner must take required minimum distributions if the owner is older than 70 1/2, so don’t forget to take your RMDs. A failure to do so can result in some pretty stiff penalties.
Update your testamentary documents — Life changes may have impacted your estate planning objectives. Perhaps you got married or divorced. Maybe your family experienced a birth or adoption. Perhaps your children finally demonstrated to you that the protective trust provisions in your will are no longer necessary (or that such provisions need to be added). Maybe a neighbor or a good Samaritan has provided you vital assistance and you wish to include him or her in your will. December is the season of giving, so it’s naturally a good time to revisit your testamentary documents and adjust them as needed.
Review beneficiary designations — Retirement plans and insurance policies are controlled by beneficiary designations, not your will or revocable trust. Now might be a good time to ensure that your beneficiary designations are consistent with the provisions of your will, and vice versa.
Update your personal inventory — In April I recommended in this column that you consider preparing a “personal inventory” to catalogue important information about your person and your estate. If you prepared one, consider updating it as an annual tradition.
Try your best during this holiday season to take care of a few of these responsibilities in between meals and office parties. Your loved ones and you will certainly be the better for it. Happy Holidays!
Matthew Laurel Trinidad is a transactional attorney at Karp Neu Hanlon PC. His practice emphasizes business law, estate planning and probate. Contact him at email@example.com, (970) 945-2261, or visit www.mountainlawfirm.com.