Tip for December, 2016
They say the only certainties in life are death and taxes. But with the recent elections, tax policy changes are on the horizon. Among the proposals by the Trump administration is that itemized deductions may be capped. If so, that may mean smaller charitable deductions available in future years.
However, donations made before the end of 2016 still receive their full value regardless of any tax law changes in the future. Donations of appreciated securities before the end of this year will still receive double tax benefits; you get your charitable deduction while eliminating any capital gains taxes otherwise due on the sale of the securities.
The future is unknown. To avoid uncertainty you may accelerate your planned giving into 2016 to take full advantage of current tax benefits.
Tip for November, 2016
Many people today have online assets, accounts, bill payment, auto-deposit, document storage, social media and information which only they can access.
Until recently most states did NOT have laws to allow your fiduciaries (i.e. Executors, Trustees, Attorneys-In-Fact) to manage your online presence. The Uniform Fiduciary Access to Digital Assets Act (UFADAA) allows fiduciaries access to digital assets. You may also restrict your fiduciary's access to email, text messages, and social media accounts if you do not consent.
The UFADAA was amended in 2015 and since then it has been adopted by many states. You should consult with your attorney from time to time to assure your estate plan is up to date under current law and still reflects your wishes.
Tip for October, 2016
When making charitable donations be on the alert for scams. If you are unsure, ask to see their IRS tax determination letter or go to IRS.gov and use the "EO Select Check" tool. Be aware that some scammers use names deliberately similar to known and respected organizations. If you are unsure to whom you are giving you should follow up to be sure you are donating to the right organization.
When donating online ensure the web address is secure. It should start with "https" and match the charity to which you are donating. Never give out your credit card number, bank account number or any personal information over the phone unless you know with whom you are dealing.
Tip for September, 2016
You may own property or other assets that pass directly to your heirs on your death and bypass your Will or Trust. For example property held in joint tenancy (sometimes called joint tenancy with right of survivorship) will pass to the surviving tenants upon your death.
Assets that let you name a beneficiary, such as life insurance, annuities, IRAs, pensions, etc., generally will pass to the designated beneficiary directly, regardless of your Will.
Make sure you advise your attorney about all of your assets when preparing your estate plan.
Tip for August, 2016
Many charitable organizations, such as the Winn Feline Foundation, are happy to accept shares of stock or mutual funds as donations.
If you donate appreciated stock you've held more than 12 months you may be able to deduct the full current value of the stock with NO capital gains taxes due. If you sell the stock yourself and donate the proceeds you may have to pay capital gains tax first.
So donating appreciated stock may mean less in taxes for you and may leave more for donation to Winn. It's a Winn-win situation.
Tip for July, 2016
When organizing your estate plan please be aware there are different kinds of estates.
Your Probate Estate consists of assets which are distributed under the terms of your Will (or intestacy if you have no Will), usually under court supervision.
Your gross or taxable estate consists of the total of your Probate Estate plus any non-probate assets plus other interests passing to another on your death. Non-probate assets may include property held in joint tenancy; assets placed in trust; retirement plans, IRA's, annuities, life insurance, payable-on-death bank accounts, transferable-on-death securities accounts and other assets not distributed by your Will. Real estate may be part of the Probate Estate if held as tenant in common or may be non-probate if held in trust or owned in joint tenancy with rights of survivorship.
You should keep in mind that changes to your Will do not usually affect non-probate assets. Care must be taken to assure proper distribution of the non-probate assets in your estate; updating your Will alone may not be enough.
Important Tip for June, 2016
The IRS reports a surge of phone scams in recent years by people claiming to be the IRS. These scammers often threaten taxpayers with arrest, seizure of assets, deportation, and more. The IRS states that they will never:
*Call to demand immediate payment, nor will the agency call about taxes owed without first having mailed you a bill.
*Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
*Require you to use a specific payment method for your taxes, such as a prepaid debit card.
*Ask for credit or debit card numbers over the phone.
*Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
Tip for May, 2016
Life insurance (whole life or term) is an often overlooked way to make charitable gifts. A gift of life insurance can be as simple as designating the charity as beneficiary or contingent beneficiary. Life insurance proceeds can go to the charity directly without probate, court costs, legal fees or unnecessary delays. The full benefit will go to the charity even if the donor dies after making only a few premium payments. A charitable gift can be made using life insurance without affecting assets earmarked for family members, such as a family home or business. It can also result in a federal estate tax deduction for the full amount paid to the charity. Current gifts of a life insurance policy itself, or a life insurance trust, may even create current income tax deductions now for the donor. Consult your tax advisor for more details.
Tip for April, 2016
Will you be changing your name because of a marriage, divorce, adoption or other event this year? On your tax return the name you use for yourself, your spouse or a dependent must match the name on record with the Social Security Administration (SSA). If the names on your tax return do not match SSA records it may cause delays when you file your taxes or prevent earnings from being posted to your SSA record. For information about how to change your name with the SSA and get a corrected Social Security card go to: www.ssa.gov.
Tip for March, 2016
A charitable life estate is a gift of real property to charity in which the donor reserves the right to live on the property (often a family home) until death. Since it is a completed charitable gift the donor may receive an immediate tax deduction based on the value of the remainder interest passed to the charity years later. The property is also removed from the donor’s estate so there is no estate tax and less property to administer. Since a personal residence may produce no immediate income there may be no reduction in current cash flow. Like other charitable deductions, any unused amount from a charitable life estate donation may be carried forward five years.
Tip for February, 2016
One often overlooked part of estate planning is making sure your heirs/family know who to contact after your death and where to find your documents, records and assets. It may be helpful to create a list which can be updated as needed. This would include the location of your original Will, Trust(s), life insurance policies or other estate planning papers. You should provide the names and contact information for your attorney, accountant, stockbroker or other financial advisors. You should list the places you keep important personal records like birth, marriage, death certificates, deeds, financial statements and records. Of course you should include information about your bank, brokerage or retirements accounts and your other assets or sources of income. As you gather your financial information and records to prepare your 2015 tax return, now would be a good time to prepare or update your list.
Tip for January, 2016
The holiday season brings many solicitations for charitable contributions from many worthy causes. But how can you be sure the organization asking for donations has qualified as a public charity? The IRS has a solution. Go to their web site at: https://apps.irs.gov/app/eos/. You can search for the status of charitable organizations by name or EIN (their tax ID number). Winn Feline Foundation (EIN 23-7138699) is a fully qualified public charity. Your donations to Winn are deductible as charitable contributions to the fullest extent permitted by law.