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Fall Planning for Your Finances

Know the moves to make before year end to start 2019 on the right foot.

Fall means the return of school, cooler weather and the end of year approaching. The changing of the season often gives many of us the desire to tackle new ambitions for next year while also making a final push on goals for the current one. For your finances, there are a number of moves you can make in the last months of 2018 to help finish the year strong and set yourself up for a productive and successful 2019.

Revisit Your Asset Allocation

Year end is a good time to revisit your asset allocation, and help ensure that your investments are still apportioned among stocks, fixed income, cash and other asset classes in a way that fits your goals and risk tolerance. Given the nine-year bull market for stocks, a greater share of your money may be invested in and overweight equities than what you might have traditionally allocated for, says Financial Advisor and Senior Vice President Lori Sackler.

“We sit down with our clients to gauge their risk tolerance and make sure their investment choices are still what they want them to be,” said Sackler, who was named to Forbes’ Top Women Wealth Advisors list in 2017 and 2018. “You may decide you don’t want so much equity exposure, or need to consider hedging your positions with other investments.”

Sackler is advising some of her clients to consider alternative investments such as hedge funds and real estate, which generate returns with lower correlation to the returns of the stock market. Investors may also want to have funds available to purchase securities if there is a drop in price, Sackler says. “You may want to take advantage of dips in the market. If there is a downturn are you ready with cash on the sideline?”

Plan for Your Tax Return

The comprehensive tax reform passed in late in 2017 may have boosted your take-home pay. Still, many living in high-tax states may see their overall 2018 tax bill increase due to new caps on how much real estate, state, and local taxes can be deducted from their federal return.

“The tax rates came down but you may have lost some tax deductions,” said Sackler. “Have a conversation with your accountant to determine what your new liability may be.”

Investors in high tax states should consider moves in their portfolio to limit the taxes they pay on investments. Review your portfolio to see if you want to put more of your money into tax-deferred or tax-exempt accounts.

If you’re not already, also consider fully funding your employer-sponsored retirement plan, such as a 401(k), since your contributions can be made on a pretax basis. You can save up to $18,500 each year through your 401(k) plan, with up to $6,000 in additional contributions for those over 50.

Estate Planning

Sackler encourages her clients to update their will and other estate planning documents as needed before year-end. More broadly, she says year-end is good time to take stock of any changes the past year brought to your family, and help ensure your estate overall plan reflects that.

“Did you gain a new grandchild or daughter-in-law?,” said Sackler. “It’s important to update your estate plan as you would your wealth plan.”

Those planning to give financial gifts to family members should keep in mind the annual gift tax exclusion limit of $15,000 for 2018 ($30,000 for couples) and look to make those contributions before year-end. Though the federal estate tax deduction rose to $11.18 million as a result of the new tax bill, Sackler advises her clients that individual states often have lower exemptions. Given that, you may want to share some of your estate with your family today to help them with their own finances. Setting up trusts and gifting to reduce your overall estate tax liability and providing for education expenses for family members through a 529 plan or direct gift to an institution are ideas you might want to consider.

Charitable and Holiday Giving

During the holidays, many feel the call to give back through charity. When making your gifting plans, you need to also decide whether you want to give cash, appreciated securities, or through a gift of your own time.

Another option for giving back is a donor-advised fund, which provides potential tax advantages while helping you support your favorite causes.

“Sit down and determine your thresholds for how much you want to give,” said Sackler. “Don’t wait until December and then make last-minute decisions on giving that aren’t carefully considered.”

Before buying gifts for everyone on your list or planning the family ski trip, Sackler suggests first setting a budget for planned year-end spending, also keeping in mind any service providers and special people in your life you’d like to give holiday bonuses to.

“What gifts do you need to buy and what is everything going to cost?” says Sackler. “Set some limits before you go overboard so you can be ready to face bills in January.”

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