Private Foundations: Avoid Jeopardizing Investments

jeopardizing investments board meeting

Public charities and private foundations are both classified as 501(c)(3)s by the IRS. However, the different nonprofit operating structures come with different benefits, requirements, and challenges that can make navigating compliance difficult. I’ve written previously on aspects of private foundations including prohibited grants, payout requirements, and avoiding self-dealing. The best way to deal with many of the ins and outs of learning about private foundations is to deal with each individually; today let’s focus on jeopardizing investments.

Don’t Jeopardize the Foundation

Failing to exercise prudence and investing in ways that threaten the foundation’s ability to carry out its exempt purposes—called jeopardizing investment—and can result in a stiff penalty.

Many factors can contribute when determining whether or not an investment can be considered jeopardizing. At the least, a private foundation’s managers must exercise reasonable, ordinary business judgment and prudence in investing a foundation’s assets. Investments should also be made with the short and longterm financial needs of the entity in mind. This is part of baseline fiduciary duty board members must act with by closely overseeing the nonprofit’s finances.

Payout Requirements for Private Foundations

Penalty Payment

In cases of jeopardizing investments, an excise tax of 10% is imposed on the foundation for the IRS-defined taxable period. Foundation managers can also be held personally liable and taxed up to a max of $10,000 (or 10% of the jeopardizing investment) if the “knowing, willfully, and without reasonable cause” participated in the making of the investment.

Furthermore, if the foundation does not take steps to remove an investment, an additional tax can be imposed on both the foundation and the responsible foundation managers.

High-Risk Activities: Proceed with Caution

While no category of investment is outright prohibited, a private foundation’s managers must pay close attention to high-risk activities, such as trading securities on margin, trading in commodities futures, and short selling, among others.

Private Foundations: Prohibited Grants

Get the Right Advice

All of this said, this is general advice and each charitable organization is unique. I highly recommend seeking out an attorney well-versed in nonprofit law to assist with multiple aspects of the charitable organization life cycle from the formation through employee hiring through board development.

Questions? Want to make sure your private foundation is taking the right steps to avoid adverse consequences like audits and taxes on top of everything else there is to keep track of? Don’t hesitate to contact me.

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The Importance of Discussing Your Estate with Your Family

two women sitting on bench

One of the worst-case estate planning scenarios for any family is in-fighting which results from avoidance of estate planning conversations. Often this avoidance arises from not wanting to risk offending a relative.

I’ve known some couples who haven’t been able to agree on an important decision, such as who will take care of the children in the event of them both passing. Since they can’t reach an agreement they decide to bypass the conversation entirely and leave their children without a legal guardian. Which is, of course, the worst possible decision of all!

How you communicate your wishes to your family depends entirely on the family dynamic. One interesting concept I’ve heard of for family heirloom-decisions is to give your beneficiaries monopoly money and have them bid against each other for different items in an auction format. While that could make for a fun (albeit competitive) game night, it’s important that your loved one realize the importance and finality of an estate plan.

No matter how you determine decisions such as property dispersal, a professional estate planner can help you fully understand all the implications of your estate plan.

Show Your Kids You Love ‘Em with a Testamentary Trust

Tricky Family Situations

I’ve seen variations of this potentially tricky situation many times.

Three brothers grow up on a farm. Eventually, two of the brothers moved to the city while the third continued to run the farm’s operations. When their parents passed away, the third brother who had managed the farm, inherited the entire property while the brothers received none of the farm assets. As you can imagine, even if two of the brothers were not actively involved in the farm’s operations, if the parents died without discussing the estate arrangement with all of their children conflict could ensue between the siblings.

Then consider if the parents in this scenario divided out the farm assets between the brothers, whether or not they had a hand in helping manage the property. The brother who actually, actively manages the farm may feel slighted. Either way, such situations are made thorny when there’s no upfront, clear communication.

Bottom Line

two young people talking near beach

Estate planning can be an extremely difficult decision-making process. It is something that should be discussed with your loved ones, family members, and beneficiaries, especially when your choices may take them by surprise. Help everyone — yourself included — achieve peace of mind by seeking professional help to draft a sturdy estate plan. And then your estate planner can help you communicate your decisions to your loved ones.

Have questions? Need more information?

A great place to get started with your estate plan is with my free (no obligation) Estate Plan Questionnaire or feel free to reach out at any time.

