3 Simple Year-End Planning Tips

A "wait-and-see" approach could cost you. Consider these moves before year-end.

couple meeting with advisor

Podcast Transcript

Host: Chelle Gonzo, Director of Business Strategy, Wells Fargo Private Bank

Guest: Tony McEahern, Head of Wealth Planning, Wells Fargo Private Bank


As we approach the end of 2017, tax reform continues to be a hot topic, creating plenty of planning uncertainty for people.

Hello, I'm Chelle Gonzo, Director of Business Strategy for Wells Fargo Private Bank, and this is "Your Financial Journey" — a podcast series that explores common financial issues that we all face. Joining me today is Tony McEahern, Head of Wealth Planning. Tony, it's understandable for people to want to take a "wait-and-see" approach to planning activity at year-end when you think that taxes might change. But I've heard you say it's a mistake to wait; why is that?


Well, Chelle, if you wait for legislation to pass, particularly when we're talking about something as significant as an overhaul of the tax code, you may find that it's costly. You may miss the opportunity to gift assets, take deductions, and make trades in your investment portfolio that can help minimize taxes.


Yes, so don't let the year-end pass without making some good decisions. So what should our listeners do right now to overcome their concerns about changes that might be coming and to avoid any regrets they may have if the estate taxes and the tax rates do change?


Well, we recommend three simple actions. One, talk to your advisors and planners about tax management in the current landscape. Two, talk to them, as well, about year-end investment planning strategies. And third, take into consideration some of the things you can do before year-end regarding charitable giving.


I like the simple, actionable approach to that. So you mention tax management in the current landscape, Tony. What do you mean by that?


Well, tax reform may be very difficult to accomplish before this year ends, and we know that while there are a number of goals, including decrease to the personal and business tax rates, we don't know what exactly will happen and when. So we recommend discussing with your advisors what makes sense for you given your circumstances now while keeping your plan flexible. Two things to take into consideration:

  • Should you defer compensation into future years?
  • Do you want to wait to realize a capital gain from the sale of either a property or a business?


Agree, it seems unlikely we'll see major tax changes this year. So when you think about investment planning — that was another thing you mentioned — what should people be thinking about at year-end when they think about their portfolio?


Once again, Chelle, there are a number of things for people to consider that make sense regardless of the outcome of tax legislation. For example, are there investment losses that you may want to use to offset your capital gains?


So you're saying treat this year-end as you would any year-end and do the right types of planning and thoughtful strategies at year-end. How about the third thing you mentioned: year-end philanthropic planning or charitable planning. What more should we be thinking about year-end there?


Well, there's been a lot of discussion about the future of the charitable tax deduction. We find that for many of our clients, particularly those who are philanthropically inclined, the tax deduction typically is lower on their list of priorities. Nonetheless, it may make sense to accelerate the completion of a charitable gift for this year.


Okay, so if you're on the fence, maybe now is the time to take some action there. So you believe reducing that by reducing a larger planning conversation into three manageable, actionable topics — tax management, investment planning, and philanthropic planning — and talking with your advisors about those three things at year-end is definitely a way to overcome the inertia people might be feeling about trying to anticipate future tax changes.


Yes. And, Chelle, it is definitely worth reiterating that making sure your plan is still aligned with your goals no matter where you think tax rates are headed is extremely important. Having a financial plan in place and meeting regularly with your advisors to update it should increase the likelihood that you're going to achieve your long-term objectives.


That's great advice and I hear that from you often, Tony. Make sure you're meeting your goals first and then planning for taxes and other considerations second. I appreciate that. Thank you for joining me on this podcast, Tony, and thank you to our audience for listening.

This is "Your Financial Journey."

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