It’s been a challenging year. Three tips to help you make sure your finances are in good order before 2021 starts.

Given how unusual this year has been, it may be wise to get a head start on your year-end planning for 2020.

While every end of year should prompt you to assess your finances as well as your tax liabilities, with this year’s global pandemic, economic uncertainty, U.S. elections and soaring U.S. equity markets, it may be wise for you to start the process earlier in the fall. Give yourself more time to connect with advisors and to act. 

To help you, we offer three year-end tips.

1)  Do a “Big Picture Review” (because much may have changed this year)

A Big Picture Review will not only help you identify and act on matters that are in your control, but also lay a solid foundation so you can respond quickly to any potential changes in the future. To do that review:

  • Evaluate your goals and discuss them with your family.
  • Speak with your J.P. Morgan team to make sure your resources are positioned to help you reach these goals.
  • Consider asking your estate planning lawyer and J.P. Morgan team to work together to review whether, given your assets, your current estate plan and documents are aligned with your goals.
  • Meet with your accountant to get an estimate of your tax liability for 2020 and see whether additional tax planning makes sense. 

Key questions you’re looking to answer in these discussions include:

  • After the markets’ ups and downs, are my assets still appropriately allocated to support my goals?
  • Do I have the flexibility to make gifts now to my family and my community, in the way I would like?
  • Have I done all I can to ensure that the people and causes most important to me will be treated in a way that aligns with my values?

2) Look at what may require action to keep you on track as you head into 2021

We will work hard to help you keep up-to-date on changes. For now, we highlight some potential actions to take, given this year’s unusual circumstances and unique opportunities:   

  • For your portfolio—While overall U.S. markets are near or are at all-time highs, one might have more losses to harvest this year than in recent years as nearly 60% of the constituent stocks1 are still down year-to-date. Above all, we recommend that you not let headline noise derail your plans. If your portfolio is aligned to long-term goals, stay invested. Over time, markets go up. Historically, even investing at market peaks has been better than staying in cash long-term. And if you have near-term needs for your money, with interest rates at historic lows, consider if there are ways to restructure it (or hold it differently) that can make it work harder for you.
  • For gifts to family—Is now the time to use your lifetime exclusion? Some clients have expressed concerns that the lifetime gift tax exclusion amount might be reduced in the future. They want to know whether they should be taking advantage of current law now. We believe any legislative change to the exclusion amount would likely take a long time to enact. Decisions now should be made based solely on your particular goals and resources, and depending on what you gift, they may require more coordination (like appraisals).   
  • For charities—Year-end is usually a time when families make gifts to causes important to them, and in 2020, the need for support at charitable organizations and the communities they work with is even greater. This year, due to the CARES Act, cash donations made directly to charities (e.g., “qualifying donations”) can be deductible up to 100% of adjusted gross income (you can carry forward any additional amount). And this can be used in conjunction with donations of appreciated stock.
  • For your retirement—You don’t have to take required minimum distributions (RMDs) this year, due to the government’s response to the crisis. So if you’ve already taken your RMDs this year, you may want to talk to your tax advisor about rolling them back. Or you may choose to take them anyway if you want to put the funds to use, for example, to make a qualified charitable distribution.

3) Remember to attend to the other key items on every year’s fall financial checklist

These may be things that you’re already doing each year, but are not always top of mind. Consider the following actions with your year-end planning:

  • Using your annual gift exclusion.
  • Contributing to your retirement plan.
  • Deferring your compensation (if your company has a December 31 deadline to make elections).
  • Reviewing your (compensatory) stock options for exercise.

Family time

Depending on where you and your loved ones were living when the coronavirus first hit the United States with full force in March, you may have been spending a lot of time with some family members and/or been separated from others. 

Whatever your situation, year-end is a wonderful time to hold an all-family meeting (virtually if need be). Beyond finances, family meetings are also an opportunity to discuss what “family success” might look like. What are your values, hopes and goals, for the coming year and the long term? Speak with your J.P. Morgan team about how to make such meetings more successful.


1 Sources: FactSet, S&P 500 and analysis by J.P. Morgan Private Bank, as of September 10, 2020. Constituent stocks are the stocks that make up the stock market. For example, if the S&P 500 has 500 stocks, the index itself has recovered, but nearly 300 of the underlying stocks have not.