FAQs – YEAR-END PLANNING MYTHS AND FAQS

• Myth: Once the holiday season begins in November, it is too late to do any planning. Everyone is out of town.

Fact: It is never too late to do your planning, as long as you have the capacity. Many people find that addressing their estate planning before the end of the year can help them start the new year on a good note knowing that they and their families are protected.

Also, income tax returns happen every year. There are a number of savvy moves you can make to save money on your tax return. But the December 31st deadline can get in the way if you don’t get started early enough.

• Myth: I am running out of room in my file cabinet because I have to keep every bill, statement, or receipt for at least 7 years.

Fact: There are only certain items that need to be kept for 7 years. These include state and federal income tax returns, W-2s and 1099s, receipts and other supporting documents for tax deductions.

Items such as bank and credit card statements and other monthly bills only need to be kept for a month. Once you have verified that your account balances are correct, there is typically no need to hold onto them.

There are some items that you may need/want to hold onto for a longer period of time, such as loan documents, investment documents, birth certificates, marriage licenses, divorce records, military records, social security cards, deeds, wills/trusts, and automobile titles.

It may also make sense to consider electronic storage of your documents. Scanners and cloud-based document storage are more affordable than ever and may be a way to avoid feeling overrun with paper.

Frequently Asked Questions:

With respect to estate planning, why does it matter that the year is coming to an end?

Because the year is coming to an end, it is a great opportunity to ensure everything is in place for a successful and financially safe new year.

Also, for things such as 401(k) contributions and funding Health Savings Accounts, the federal government allows you to contribute a maximum amount per year. Towards the end of the year, if you have found that you have not taken full advantage of these, it may be a great opportunity to save more for your retirement and your future medical needs.

Trust attorney Schoemakers to help you determine the best way to manage your estate. Call now to schedule an appointment with an estate planning lawyer in Clear Lake, Texas.

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