I think that is an excellent indicator that your new financial planner is on the ball.
Not only does your tax return contain a treasure trove of information regarding your financial circumstances, but it can be of great benefit when it comes to your estate planning, too.
In case you missed it, your question was the subject of a recent CNBC report titled “Use your tax return for more than paying taxes.”
Lines 1-5 (Filing status). If you need to check a different box for your filing status, you should review your estate plan. If you get married or divorced, you will need to update your will and trust, along with the beneficiaries for life insurance and retirement plans.
Line 6c (Dependents). An increase in the number of dependents is a good reason to update your estate plan. This might mean a change to your cash flow for college savings and insurance needs.
Line 7 (Wages, salaries, tips, etc.). Take a look at your W-2s. Are you making the most of workplace benefits? For instance, employees can benefit from boosting pre-tax retirement contributions, and those with children may be missing the opportunity to contribute to a pre-tax account for dependent care expenses.
Line 11 (Alimony). This is considered earned income, so consider using some of it to bolster retirement savings by contributing to an IRA.
Line 12 (Business income). If your business has become more profitable, look at whether a sole proprietorship is still the best business structure. There may be significant tax and liability considerations that suit your growing company.
Line 13 (Capital gains). Your capital gains and the details on your Schedule D can say a lot about how you are investing. If the numbers are too high or too low, it could mean you need to reexamine whether the investments and diversification are appropriate for your age and acceptable risk levels. You may have some missed opportunities to offset capital gains with capital losses.
Line 17 (Rental real estate). Are you buying rental property? Your estate planning attorney may have some suggestions regarding the best way to hold ownership to reduce your liability exposure.
Line 28 (Self-employed SEP, SIMPLE and more). Are you a Schedule C or F worker? If yes, then a "zero" on line 28 may be a missed opportunity to increase your retirement savings.
Line 40 (Itemized deductions). A look at these line items may help determine if you need to make any changes to maximize deductions.
Consider bringing your financial planner and your estate planning attorney together over coffee.
Not only should they should know one another anyway, but this will enable them to collaborate on and seamlessly coordinate your financial and estate planning.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: CNBC (September 28, 2016) “Use your tax return for more than paying taxes”