This entry was originally written for our December 2015 Newsletter. Download PDF file to view all articles.

As the year draws to a close, there should be more on your mind than holiday parties and gift giving. Year-end review of your estate planning and business activities can provide tax savings and peace of mind as you head into the new year.

Business owners should be mindful of any changes in ownership structure throughout the year. Were additional partners brought on board? If so, then you should document that change and consider entering into an operating agreement or shareholder agreement to spell out the respective rights and obligations of the owners. Businesses that have elected to be taxed as an s-corporation must be especially careful in documenting ownership changes. Did an owner exit the business? Such exit should be timely documented for the tax year during which it took place. Even if no changes in ownership structure occurred, it is wise for business partners to conduct an annual meeting in compliance with applicable law in the jurisdiction of formation.

Businesses evolve and change over the years, and owners should conduct reviews to determine if any inactive businesses need to be dissolved or merged into an active business. Dissolution or merger will simplify administration and eliminate extraneous reporting requirements for entities that are no longer in operation.

Of course, businesses aren’t the only group that should be mindful of year-end planning. Individuals should review their estate and gifting plans every few years to ensure their plans accurately reflect their wishes. If you intend to make gifts, remember the $14,000 annual exclusion is a “use or lose it” provision. The exclusion resets each year but cannot then be applied to the prior year. You should also review your finances to determine if more sophisticated estate planning is needed. If you estimate your estate to be in excess of the applicable exclusion amount of $5,430,000 for individuals, you should consider more careful planning.

Businesses evolve and change over the years, and owners should conduct reviews to determine if any inactive businesses need to be dissolved…

As the saying goes, an ounce of prevention is worth a pound of cure. Careful year-end planning provides many benefits such as tax savings and risk reduction. If you wish to review your personal or business plans, please contact our business and estate attorneys today.