A will or trust explains what you want to have happen to your assets when you die, hopefully in a very, very long time. While most people understand that a will explains what to do with money, property, and children, there are other parts you might be surprised by.
MSN’s recent article entitled “3 surprising things you might not think to include your will” tells about three things to include in your will that you may not have thought about before.
A fear that children will not be motivated to have careers because of their family’s wealth is a concern. However, in the long run, it can hamper how wealth is handled by the next generation.
In a perfect world, discussing a family’s legacy should be a process that begins when children are old enough to understand concepts as simple as giving and the notion that wealth comes with social responsibilities. In reality, few discuss their philanthropic or legacy goals with their children.
CNBC’s recent article, “Don’t expect Mom and Dad to clue you in on your inheritance,” says that 8 out of 10 financial advisors said that “some” or “hardly any” of their clients involve the next generation in family philanthropy, according to a recent survey from Key Private Bank.
Estate planning attorneys and CPAs all keep an eye on letter rulings to see if IRS decisions have any bearing on their own client’s situations. In this case, a taxpayer is setting up a revocable trust and wants to use a Charitable Lead Annuity Trust known as a CLAT.
A recently posted letter ruling from the IRS addresses the use of a CLAT used in estate planning.
A CLAT letter ruling could be of interest to those who are using life insurance, annuities or other instruments in estate planning.
The fight over Conrad Prebys’ $1 billion estate continues, three years after the San Diego developer and philanthropist died.
When the directors of the Conrad Prebys Foundation decided to give his son Eric $15 million, despite the fact that his father had left him out of the will, Preby’s longtime partner tried to sue them.
The San Diego Union-Tribune reported in the article “Court fight continues over control of $1 billion Prebys estate,” that in January, a San Diego Superior Court judge dismissed Debra Turner’s suit, holding that she had no legal standing to bring it. She then filed an amended complaint. However, the judge recently dismissed her lawsuit.
At 65, Americans are shifting their focus from accumulating to giving of time and resources. It seems like a natural progression: after living for more than six decades, there’s a greater understanding of what matters.
The generosity of the 50 million Americans over 65 may be in part because of their perspective, but it may also reflect their controlling more assets and having a higher net worth than any prior generation. The Federal Reserve says that the average net worth for Americans age 65-74 is $1,066,000. The median American net worth is $224,000.
The Denver Post reports in the article “On Philanthropy: Giving in the last third of life,” that older Americans are the most generous generational group in the country. Those born before 1964 are responsible for almost 70% of all charitable giving.
“Financial planning is an ongoing process that examines your goals, situation and finances, in order to determine if and how these goals can be met. It’s not a product-centric process, but often we use financial products like mutual funds, annuities and/or life insurance to achieve goals in the most efficient manner.”
As Forbes explains in the article “2 Ways To Combine Charitable Giving And Life Insurance,” one of the core products for protecting wealth is life insurance. As you age, your need for life insurance may lessen, but sometimes it will increase. If you have a life insurance policy that you no longer need, one option might be to donate the policy to a charity. There are several ways that life insurance policies can be gifted or used for charitable purposes.
Gift Your Existing Policy. You can simply give away an existing policy, if you no longer need the policy for estate liquidity or estate taxes. You could gift the policy outright to your favorite charity or use a Donor Advised Fund (DAF). If you give the policy to a charity outright, you can change ownership of the policy and pretty much be done with it. You might get a charitable income tax deduction for the value of the policy at the time of the gift (it’s measured by the sum of the interpolated terminal reserve plus unearned premiums rather than the death benefit amount).
While there’s a time limit on this great opportunity for tax-free giving—2025, unless Congress makes some changes—this is a good time to take advantage of minimizing your tax liability through generosity. There’s a new big break for top-dollar wealth transfers, thanks to the new tax law.
Basic rule: the more you give away, the smaller your estate and, therefore, the smaller your tax liability. If you’ve got a lot of wealth, this is a good time for you and those you want to make gifts to. The sooner you exploit this, the more you can give. It means that there’s less of a chance your estate will have to write a check to the IRS.
The Street’s recent article, “This Is the Golden Age of Tax-Free Gift Giving,” says the federal government has taxed estates since 1924, and as recently as 2001, the threshold when taxes kicked in was $675,000. This exemption level from taxation has been increased ever since. However, a large increase came from the Tax Cuts and Jobs Act, which took effect in 2018. The Act doubled the exemption level and indexed it to inflation. Anything above the new limits is taxed at 40%. It is $11.4 million for singles and $22.8 million for married couples in 2019.
Most donations are made in December, and charities of all shapes and sizes make the most of the holiday spirit. However, by taking a bit of time to plan out charitable giving, including doing some research and talking with your family about your legacy, your giving could have a greater impact this year and in years to come.
A rough ride in the start of the year’s markets and changes to the tax laws have left many donors wondering if they can afford to be as generous in 2019, as they were in the past. Fundraisers advise donors to think more about what non-profits have greater meaning to them and to take a more thoughtful approach to giving. Philanthropy is still good for your legacy, sense of community and, when done right, taxes.
The Reno Gazette Journal’s article, “Get an early jump on charitable giving” looks at tax planning opportunities for charitable giving, specifically in light of the Tax Cuts and Jobs Act and Qualified Charitable Distributions (QCD). Here’s a review of why people give. The primary reasons for donating include the following:
Even 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.
First, say thank you. Then, learn more about the rules about paying taxes on a financial gift.
Couples whose families are generous enough to give them help towards buying their first home are often concerned with what, if any, tax liability may be created. Do they have to pay taxes on the gift? Do their parents or in-laws pay taxes?
The tax laws on gifts can be pretty confusing, says nj.com in an article, “Are taxes owed on gift from in-laws?”
Houston Estate Planning and Elder Law Attorney Blog