February 26, 2012   Giving

Private Charitable Foundation

Many people who have been charitably inclined during their lifetimes like the idea of establishing a charitable foundation that will continue after they die. The foundation can be created while you are living, or it can be established after you die. To qualify, a small percentage of the trust assets must be distributed to charity each year. But you can name whomever you wish to run the foundation, including your children, and the foundation can pay them a reasonable salary. You can be very specific about which charities you want to support, or you can leave that up to the trustees of the foundation to decide (within IRS guidelines, of course).The tax benefits of setting up your own foundation can be substantial. You can save estate, capital gains and ordinary income taxes:The assets you gi...
January 20, 2012   Giving

Gifting... An Easy and Satisfying Way to Reduce Estate Taxes

If you have a sizeable estate, you may want to consider giving some of your assets now to the people or organizations who will receive them after you die.Why? First, it can be very satisfying to see the results of your gifts -- something you can't do if you hold onto everything until you die. Second, gifting is an excellent way to reduce estate taxes because you are reducing the size of your taxable estate. (Just make sure you don't give away any assets you may need later.) And third, well, we'll wait and explain the third reason at the end.One of the easiest ways to do this is through annual tax-free gifts. Each year, you can give up to $13,000 to as many people as you wish. If you are married, you and your spouse together can give $26,000 per recipient per year. (This amount...
November 15, 2011   Giving

Making Gifts Now Can Reduce Estate Taxes Later

Your estate will have to pay estate taxes when you die if the net value (assets minus debts) is more than the exempt amount at that time. In 2011 and 2012, the federal exemption is $5 million (adjusted for inflation in 2012) and the tax rate is 35%. However, if Congress does not act again before the end of 2012, on January 1, 2013 the exemption will be $1 million and the top tax rate will be 55%. Also, some states have their own estate or inheritance tax, so while your estate may not have to pay a federal estate tax, it may have to pay a state tax.With the federal estate tax exemption at $5 million, you may not need the estate tax savings right now. But it's important to understand how gifting works because the exemption may be reduced in the future (as early as 2013) and the value of...
November 3, 2011   Inheritance

Giving Your Assets to Your Children Now Can Cause Serious Problems

Sometimes people will transfer title of their assets to their adult children while they are living, thinking it will make things easier for their children when something happens to them. Doing this will prevent the court from controlling the assets if you become incapacitated and it will avoid probate when you die. And while there can be valid tax reasons to transfer some assets now, it can also create problems.First, when you give away an asset, it's gone. You may think your children will give it back to you if you change your mind, but they don't have to, and things can change in families when money is involved. They could sell the asset against your wishes, they could lose it to creditors, or they could be influenced by a spouse. If you outlive your children or they divorce, a d...
October 20, 2011   Giving

Testamentary Charitable Lead Annuity Trusts (A Brief Overview)

By Sean R. Kenney, J.D.
Charitable lead annuity trusts (“CLATs”) are an interesting vehicle for testamentary planning due to the historically low interest rates. Further, proper use of a testamentary CLAT not only zeroes out the estate tax but also offers a donor the chance to leave a charitable legacy with the organization of his or her choosing. This short article has two main goals: (1) to present the estate planner with a brief overview and description of a testa­mentary CLAT and (2) suggest assets this author finds most suitable for funding a CLAT. As the title suggests, this is a brief overview of these two topics, and for those who want a more in-depth discussion, I suggest visiting the Leimberg Information Services website at, and doing a search fo...
January 11, 2011   Giving

Charitable Planning and Business Development

By Roger D. Silk, Ph.D., CFA
You know that many clients and potential clients do not have optimal estate plans in place. Indeed, in the recent climate, the very concept of optimal estate planning has become muddled.   However, most clients and potential clients also lack op­timal charitable planning. This lack of optimal charitable planning creates an opportunity for planners to use chari­table planning as a business development tool.   Clients and potential clients usually have either too much or too little charitable planning.   Too Much Charitable Planning How can a client have too much charitable planning? By having previously committed to charitable endeavors that he no longer needs or desires. The most common example of this occurs when a client has a charitable remainder trust (CRT), and...
April 15, 2007   Estate Planning

New Law Creates Exciting Planning Opportunities

The purpose of this newsletter is to inform you of changes in the law and to provide planning information and general financial news. These newsletters also give me a chance to share new techniques to enhance your planning, as well as to help you to stay current with tactics designed to maximize the effectiveness of your plan. I hope you will read each newsletter carefully to keep up to date on these important topics. Please feel free to contact me if you have any questions about this or any matters relating to your planning.The new Pension Protection Act of 2006 (signed into law last Fall) creates significant planning opportunities for those who understand it. This newsletter focuses on two key provisions: (1) non-spousal rollovers from a qualified plan to an inherited IRA and (2) charita...
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