You’ve probably heard you need to have a financial power of attorney in place, but the whole thing seems a little ambiguous…what does this important document (which is an important part of a complete estate plan) actually mean? Let’s cover the basics.

What is a financial power of attorney?

A financial power of attorney (“POA”) is a legal document that designates someone to handle your financial decisions on your behalf, if you are unable to do so while living, due to incapacitation. (Note that upon death, your financial power of attorney terminates and your will and/or trust kick in to guide decision making in your absence.)

There are two main types of financial power of attorney I offer my clients.

  • Immediate power—effective from the moment you sign it, without any medical certification; while immediate, you do not lose control of your affairs. (This is typically what I recommend.)
  • Springing power—becomes effective only upon medical certification that you are unable to carry on your legal and financial affairs.

What happens if I don’t have a financial POA?

If you don’t have a financial POA, and you were to become incapacitated, any financial decisions would need to be made by a court-appointed conservator. Under a court’s direction, the conservator would handle your financial matters. It’s a quite expensive and time consuming process, especially compared with the relative simplicity of executing a financial POA. Also, needless to say, most people would elect to trust their important financial decisions to a person they love and trust, over someone the court appoints.

After I die, can my agent continue to operate under my financial POA?

A common misperception is that your agent will be able to use this power after your death. Instead, at your death, any of the agent’s powers will be automatically revoked. The representative appointed through the probate process will carry out your estate plan.

Who should I choose to serve as my “attorney-in-fact?”

two people talking on the beach

The agent (or attorney-in-fact) you choose will be managing your finances, so it is critically important to choose someone trustworthy; someone who will not abuse or exploit this power; someone who will listen to your wishes, goals, and objectives, as included in the document or otherwise communicated; and someone who will look out for your best interests.

You also have the option of designating a successor agent who can take over if the original agent is unable or unwilling to serve. This is highly recommended.

Who should receive a copy of my financial POA?

The person named as agent and any person named as a successor agent should receive a copy. It may also be wise to share a copy with your financial institution(s), such as your bank/credit union, as well as with your financial advisor and/or accountant.

Can I revoke my financial POA?

Yes, you may revoke the financial POA at any time. You can also amend the financial POA (change it, revise it, etc.) at any time.

Are there other estate planning documents I need?

Yes, definitely! There are six “must have” estate planning documents. The financial power of attorney is one of these documents that create a comprehensive estate plan.

Who needs a financial power of attorney?

I’m a staunch believer that every adult Iowan needs an estate plan—including young professionalsnewlyweds, the non-wealthy, and especially people with minor children—and, therefore a financial power of attorney. A financial power of attorney can even be incredibly important (but often overlooked) for college students.


Do you have a financial POA? How about a full estate plan in place? Why or why not? I’d love to hear from you. Email me at gordon@gordonfischerlawfirm.com or call (515-371-6077).

hand holding flowers

It’s the end of January and that means Tax Day is creeping closer. You tend to hear a lot about what sort activities are tax deductible. You may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions. And, you’ll certainly want to be aware for substantiation purposes what contributions are indeed deductible.

But, in conquering your charitable giving goals, it’s just as important to know which nonprofit organizations are NOT qualified beneficiaries for tax-reducing gifts. Additionally, not all gifts to qualified charities are eligible. Contributions to certain entities may appear to be tax-deductible, but in actuality are not. This is not to say that these contributions are not valuable and helpful to the respective donees, it’s just that the U.S. government isn’t going to give you a tax break.

Knowing what you can and can’t claim helps you maximize the potential tax savings that the charitable tax deduction offers.

Contributions made to the following are NOT considered viable for the charitable deduction:

Promises and Pledges

man on computer in blue room

Let’s say you made a charitable pledge to a local 501(c)(3) for $150, but only paid $50 in donation during the tax year of the respective tax return. You can only deduct the $50 actually donated. Once you make the transfer of the rest of the pledge ($100) then you could deduct that from the appropriate tax year.

Political parties, campaigns, and action committees

It’s important to get involved in the process fo democracy, but joining politic through monetary support does not translate into a charitable donation. Funds given to political candidates, parties, and PACs cannot be claimed. This also includes money spent to host or attend fundraising events or advertising.

boy skateboarding with American flag cape

Fundraising tickets

I’m sure you cannot count all the times you’ve been asked to purchase raffle tickets, bingo cards, lottery-based drawings and the like. It’s a common fundraising tactic, but such costs are not deductible.

