It’s almost Thanksgiving - a holiday that once celebrated the harvest season. Although many of us today may not be directly connected to agriculture, we still gather on Thanksgiving with our loved ones to share whatever “bounty” we may have.
But this practice doesn’t have to begin and end with food. Why not incorporate the spirit of sharing into your overall financial strategy?
Here are a few suggestions for doing just that:
Make financial gifts. You could give shares of stock to your loved ones, or perhaps give them money to help fund their IRAs (they must have earned income, however, to be eligible to contribute to an IRA).
You can give up to $14,000 per year, per recipient, without those gifts counting against your $5.43 million lifetime exemption - an amount that you, like the vast majority, are unlikely to reach, anyway.
Invest in your children’s future. To help your children meet the high costs of higher education, you might want to invest in a college-savings vehicle, such as a 529 plan.
When you contribute to a 529 plan, your earnings grow tax-free, provided they are used for qualified higher education expenses (keep in mind, though, that Section 529 plan distributions not used for these qualified expenses may be subject to income tax and a 10 percent penalty).
Furthermore, your 529 plan contributions may be deductible from your state taxes, if that applies.
Review your insurance policies. If something were to happen to you, is your life insurance sufficient to take care of your family?
In other words, would there be enough money available to pay off your mortgage, send your children to college and help your surviving spouse meet at least some of his or her retirement expenses?
A financial professional can help you determine if your life insurance is sufficient for your needs.
And it’s also a good idea to have adequate disability income insurance, too, because even a relatively short time away from work can jeopardize your financial security.
Involve your family with your investment situation and estate plans. You will eventually want to inform your grown children, and perhaps other family members, about your investment situation and your estate plans.
Specifically, you’ll want your loved ones to know where your investments are held and who is helping you manage them; this information will be invaluable should you ever become incapacitated.
And, as you move deeper into your estate plans, involve your family with decisions relating to your will, living trust, power of attorney and other legal arrangements.
Update your beneficiaries. If you have a retirement account, such as a 401(k), and a life insurance policy, you probably had to choose a beneficiary.
These beneficiary designations are powerful - in fact, they can even override the wishes expressed in your will.
So, if you’ve gone through changes in your family situation, such as a divorce or remarriage, you’ll want to update your beneficiary designations.
Otherwise, you could risk subjecting your family members to unpleasant “surprises.”
Once the turkey is eaten and the football games have ended, Thanksgiving will draw to a close.
But by making the right moves, you can extend the thankfulness to your loved ones all year long - and throughout your lifetime.
Chris C. Hazelip, CFP, CLU, AAMS is a financial adviser for Edward Jones Investments in Tyler.Edward Jones, its employees and financial advisers are not estate planners and cannot provide tax or legal advice. You should consult your estate-planning attorney or qualified tax adviser regarding your situation.