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Year end financial and estate planning in Washington, DC

The end of 2013 is rapidly approaching, and tax time is not far behind. As such, this is a good time to make any needed adjustments to a Washington, DC resident's financial and estate planning strategies. A thorough review of existing documents and strategies could yield additional opportunities to avoid tax liability.

No one can predict when a major life change will occur or tax laws will change. When people get married or divorced, pass away or have children, a change in estate planning documents may be needed. Without a periodic review of these documents, assets might end up with an ex-spouse or a new grandchild may not receive a portion of a grandparent's estate. Further, a change in tax laws could expose an individual to unnecessary tax liability.

Gifting is one way to share the wealth with children and grandchildren during a person's lifetime. Individuals are able to gift up to $14,000 to each person without it counting against the federal estate tax exemption. Gifts are tax-free to both the person giving and the person receiving.

In addition, items such as college tuition and insurance can be paid directly without any tax consequences for the receiver. Adding additional monies to tax-deferred or tax-free accounts may also be helpful. Retirement accounts and insurance policies fall into this category.

Many Washington, DC residents consider their estate plan final once an original set of documents is executed. This is not always the case. Many estate plans need consistent upkeep in order to give the person making the plan and future generations the most benefit from the assets. No one wants to pay more taxes than they have to, and estate planning can help keep taxes at a minimum.

Source: The Huffington Post, Planning Now: Back to the Basics, Jordan Waxman, Dec. 18, 2013

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