2011 Year End Strategies - General Toolkit
Re-examine the adequacy and liquidity of your emergency fund. Remember, your emergency fund is the “buffer” which prevents you from carrying credit card debt. When expenses exceed income, you dip into the emergency fund to avoid carrying a balance on your credit cards. Then, focus your savings effort to replenish the emergency fund so it is there the next time you need it. If you have to dip into the emergency fund too often and aren’t replenishing it, it is a sure sign that your cash flow plan needs review.
Plan holiday spending to keep in line with budgeted amount - travel, entertainment, gifts, etc. Consider “acts of kindness” and “gifts of time” instead of spending money on more “things.” Often, those gifts are more rewarding, meaningful, and cheaper!
Update your home inventory (actually, best done after the holiday giving season). Be sure to include: item, cost/value, date and place purchased. File receipts with home inventory. It's also a good idea to photograph or video items so your insurance company has the best information available should you need to file a claim. Store photos, video tape and inventory away from home.
If making year-end gifts, the annual exclusion amount that can be given by each individual to any number of individuals for 2011 is $13,000/person. If a gift exceeds the annual exclusion amount, then you must file a gift tax return (IRS Form 709) even though you will not owe gift tax on the first $5 million gifted. However, you do use up a portion of the unified credit which offsets estate tax at death.
The estate tax returned in 2011 after a hiatus in 2010. However, the first $5 million of an estate isn’t taxable (providing none of the unified credit has been used).
Review your credit report for inaccuracies and accounts that should be closed but which remain open. All US citizens are eligible for a free credit report from each of the three reporting agencies annually – www.annualcreditreport.com.
Review your Comprehensive Loss Underwriting Exchange (C.L.U.E. ®) reports. The C.L.U.E. Personal Property report provides a seven year history of losses associated with an individual’s personal property. The C.L.U.E. Auto loss report provides a seven year history of vehicle losses. Just as ensuring that your credit report is accurate, it is important to ensure these reports are as well as they may appreciably impact your insurance premiums; so, take advantage of the free reports annually – https://personalreports.lexisnexis.com/fact_act_claims_bundle/landing.jsp.