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...
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...
June 14, 2013   Giving

Gifts to Your Children or Grandchildren–What Could Go Wrong?!

By Martha J. Hartney, Esq.
Parents have asked me many times over the years about setting up bank accounts for their kids and setting money aside for them for their future. Their goal, of course, is to create a pot of gold for hard times, something their kid or grandkid can rely on when the going gets tough. What a nice thing to do, right? Wrong. If I had a buzzer, I’d use it. There are few hard and fast rules in estate planning, but this is one. Never, ever allow a child to own assets or be a direct beneficiary of anything. Ever. How could you know that if you put money into a bank account, you lose all control over that on your child’s 18th birthday (in some states 21st birthday)? First, you’d have to know that these accounts are called custodial accounts. They’re also known as...
July 22, 2013   Giving

IRS Gift Tax Limits Increased for 2013

One of the most commonly ignored tax documents is Form 709. This form, which must be filed along with a person’s income taxes on on April 15, is used to assess the federal gift tax.   For purposes of the federal gift tax, a gift is considered to be any transfer of assets from one individual to another for which the transferring individual receives nothing, or less than the full value of the gifted asset in return. Besides traditional gifts, the IRS may also find that an individual gave a gift when he or she sold an item for a price below its full value, or made a loan at a reduced interest rate. Importantly, the federal gift tax applies to transfers that meet the IRS criteria, regardless of whether the transferring party intended the transfer to be a “gift” in the tr...
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...
August 14, 2013   Giving

Our Guide to Keeping Your Charitable Giving Private

There are many reasons why a person who chooses to participate in charitable giving might wish to do so privately. The most commonly cited reason for private giving is to avoid the mass of solicitations that follow after a single charitable gift.   One way to maintain your privacy is to use an advisor as an intermediary between you and the charity. Have your advisor meet with the charity and offer the funds on the provision that your identity remains anonymous. The advisor may deliver the funds, then return to you with a receipt for tax purposes. You may use anyone as an intermediary, such as an attorney, financial professional, bank, or personal advisor.   If you do a lot of charitable giving, you may want to consider creating an entity for this purpose. Through an entity, you c...
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,   Inheritance,   Asset Protection Planning,   Business Planning

Succession Planning and the Family Farm

By Todd N. Hallock, J.D. and Sara Nelson Hallock, J.D.
“Those who labour in the earth are the chosen people of God, if ever he had a chosen people, whose breasts he has made his peculiar deposit for substantial and genuine virtue.”  - Thomas Jefferson The farmer as virtuous is well-established in our national conscious and reverence for the family farm sets planning for it apart from other types of family owned businesses. Even children who do not plan to actively participate in farming have a deep emotional attachment to the farm. According to the USDA, approximately 96 percent of the 2.2 million farms are classified as “family farms.” The average age of a farm operator is 57 and the fastest growing segment is those ove...
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...
September 24, 2012   Giving

The Perils of Making Lifetime Gifts and Loans to Your Children

By Richard J. Shapiro, J.D.
When counseling clients, I am always concerned when I learn that parents have made, or are proposing to make, large monetary gifts or loans to their adult children.  The reasons for such gifts or loans vary.  Perhaps a child finds him or herself in financial difficulty, often as a result of a job loss, divorce, business failure, or dependency addiction.  Few parents, even if they have limited means, turn away a child in need.   As the father of two children, I have nothing against such a parental bailout where a child is in genuine need.  After all, family is family.  However, I frequently see situations where an adult child convinces his or her parents into transferring a significant portion of the parents' life savings for non-essential needs—often...
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