Personal benefit gifts

The IRS considers a charitable contribution to be one-sided. This means if you receive something in reciprocity for a donation—anything from a tote bag, to a plant, to a three-course dinner—only the amount in excess of the fair market value of the item/service received is deductible. Let’s say your little neighbor is selling popcorn to raise money for their scouting troop. You buy some popcorn from the kid for $10 and the retail value of such a popcorn tin is $6. This donation would translate into a $6 charitable deduction. Likewise, you purchase a $75 ticket to an annual event hosted by a qualified charity. The event includes a meal that would have cost you $30 at a restaurant; overall your charitable deduction would be $45. (Read more about quid pro quo donations here.)

Receipt-less donations

You’ve probably given more than you can write off from small cash donations to your church’s collection plate, the Salvation Army holiday bell ringer, and charity bake sales. Why cannot you just guesstimate, add this all up, and deduct the amount off of your taxes? Receipts. The IRS requires proof of all cash donations big and small; a canceled check, statement or receipt from the recipient organization can suffice for cash donations up to a $250 (in total), and then more substantiation is demanded.

Person-to-Person

I’ve seen many successful crowdfunding campaigns for individuals raising money for a multitude of things. Let’s say your cousin is raising money for an expensive medical procedure through an online site and you donate to help them reach their goal. Or, maybe your nephew is raising money to take a mission trip this summer. Unfortunately and contributions earmarked for a certain individual (despite the economic/medical/educational need) are not deductible, according to IRS Publication 526. However, if you were to make a contribution to a qualified organization that in turn helped your cousin or nephew out with a grant or scholarship, for example, the contribution would be deductible. Make note though, even if you were to give a contribution to a charity in order to help a specific individual, you cannot designate the money to one specific individual for the gift to. Basically, the contribution cannot be given directly or indirectly to a specific individual and still be tax deductible.

two people talking

The list could go on for contributions that are not deductible, but some other notable inclusions to be aware of include:

  • For-profit schools (nonprofit schools are good to go so long as donations are not made to benefit a specific individual)
  • For-profit hospitals (nonprofit hospitals are A-OK)
  • Foreign governments
  • Foreign-based nonprofits (with some exclusions for specific nation-states)
  • Fines or penalties paid to local or state governments
  • Value of your time for services volunteered to a charity
  • Value of blood donations (you just need to do that one out of the goodness of your heart…literally)
  • Dues, fees, or bills paid to country clubs, lodges, fraternal orders, or similar groups
  • College tuition (Even if the school is a nonprofit, tuition to attend the school is NOT tax deductible as a charitable contribution)
  • Professional groups/associations (such as civil leagues)

This may make it seem like there are many exceptions to the charitable deduction rule, however there are still an innumerable number of qualified nonprofit organizations that are a good way of reducing taxes (remember, you have to itemize) while also helping others. If you have questions about the charitable contribution tax deduction it’s a good idea to consult with your professional advisors. It’s also a good idea to heed these tips prior to making a charitable donation and double-check the organization’s status on the IRS’ Exempt Organizations Select Check tool, which allows users to search a list of organizations eligible to receive tax-deductible charitable contributions.

I would be happy to have a conversation regarding the tax code, the best time and way to maximize a charitable donation, and help ensure you’re in compliance in compliance with all state and federal laws. Contact me at via email or by cell phone (515-371-6077). 

GoFisch January Newsletter

The January edition of GoFisch is live! This month’s edition features:

Estate Planning Spotify GoFisch

  • A curated Spotify playlist to get you inspired to finally fill out my estate plan questionnaire.
  • The rundown on resolutions you can (and will) actually keep this year!
  • Nonprofit & philanthropy news.
  • Must-read blog post highlights.
  • A short video explaining how helping causes and organizations important to you can also help with your tax bill.

Like what you read? Don’t forget to subscribe to GoFisch and tell your friends!

red for hire sign

It may sound basic, obvious even, but if your nonprofit organization is hiring any employee or independent contractor, you NEED to have job descriptions for each role. And, not just basic job descriptions, but comprehensive overviews of the open position. Be it a position for chief executive officer, marketing manager, or programs director, the advice remains the same.

