Articles Posted in Charitable Giving

1.3.19Single with a net worth less than $11.4 million in 2019? You’re in luck—you can die knowing that all of your money will pass free of any federal estate tax to your heirs.

It was good news for the wealthy—the Tax Cuts and Jobs Act (TCJA) amped up the unified federal estate and gift tax exemption to $11.4 million for 2019 (and up to $11.18 million in 2018). If that wasn’t generous enough, those exemptions will be increased annually for inflation from 2020 to 2025. As comedian Mel Brooks would say, “It’s good to be the king.”

MarketWatch’s recent article, “How single folks should handle estate-tax planning under the new tax law,” explains that taxable estates above the exemption will have the excess taxed at a flat 40% rate. An individual’s cumulative lifetime taxable gifts in excess of the exemption are taxed at the 40% rate. Likewise, taxable gifts are those that are more than the annual federal gift tax exclusion of $15,000 for 2018 and 2019.

5.22.18Even with the new tax laws in place, there are still advantages to philanthropy, at all levels of giving.

There are many ways to support causes that matter to you. Some charitable giving can be incorporated into your estate plan, according to Investopedia’s article, “A Primer on Philanthropic Vehicles.” However, some people enjoy giving while they are living, to have control over their generosity and enjoy the positive impact their giving has on others.

Cash is the most basic donation and is one that most people know about. That’s as simple as writing a check to the charity or other tax-qualified organization of your choosing.

11.16.17If you roll the money over to an IRA first, you can donate funds from your 401(k) Required Minimum Distribution tax free. Be very careful to follow the rules, so that you don’t create a tax or penalty problem.

First, let’s define the RMD (Required Minimum Distributions). This is the least amount of money that someone who owns a retirement plan is required to withdraw every year, starting the year that the individual turns 70½, or, if they retire later, the year when they retire.

 However, if the retirement plan account is an IRA or the account owner is a 5% owner of the business sponsoring the retirement plan, the RMDs have to start once the account holder is age 70 ½—even if she’s not retired. The rules of what can and cannot be done with retirement plans are very strict, so you may need help from a professional.

8.10.17Higher fees are coming to high earners, when income thresholds for the highest surcharge tiers drop even further next year.

If you were hit with premium surcharges for Medicare Part B and Part D already, these costs will increase again in 2018, according to a recent article in Kiplinger, “Medicare Surcharge Thresholds to Drop.”

This recalibration of the trigger points was a part of the Medicare Access and CHIP Reauthorization Act of 2015, also called the "Doc Fix" law, which ended the annual battles over fee schedules for doctors' Medicare payments. To help pay for the permanent fix, lawmakers have asked high-income beneficiaries to foot the bill.

7.5.16Whether your love is animal rights or protecting the planet, a trust donation creates a legacy that reflects your values and supports the future.

A woman’s love for animals was reflected in a significant trust donation given to the Little Rock Zoo, as reported in The Northwest Arkansas Democrat Gazette article, “Animal lover leaves Little Rock Zoo nearly $3M, biggest gift ever.” A trust created an endowment fund, the Jayne and Fletcher Jackson Foundation, which will fund many programs at the zoo for years to come.

"Animals are what made her happy,” a zoo representative commented. “It was no surprise after we got to know her that the zoo was what she wanted to leave her estate to upon her passing."

Multigenerational familyMake no mistake. Estate planning is, and should be, a serious business, along with financial planning and wealth management, notes The Wilmington Business Journal. These are all on-going activities and part of a well-managed, successful life, at any age or stage.

In its article "Do You Really Want To Leave a Large Inheritance?" the Journal advises seniors that having enough retirement funds is critical. But what about this other school of financial planning: Don't Die Rich!

The "Don't Die Rich!" philosophy is based on the premise that money is best used while you are around to enjoy it and appreciate the benefits. Due to lengthening life spans, in many cases, parental assets aren't going to be around to be inherited by children until those children are near retirement age.

Hand with cashLifetime gifts may carry considerable advantages over charitable bequests, according to Atlantic Trust, the U.S. private wealth management division of CIBC (NYSE: CM) (TSX: CM).

Lifetime gifting allows you to see your donation make a difference. In addition to this giving advantage, there’s also the goals of receiving an income tax deduction or estate tax savings, explains the PR Newswire article titled Benefits of lifetime charitable gifts can outweigh bequests.”

For instance, individuals who give cash to public charity typically are entitled to an income tax deduction of up to 50 percent of their adjusted gross income (AGI) or up to 30 percent of their AGI for donations of other appreciated assets that are held for at least a year. What’s more, these deductions can be carried forward for up to five years if they can’t be taken in the year the gift was made.

Money giftThe end of the year is a great time to consider making a contribution to a cause that is meaningful to you. Along with potential tax benefits, there is the enjoyment that comes from making a positive difference and helping the organization of your choice.

Is the holiday spirit prompting you to give back to charity?

Like many charities, the SPCA of Northern Nevada depends to a great extent on year-end giving in order to raise funds for its ongoing operations. The SPCA wants all of its animals to find homes during the holidays: the cost of caring for each animal is on average more than $350. It really adds up, given the thousands of animals the charity rescues every year.

Money giftIs inherited wealth making a comeback?

Is leaving an inheritance a good or bad idea? Well, it all depends on who you ask. For example, a recently published book by French economist Thomas Piketty, “Capital in the Twenty-First Century,” argues that estates are getting larger and eventually most of the money in the world will be tied up in huge estates. The argument is that this is bad. Why? Because the wealthiest people will have done nothing to earn the wealth themselves and much of the money will never be spent. Consequently, the money will just accumulate in estates and remain outside the greater economy.

Not all economists see this as a necessarily bad thing. In a recent article in The New York Times titled “How Inherited Wealth Helps the Economy, Harvard Professor N. Gregory Mankiw explains how those who save their money and leave an estate to their heirs actually induce a redistribution of wealth from the owners of capital to workers. He states, “Because capital is subject to diminishing returns, an increase in its supply causes each unit of capital to earn less. And because increased capital raises labor productivity, workers enjoy higher wages.”

Money bagThe tax law makes clear that the taxpayer has the burden of substantiating the value of the property.  To this end, a taxpayer must not only comply with the procedural requirements for valuation, but must also persuade the trier of fact that his claimed valuation is correct.

How do you place a value on art? There is the subjective eye of the beholder that gauges the beauty of the art, and then there is the no less subjective eye of the market, the appraiser and/or the taxman. Be sure to properly plan for your artworks and ensure that they are appropriately (if usefully) valued, as seen through the eyes of the taxman.

The issue of valuation is always the issue at stake when it comes to taxes – be it with regard to real property, stocks, or something as mercurial as an easement – but with art there is both a special importance and a special irony. After all, art is only truly valuable when it is priceless, in one sense, but there is nothing that is priceless on the market.

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