Financial experts say the fall cleanup you should be thinking about before the end of the year approaches goes beyond your yard.
Some of the tips to declutter your finances and get other things in order may be easy to overlook with everyone’s busy schedules.
Kathleen Sablone, co-chief planning officer with Boston Financial Management, has two suggestions when it comes to tax planning.
The first is accounting for charitable contributions before December 31st.
Secondly, she recommends reviewing nonprofitable investments for a strategy known as “tax-loss harvesting” for a lower tax bill.
“It means basically taking things that are at a loss and selling them so that you can net it against your capital gains for the year,” said Sablone.
She said another thing to look at before 2024 comes to a close is your insurance coverage, including those who have a homeowner’s policy.
“Your excess liability or umbrella insurance may need to be increased over time. Many people, we find, have lower and lower amount in place than they really should,” she explained.
For families with kids off to college, it’s a reminder to take care of important legal documents if you haven’t done so already.
“You want to make sure now that they’re an adult, they’re 18, that they have their own documents in place,” said Alisa Kim O’Neil, chief planning officer with Boston Financial Management.
Kim O’Neil said another thing you should take care of is a durable power of attorney.
That’s a legal document in which you appoint a person you trust to make financial decisions on your behalf if you are unable to do so.
“Another one is the health care proxy. This is the individual that you name to make medical decisions on your behalf and to describe to the health professional what kind of treatments you can receive,” said Kim O’Neil.
She shared an important clarification for parents with kids who are off to college.
“Your child is out of state, for their education, and something happens to them. You do not, as a parent, have an immediate right to have any information about their medical condition or their medical treatment,” explained Kim O’Neil.
She said people should make sure they know about FERPA, which stands for Family, Education, Rights and Privacy Act.
This gives the parent the right to access the child’s grades and educational information.
“If you’re paying the tuition, you want to be able to see what you’re getting for that investment. Unless your child signs off on that, you have no access to that information,” she said.
For retirees, another important step to think about before the end of the year pertains to required minimum distributions.
That’s the amount you must withdraw from your retirement accounts annually starting at age 73.
“If you missed that distribution, there is a 25% excise tax penalty that you need to pay,” added Sablone. “A lot of the custodians have some processing time, so you don’t want to wait until the last minute to get that started.”
Some other general steps to keep tabs on your financial goals and strategies to plan for a new year include taking a closer look at your spending habits, monitoring your debt and checking your credit report.
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