Job descriptions are in part a legal protection, and in part a primary means for announcing the open position to both internal and external stakeholders which is going to help you find or recruit the best candidates for the organization. If that’s not enough to convince you, consider these four major reasons:

  1. Job descriptions can be used as a basis for objective performance management. It provides both management and employees a shared understanding of the duties of the position.
  2. Job descriptions assist in making sure staff duties align with your organization’s overall mission and vision.
  3. When conducting interviews, job descriptions can, and should, inform the development of interview questions.
  4. Job descriptions can be the foundation of a compensation system that accurately reflects employees’ qualifications and responsibilities in the organization.

woman working on computer

I’m here to assist you and your organization on the legal aspects of nonprofit employment ranging from new hires, to employee handbook, to employment contracts. Don’t hesitate to contact me via email or phone (515-371-6077). We’ll schedule your free one-hour consultation and make a plan to set your organization up for success!

woman doing photo at sky

You’ve almost certainly had to designate your beneficiaries on savings and checking accounts, life insurance plan, annuity, 401(k), pension, or IRA. All of these accounts are passed along at the time of death via beneficiary designation (sometimes referred to as payable on death (PODs) or transfer on death (TODs) accounts). It’s easy to forget, but beneficiary designations take precedence over whatever is written in your will. So, even if you have the six basic “must have” estate planning documents in place, you still need to address who is named as your beneficiaries.

I have a few simple tips for reviewing and protecting your important accounts:

  1. Be sure to name a primary beneficiary (or beneficiaries), using the appropriate beneficiary designation forms.
  2. Be sure to also name an alternate beneficiary in case the first beneficiary dies before you.
  3. Don’t name your estate as the beneficiary (not without lots of expert advice).
  4. Review the beneficiary forms once a year to make sure they still reflect your wishes.
  5. Update the beneficiary forms more often if there has been a change in your life circumstances, such as a birth, adoption, marriage, divorce, or death. For example, if you’ve gotten a divorce you may not want your ex-spouse to be the beneficiary of your life insurance.
  6. Each time you change the beneficiary designation form, send it to the organization that holds the account, and request they acknowledge receipt.

 

couple holding hands in green space

Checking your beneficiary designations is a smart estate planning step you can take today. But, of course, you’re going to need a solid estate plan to account for all of your assets that are not transferred via beneficiary designation. A great way to get your key estate plan documents started is by downloading my free, no-obligation Estate Plan Questionnaire. You can also contact me by phone (515-371-6077) or email with any questions or concerns.

wall street sign

A less-than-obvious, but ideal asset for charitable giving is appreciated, long-term, publicly traded stock. The merits of this giving tool are numerous, but there are some questions I hear from donors considering this options. For instance, when do you assess the value of a stock donation—before the donation, during, or after? And, how do you determine a specific dollar value on an asset that’s perpetually fluctuating?

Simple Stock Equation

Forget stock charts or complicated formulas, there’s a simple solution. The value of a gift of publicly traded stock is the mean average of the high and low prices on the date of the gift.

For example, Jill Donor gifted 100 shares of Twitter stock to her favorite charity. On the date of Donor’s gift, the high was $25 per share and the low was $23 per share. In this case, the value of a share for charitable deduction purposes would be $23.50 ($25 + $22 divided by 2). The charitable deduction value of Donor’s gift would be $2,350 ($23.50 per share x 100 shares).

Any subsequent sales price, or current valuation (if the charity retains the stock), is irrelevant for valuing publicly traded stock and determining a donor’s charitable deduction. Again, only one factor matters: the average of the high and low selling price of the stock on the date of the gift! Of course, this equation doesn’t account for changes in the stock market in terms of what day would be better to donate over another. For that you’ll need to talk to your financial professional advisor or watch the trends to donate on a date with preferred value.


If you’re interested in gifting stock to a qualified charity, ensure you’re doing so in a way that maximizes all of your financial benefits and contact me for a free consult. Or, if you’re a nonprofit leader wanting to accept gifts of stocks but are unsure of how to facilitate, don’t hesitate to reach out via email or phone (515-371-6077).

church pews

I worry about all the folks going to church this morning. (I use “church” as a term that could be easily replaced with other houses of worship: synagogue, mosque, etc.) Here’s my specific concern: when the collection plate comes around, do folks give cash? Probably. And if so, are they documenting their charitable gift? Probably not. For most people, it’s a $20 here and a $10 there, but over the course of many Sundays that can add up quickly. The total figure of such donations to a tax-exempt organization, like your church, could be claimed as a federal income tax charitable deduction. But, without substantiation, you cannot claim the beneficial charitable deduction.

