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'Tis the Season: Four Year-End Financial Strategies Before 2023

November 2022

'Tis the Season: Four Year-End Financial Strategies Before 2023

Lucas Maxwell, CFP®
Senior Vice President
Trust & Family Office Advisor

Financial Implications to Consider by 2025

The current law provides a significant opportunity to save on future estate taxes. The 2017 Tax Cuts & Jobs Act ("TCJA") doubled the unified credit, generation-skipping and lifetime giving exemptions from $5.6 million to $11.2 million per person, indexed for inflation. As of 2022, that number is $12.06 million per individual or $24.12 million per couple without concern for estate transfer taxes.

The rate currently sits at 40% on amounts over the Federal exemption, so failure to maximize one’s lifetime exemption over the next several years could cause an additional estate tax bill of $2.4 to $4.8 million or more!

Of course, setting up a trust is just one of many financial strategies to consider before 2023 comes. Here’s what you need to know to make an informed decision that works best for you and your family between now and then.

Four Year-End Strategies

Estate planning is just one of many aspects of wealth management you should concern yourself with. This close to the end of the year, it’s prudent to take inventory of your finances and clear up anything needed before the calendar flips to a new year. And that largely involves organizing and preparing for taxes.

Here are four year-end strategies that may help with your situation:

1. Given the economic volatility, we’ve been methodically harvesting losses throughout the year. Tax-loss harvesting is an ongoing practice that shouldn’t wait until year end. If you don’t want to carry losses forward, look to realize gains to offset them.

2. Clients over 70.5 with charitable donations to make should consider a Qualified Charitable Distribution from an individual retirement account (IRA). This gives you a tax haven while satisfying the 2022 Required Minimum Distribution.

3. The gift-tax exclusion (not to be confused with the estate tax exclusion) is another consideration by year end. Individuals can gift up to $16,000 to another individual (or $32,000 per spousal couple). In most cases, there is no reporting required, and no taxes owed.

4. For Missouri clients, the SALT Parity Act (Missouri SB No. 1154) offers benefits for individuals earning income from various partnerships and pass-through entities.

Ultimately, the goal of these strategies is to focus on tax planning and ensure your assets do what you intend for them to do later in life and beyond. This can range from leaving a multi-generational legacy all the way to leaving a legacy for a charity, and now is the perfect time to consider these things before the window closes and your exempted amounts cut in half.

Of course, you shouldn’t decide alone. In any matter of estate or tax planning, it’s crucial to partner with trusted advisors, CPAs and attorneys for a regular review of your estate planning documents in conjunction with a broader financial overview. Contact us today to find out what the most fiscally sound moves are to solidify your family for generations to come.
Lucas Maxwell, CFP®
Senior Vice President
Trust & Family Office Advisor
Lucas serves as both a trusted partner and advocate, offering clients objective advice based on diverse industry experience. He is dedicated to understanding, prioritizing and then collaborating to achieve each client’s unique goals through strategic investment planning, tax management, and estate planning.

DISCLAIMER: This newsletter is intended to provide thought-provoking commentary. The information presented herein has been obtained from and is based upon sources and vendors deemed to be reliable, but may be incomplete. Parkside Financial Bank Trust does not itself endorse or guarantee, and assumes no liability for, the accuracy or reliability of any third party data or the financial information contained herein.

Parkside Financial Bank Trust is not a tax advisor. All decisions regarding the tax implications of your investments should be made in consultation with your independent tax advisor. We will work with you independent tax and/or legal advisor(s) to help create a plan tailored to your specific needs. The material contained herein is for informational purposes only and does not constitute tax advice. Investments are not insured by the FDIC or any federal government agency, provide no bank guarantee, are not a deposit and may lose value.

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