New York Elder Law Attorney
As the year draws to a close, it’s worth taking a step back to assess the legal framework that governs how your assets will be managed during life and transferred at death. Many financial and tax-related decisions, including retirement account contributions, charitable gifts, and certain trust funding activities must be completed by December 31 to maximize potential tax benefits and ensure estate planning documents continue to reflect your goals.
A thoughtfully maintained estate plan is not a “set it and forget it” exercise. It should evolve with life circumstances, family needs, and changes in federal and state law. Periodic reviews every three to five years help ensure your estate plan continues to protect those you love and operates as intended when it matters most.
Review – and Update if Necessary
If you already have an estate plan in place, you are ahead of the curve. However, even a well-crafted plan requires ongoing attention. Unless your documents were prepared or reviewed within the past year, it’s time for a checkup. Laws governing estates, trusts, and taxation evolve, and life rarely remains static. Marriages, divorces, births, deaths, relocations, and even changes in asset composition can all impact how your plan functions.
A comprehensive review should include your last will and testament, any revocable or irrevocable trusts, durable powers of attorney, and healthcare directives. Ask yourself:
- Do these documents still reflect my current wishes and family situation?
- Have there been any major life events that warrant revisions?
- Have I moved to another state where probate, homestead, or tax laws differ?
- Have I acquired new assets or sold property referenced in my plan?
Working with an experienced estate planning attorney ensures your documents remain compliant with current law and intentions are not just clearly expressed but are also enforceable.
Did Your Trust Cross the Finish Line?
Creating a trust is an important step, but it is only effective once it has been properly funded. If you established a revocable living trust in 2025, have you completed the process of transferring assets into it? Deeds, account registrations, and beneficiary designations must be updated to reflect ownership by the trust.
If you pass away before funding is complete, those unfunded assets may remain subject to probate, precisely what you sought to avoid by creating a trust in the first place. Year-end is an excellent time to verify that bank accounts, brokerage accounts, real property, and business interests are properly titled.
Additionally, review any “pour-over” provisions in your will, which are designed to transfer remaining assets into the trust upon death. These provisions work best when the bulk of your estate is already held or designated for transfer to the trust.
Are Your Powers of Attorney and Healthcare Directives Current?
Equally important are incapacity documents — durable power of attorney and healthcare directives. These instruments authorize trusted individuals to act on your behalf in managing financial affairs and making medical decisions should you become unable to do so.
The designations can become outdated over time. Agents may move out of state, become incapacitated themselves, or simply no longer be the right choice. If your chosen representative has retired to Florida while you reside in Nassau County, for example, they may not be able to assist you effectively in an emergency.
An updated power of attorney and healthcare proxy can spare loved ones significant stress and expense. Without these documents, family members may be forced to petition a court for guardianship to manage your affairs. This is a time-consuming, expensive, and emotionally draining process, easily avoided.
Review who you have named, confirm their willingness to serve, and be sure they have current copies of your documents.
Review Beneficiary Designations
One of the most common pitfalls in estate planning involves outdated beneficiary designations. The beneficiary designations on life insurance policies, retirement plans, annuities, and certain investment accounts override whatever instructions are contained in your will or trust.
For instance, if an ex-spouse remains listed as the beneficiary of your life insurance policy, that person will receive proceeds upon your death, no matter what’s in your will or how much time has elapsed since you’ve had any contact with them. The insurer is legally bound to honor the most recent signed designation on file. Many people go to court on this issue and do not get the results they hoped for.
Take time before year-end to review all beneficiary forms and ensure they are consistent with your overall estate plan. Confirm not only your primary beneficiaries but also contingent (secondary) beneficiaries in case your first choice predeceases you.
End of Year Financial Considerations
Required Minimum Distributions (RMDs)
If you are age 73 or older, you are required to take annual distributions from traditional IRA and certain retirement accounts. Failure to withdraw the appropriate amount can result in a penalty equal to 25% of the amount that should have been distributed.
Beneficiaries of inherited IRAs must also take distributions under the SECURE Act rules, which generally require the account to be emptied within ten years of the original owner’s death (with certain exceptions for eligible designated beneficiaries). Reviewing your RMD status before year-end ensures compliance and helps manage your taxable income effectively.
Flexible Spending Accounts (FSAs)
If you participate in a Flexible Spending Account through your employer, review your plan’s “use it or lose it” provisions. Some plans allow a short grace period while others permit only a small carryover amount. Any funds left unused beyond the permitted deadline are forfeited. Verify your account rules now so you can plan eligible expenses accordingly.
Tax Planning Opportunities and Year-End Charitable Giving
Year-end is also a time for strategic tax planning. Charitable giving can serve both philanthropic and financial purposes, reducing taxable income and helping causes important to you.
Whether you prefer to make cash contributions, donate appreciated securities, or establish a charitable trust, completing your gifts before December 31 is key to claiming the deduction for the current tax year. Donating highly appreciated stock can be particularly effective — you avoid paying capital gains tax on the appreciation and still receive a charitable deduction for the fair market value of the asset.
Qualified Charitable Distributions (QCDs)
Individuals aged 70½ or older can make Qualified Charitable Distributions of up to $108,000 directly from an IRA to a qualified charity in 2025. A QCD counts toward your Required Minimum Distribution but is excluded from your Adjusted Gross Income. This strategy can help lower overall taxable income and may also reduce the impact of other income-based taxes or Medicare surcharges.
It is essential, however, that the funds be transferred directly from the IRA to the charitable organization. Personal withdrawals do not qualify. Always consult your estate planning attorney to ensure compliance.
Annual Exclusion Gifting
Under current federal law, individuals may gift up to $19,000 per recipient annually ($38,000 for married couples) without incurring gift tax or affecting the lifetime exemption amount. These gifts can be an effective way to reduce the size of your taxable estate while providing meaningful financial support to family members or other beneficiaries.
In addition, direct payments for another person’s tuition or medical expenses made directly to the educational or healthcare provider do not count toward the annual exclusion or lifetime exemption. These strategies can help transfer wealth efficiently while maintaining flexibility and control.
Estate Planning as a Living Framework
An estate plan is more than a collection of documents — it is a living framework that guides your financial and personal legacy. A properly prepared and maintained plan provides clarity for your loved ones, minimizes administrative burdens, and helps avoid unnecessary court involvement.
At its core, estate planning is an act of care. It ensures that the people you trust have the authority to make decisions on your behalf and that your assets are distributed according to your wishes. It also protects your heirs from confusion, conflict, and unnecessary expense.
If you have yet to formalize your estate plan, there is no better time to start. And if you already have one, take advantage of this year-end season to confirm that your plan remains legally sound, properly funded, and aligned with your current circumstances.
Estate planning is not a one-time task but an ongoing process that, when approached proactively, can provide peace of mind for years to come.
As you wrap up 2025 and prepare for the new year, make estate planning a priority alongside your other year-end financial to-dos. By reviewing your documents, confirming your beneficiaries, funding your trusts, and making strategic gifts, you ensure your estate plan continues to reflect your values and protect those you love.
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