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Time for a Clean Sweep

By Gail Kinsella

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Here is a perfect solution to that nagging thought that you should really get your financial house in order “this” year. Start with a list. Does it seem like a daunting task? Here’s some help. Consider some of the items I have on my personal “get it together list.”

• Sort financial records into two piles: retain and shred. For items you plan to keep, file them by year. Do a bit of research on what you really need to keep. Suggestions abound. Even the IRS offers a list of what records you should retain. Check out www.irs.gov.

• Organize tax data for 2011 and consider options for 2012. Tax credits are available for certain purchases, and one never knows what steps Congress will take, so keep your eyes and ears open and talk with your CPA.

• Update asset inventory. Be sure the list includes account numbers, investment institutions, contact numbers, and the like. Set up a “year-end folder” to keep a copy of all investment statements, policy reports, and ownership records in one place. 

• For each account or investment be sure you know exactly who owns the account, who is the beneficiary and how the account can be transferred or closed in the event of a death. 

• Consider the need to update insurance riders on jewelry, fine art, etc. (Perhaps you donated the appreciated art last month for a tidy charitable-contribution deduction and now no longer need to keep a rider active.)

• Review last will and testament, living wills, and power-of-attorney documents. Update organ donor and DNR (do not resuscitate) documents. This may sound distasteful, but is one of the best ways to use your time.

• Check expiration dates for passports and licenses. Check renewal requirements and take steps to keep everything current.

• Donate items no longer being used. Include children of all ages in the sorting and giving process. Check documentation requirements for donations — call your CPA or check the IRS website.

• Arrange to maximize 401(k) contributions and set up IRA accounts for children who work. Have kids check out one of the web-based calculators so they see how saving early really pays off.

• Take a look at investments. Talk to children about what diversification is and how it works. Contact your financial advisor and CPA to schedule a meeting.

• Consider making a pact with children or grandchildren to encourage saving — set up a matching program for each dollar they deposit.

• Review monthly expenditures. Figure out what is necessary for the family and hold a family discussion to explain the cost of luxuries.

 
• Meet with your CPA to discuss steps to take this year on personal and business investment and retirement planning.

The time you invest will serve you well in the coming months. The best part? You can stop worrying about the things you have been putting off. Don’t delay, check off items on the list, and get going.               

 

Gail Kinsella is a partner in the accounting firm of Testone, Marshall & Discenza, LLP. Contact Kinsella at gkinsella@tmdcpas.com

 

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