Charitable Giving

Published on: December 26, 2017

New Tax Act Doubles Gift and Estate Tax Exemption: Now What?

On December 22, 2017, President Trump signed a bill that makes huge changes to the American tax system—including the estate and gift tax. As of 2018, individuals can give away up to $11.2 million free of estate and gift tax, and couples can combine that to give away up to $22.4 million! These exemptions are indexed to inflation and scheduled to revert back to 2017 levels in 2026 (unless Congress extends them or makes them permanent at that point).

This sounds like big news, but, to tell the truth, there’s no benefit to most of us. Less than 1% of Americans were subject to the estate tax under the old law–now even fewer of them are. The Joint Committee on Taxation now estimates that there will be only 1800 taxable estates (in the ENTIRE COUNTRY) in 2018, compared to 5,000 under the previous law, and 52,000 in 2000, when the exemption was $675,000.

So, what does that mean for most of us? It means that estate planning isn’t really about minimizing the estate or gift tax any longer. (And it hasn’t been since 2012 for those with $5 million or less.) But that doesn’t mean you don’t need an estate plan.

Continue reading →

Published on: May 4, 2016

Prince’s Sister Claims He Had No Will

By Liza Hanks

Last week, the New York Times reported that Prince’s sister filed a Petition in probate court in Minnesota that stated that no Will had been found for Prince’s estate.

The Petition asked the court to appoint a regional bank as the administrator of Prince’s estate, and listed five half siblings as Prince’s heirs, in addition to the sister filing the Petition. This Petition is only the start of what’s likely to be a protracted process of sorting out what Prince left behind and how best to distribute his assets.

Reportedly, in addition to his financial investments, he left behind ownership of his publishing catalog in addition to archival recordings, and real property worth millions. Since his death, the Times reports that 650,000 Prince albums and 2.8 million tracks of his songs have been sold.

Continue reading →

Published on: December 20, 2015

Congress Makes Charitable Rollover Permanent

By Liza Hanks

In last week’s end of the year budget bill, Congress made permanent the qualified charitable rollover distribution. This lets individuals who are 70 1/2 or older donate up to $100,000 a year directly from their IRA to qualified charities. By doing so, donors can reduce their taxable income (because the money coming out of the IRA won’t count as taxable income to them) and charities can benefit from income-tax free gifts (because qualified charities don’t have to pay income tax on the IRA withdrawals). The charitable rollover counts towards the donor’s required minimum distribution.

Published on: December 14, 2015

Making Smart Charitable Gifts

By Liza Hanks

As the year draws to a close, now is the time to consider making charitable gifts, both because it’s a good thing to do and because year-end charitable gifts will provide tax deductions.

In addition to the time-tested check writing method, here are three other ways that you can give that are less obvious and quite beneficial.

Consider opening up a Donor Advised Fund. You can open up a Donor Advised Fund in 2015 and get a charitable deduction for that gift by year’s end. But, you can make recommendations on how those funds should be spent in 2016 or after. Donor Advised Funds are a great strategy when you need the charitable deduction right away, but haven’t had time to research the charities that you want to support. You can open up Donor Advised Funds at large financial institutions like Schwab and Fidelity and Vanguard and also at community foundations like our very own Silicon Valley Community Foundation.

Continue reading →

Published on: December 22, 2014

IRA Charitable Rollover Extended for 2014

By Liza Hanks

Late in the year, and at the last minute, on December 16, 2014, Congress has extended the ability of those over 70 1/2 to make direct charitable donations from their IRA’s of up to $100,000, as long as they haven’t already taken out the required minimum distribution for 2014 and do this charitable rollover by December 31. The way to do this is to tell your plan custodian to distribute up to $100,000 to a public charity of your choice from your IRA. (For a couple, this is 100K from each IRA.)

Although there’s no charitable deduction for a charitable rollover, there’s still a potentially big tax benefit for those who make them: the money that’s designated to charity does not count as taxable income to the donor, and that can help keep the donor’s taxable income below threshold limits for Medicare means testing, and other tax thresholds.

The current extension is for 2014, only, and is one of many temporary laws that were supposed to last only two years, but have been extended annually since the end of 2013.

Published on: November 24, 2014

IRS Year-End Gifts to Charity Tips

By Liza Hanks

As 2014 draws to a close, many of our clients are thinking about making annual gifts to charities. The IRS has just posted a handy article with six tips to keep in mind to make sure that you can claim an income tax deduction for the gift. Here’s a summary:

1. Qualified charities. Make sure that you are making a donation to a qualified charity. The IRS offers a tool to make sure that your intended recipient is qualified. Donations to churches, synagogues, temples, mosques, and government agencies are also deductible, even if they’re not listed.

2. Monetary donations. If you want to give a charity money, in cash, or by check, electronic funds transfer, or credit card, you must have a bank record (like a cancelled check) or a written statement from the charity to deduct the gift.

Continue reading →

Published on: May 2, 2014

Focusing on Income Tax for the 99.85%

By Liza Hanks

Today, the federal estate tax exemption is $5.34 million, and this number is indexed to inflation, so will rise over time. I was recently at the Stanford University and the Silicon Valley Community Foundation’s annual Conference on Charitable Giving, and heard that the White House’s Office of Management and Budget has estimated that this means that only .15% of estates will be subject to the estate tax in the future.

In less wonky terms, this means that less than 1 out of every 100 American households will ever have to file an estate tax return. It also means that more than 99% of Americans don’t need a charitable deduction at death, since they’ll have no estate taxes to reduce by that deduction.

As a result of the high exemption level, the focus of estate planning, for many families, has shifted from planning as a way to reduce the estate tax that may be due at death to other priorities. It is still important, of course, to use planning as a way to manage assets for minors, to distribute your assets at death and to avoid probate.

Continue reading →

Published on: September 7, 2012

Charitable Remainder Trusts: A Great Way to Give to Charity

By Liza Hanks

If you are considering making a gift to charity in your estate plan, own assets that have appreciated significantly, and would like to get a current income tax deduction, please talk to us about establishing a Charitable Remainder Trust (CRT).

A CRT doesn’t have to be complicated to offer compelling benefits. If you’d like to benefit a charity or multiple charities, you can establish the trust and transfer appreciated assets into the trust. As long as the trust conforms to IRS rules, the trust can then sell the appreciated assets and diversify the trust’s holdings. The CRT is tax exempt, so when the asset is sold, the trust pays no capital gains taxes. The entire amount can be reinvested.

You (or a named beneficiary) must receive a certain amount or percentage of the trust’s assets each year, and you will be taxed on the portion of each such distribution that is capital gain income. The trust can last for your lifetime, or a certain number of years, and the charity will receive the remaining assets when the trust terminates. You get an income tax charitable deduction based on the value going to the charity and the type of charity you’re benefitting.

Articles Posted in Charitable Giving

New Tax Act Doubles Gift and Estate Tax Exemption: Now What?

Prince’s Sister Claims He Had No Will

Congress Makes Charitable Rollover Permanent

Making Smart Charitable Gifts

IRA Charitable Rollover Extended for 2014

IRS Year-End Gifts to Charity Tips

Focusing on Income Tax for the 99.85%

Charitable Remainder Trusts: A Great Way to Give to Charity

Liza’s Most Recent Books