Vrakas CPAs, Here Are Your Articles for Wednesday, December 07, 2016
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Estate Planning: The PBS Way

 

"Your estate plan can also be used to support the charitable causes that matter most to you, such as the quality programs and education services offered to our community by this station."

Does this sound familiar? Do you wonder whether this is a good idea for your estate planning? Often called planned gifts or legacy giving, naming a public TV or radio station or a library in your will or estate plan can be a win-win situation. The public entity sees this as a way to continue its mission for generations to come — as National Public Radio says on its website, "to realize today the ability to positively impact the future success of public radio." And donors take advantage of federal and state tax laws that may allow a reduction of income taxes, lower gift and estate taxes, and/or provide income during the donor's lifetime.

It's also a popular giving plan for colleges, some of which have put together glossy brochures to give to well-heeled alums.

Here are some of the ways public entities offer to help themselves and you at the same time:

  • If you're 70 1/2 or older, you can give up to $100,000 from your IRA directly to a qualified charity, such as public radio or TV, without having to pay income taxes on the money. There's no expiration date — you can make annual gifts to the organization you choose. If you haven't taken your required minimum distribution, your IRA charitable rollover gift satisfies part or all of the requirement.
  • You can designate a public entity like your local public TV station as the beneficiary of a percentage of your IRA assets. Once you complete a beneficiary designation form specifying the percentage, it's completely revocable during your lifetime, and your estate will receive an estate tax charitable deduction for this share.
  • You are allowed to gift up to $14,000 (for 2016) per year per person without having to declare the gift or pay gift taxes. Gifts made during your lifetime in excess of this amount will reduce your estate tax exemption, which currently is $5.45 million. (That figure may change in future years, so be sure to check before making detailed plans.)
  • If you've built up a sizable estate and are looking for ways to receive reliable payments, you can consider setting up a charitable remainder trust, which includes a partial charitable income tax deduction, the potential for increased income and upfront capital gains tax avoidance.

There are two ways to receive payments with charitable remainder trusts: annuity trusts that each year pay you the same dollar amount you choose at the start and remain the same, regardless of fluctuations in trust investments, and unitrusts that pay a variable amount based on a fixed percentage of the fair market value of the trust assets, so that your payments reflect the value of the trust — either increasing or decreasing.

Through these trusts, you can be eligible for a federal income tax charitable deduction and save income taxes.

While the monies generated through estate and deferred gifts enable public radio and television stations as well as libraries to feel financially secure, deferred gifts are used for general operating activities, says NPR.

National Public Radio has a Legacy Society that donors can take advantage of to learn about current events and new programming, while being invited to special happenings.

Many charities have a manager who can help with planned giving, but you should also have your own independent advisor to work with. The above numbers and provisions can change from year to year, and everyone's situation is different.

 

 
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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