The IRS requires you to have records and documents backing up your claims of charitable donations. The greater the amount of the deduction you seek, the more records that are required. Let’s start with a basic category: gifts of cash less than $250.

Substantiation requirements for monetary gifts less than $250

wallet with cash money on top

A federal income tax deduction for a charitable contribution in the form of cash, check, or other monetary gift is not allowed unless the donor substantiates the deduction with a bank record or a written communication from the donee showing the name of the donee, the date of the contribution, and the amount of the contribution.

Meaning of “monetary gift”

For this purpose, the term “monetary gift” includes, of course, gifts of cash or by check. But monetary gift also includes gifts by use of:

  • credit card;
  • electronic fund transfer;
  • online payment service;
  • payroll deduction; or
  • transfer of a gift card redeemable for cash.

Meaning of “bank record”

Again, to claim the charitable deduction for any monetary gift, you need a bank record or written communication from the donee. The term “bank record” includes a statement from a financial institution, an electronic fund transfer receipt, a cancelled check, a scanned image of both sides of a cancelled check obtained from a bank website, or a credit card statement.

Meaning of “written communication”

The term “written communication” includes email. Presumably it also includes text messages. But, again, the written communication, whether paper or electronic, it must show the name of the donee, the date of the contribution, and the amount of the contribution.

I must repeat. A federal income tax deduction for a charitable contribution in the form of cash, check, or other monetary gift is not allowed unless the donor substantiates the deduction with a bank record or a written communication from the donee showing the name of the donee, the date of the contribution, and the amount of the contribution.

How about monetary gifts [as defined above] which are $250 or more? As to cash contributions of at least $250, an extra set of substantiation rules apply. Click here to read more.

pulling dollar out of wallet

Responsibility lies with the donor

Interestingly, the responsibility for obtaining this documentation lies with the donor. The donee (the charity) is not required to record or report this information to the IRS on behalf of the donor.

If this sounds like a lot, know you don’t have to navigate these requirements just by yourself. Contact me at any time to discuss your situation and charitable giving goals. We’ll figure out the best course of action together.

happy new year fireworks

Happy New Year! It’s 2018 and if you’re like me, “Auld Lang Syne” was playing merrily in the background as a cup of cheer was raised and confetti fluttered on New Year’s Eve. The title and main chorus of song ubiquitous with the holiday roughly translates to “for old times’ sake.” On that note I’ve spent some quality time (like the song eludes to) reminiscing about the year that’s gone by. I’ve reviewed what Gordon Fischer Law Firm tackled in 2017, but more importantly I’m looking ahead to where we want to go, how to get there, and how to improve along the way. I have a few “resolutions” I want to share…resolutions we actually intend to keep! These goals will work to further advance the mission of the firm “to promote and maximize charitable giving in Iowa.”

At Gordon Fischer Law Firm we fully intend to:

  • Post even more regular content on the GoFisch blog to make it ever easier for both donors and donees to effectuate charitable giving to/for their favorite causes.
  • Continue growing the monthly GoFisch newsletter (have you subscribed?).
  • Additionally, I would like to produce a regular specific newsletter for professional advisors (accountants, financial advisors, insurance agents, and fellow lawyers) with smart planning information to be able to further help Iowans.
  • Present an all-day seminar (for continued education credits) targeted to both nonprofit leaders and professional advisors to discuss all aspects of charitable giving and facilitate beneficial networking.
  • Continue demystifying estate planning for all Iowans—complete with basic forms to help that process along.

Tomorrow I’ll highlight aspects of estate planning and charitable giving you can (and should) incorporate into your goals for 2018. Do you already have such goals in mind? A few examples could be to stop making excuses to avoid estate planning, finally establish that living trust, or consult with a professional about a retained life estate. Don’t hesitate to contact me to discuss. Together we’ll likely be able to set a plan in place for you to achieve your goals (or resolutions) to truly make 2018 your best year yet.