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When do Nonprofits Need to File Form 990 in 2020

alarm clock on table

Most people have Tax Day earmarked in their minds like a birthday or federal holiday (typically it’s April 15, although with the nationwide COVID-19 pandemic the IRS pushed the due date for filing income taxes back to July 15, 2020). Nonprofit leaders should have another day highlighted on their calendars for the next few years: when the annual reporting return, Form 990, is due.

Tax-exempt nonprofit organizations don’t pay federal taxes (obviously from the “tax-exempt” category), but the IRS still requires certain information in order to evaluate organizations on details like programs, finances, governance, and mission. It’s a way of confirming that tax-exempt entities are still qualified to operate without paying federal taxes. Form 990s are also made available to the public so there’s also accountability and transparency involved.

Due date?

man typing on computer with phone in forefront

So, when is Form 990 due exactly? It depends on the end of your organization’s taxable year; the form is usually due the 15th of the fifth month after the organization’s taxable year.  For most tax-exempt organizations that follow the typical calendar year (January 1 through December 31), this means Form 990 is due on May 15 every year.

However, on April 9, 2020, the IRS issued Notice 2020-23, which granted nonprofits and foundations the opportunity to extend the filing due date out to July 15, 2020. Taxes owed with Form 990-PF and Form 990-T are also due at the time of the filing. Additionally, Form 8868, “Application for Automatic Extension of Time to File an Exempt Organization Return,” can be filed to request an additional extension until November 15, 2020. Note that

What happens if there’s a failure to file?

Just like if you fail to file your income taxes there are repercussions, if an organization is required to file Form 990 and fails to for three consecutive years, the IRS will automatically revoke tax-exempt status. That’s right, no questions, no appeal process, just revocation in accordance with the law. Timely submission of Form 990 also can help your nonprofit organization avoid filing additional documents and certain user fees.

Collective Responsibilities of Nonprofit Boards

What happens if tax-exempt status is revoked?

If your nonprofit’s tax-exempt status is revoked, then the organization will have to pay corporate income tax on annual revenue. Additionally, the organization may be subject to penalties and back taxes if the revocation date was in the previous tax year. The nonprofit will then lose any state tax exemptions that were dependent on federal tax-exempt status. (Common examples of such state tax exemptions are property, income, and sales/use taxes.) Of course, the organization will no longer be able to receive tax-deductible charitable contributions and, accordingly, donors will no longer be able to receive the federal income charitable deductions for any gifts post-revocation date. Losing tax-exempt status will also disqualify the nonprofit from receiving many private foundations’ grants.

First Day of the Season: Spring Ahead with Nonprofit Success

Be prepared for the filing date!

Form 990 is over 10 pages (not including additional schedules and written attachments) so your organization should get jump start on the process. The best way to be prepared, year after year, is to have updated and applicable policies asked about on the form readily available to be referenced. I’m offering a great deal that features 10 policies related to Form 990 for $990. The rate includes a comprehensive consultation and full review round.

Any questions about when your nonprofit specifically needs to file, or want to discuss how the “10 for 990” special could work for you? Contact me at any time via email or by phone (515-371-6077).

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Be a Better Board: Training on 10 Basic Responsibilities of Nonprofit Boards

board meeting with materials on table

While many nonprofit operations have shifted in some way or another during COVID-19, organizations do need to prep for a post-pandemic world. An ad hoc approach or reliance on what worked in the past may no longer be a strategic path forward.

I love the opportunity to speak with nonprofit boards of all sizes to help them govern the charitable organization in mission fulfillment in the utmost ethical and legal manner possible. While we can’t get together in the present due to public health concerns, leaders who are thinking ahead will want to schedule such trainings well in advance.

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I highly recommend organizations of all sizes host training for their board members regarding their ten basic responsibilities, individually and collectively, within the broader context of modern best practices. I provide a two-hour training/orientation on these ten basic responsibilities, and the information below is intended as a simplified summary of this training.

Tailored Presentations

My live training session can be tailored to the nonprofit’s specific size, needs, and experience. The training includes an engaging visual presentation, handouts, and plenty of time for questions and discussion. Slides will also be sent out to attendees following the training. The following is a brief outline of the information I would present to the board.

10 Basic Responsibilities of Nonprofit Board Members

The ten basic responsibilities of nonprofit board members are as follows:

  1. Determine the organization’s mission, vision, objectives, and goals, and then advocate for them.
  • The board is responsible for ensuring’s mission, vision, objectives, and goals are plainly stated, embraced by all, and enthusiastically supported.

Nonprofit Document Drafting: 2 Common Problems to Avoid

  1. Hire successful staff.
  • The board’s ability to recruit, support, reasonably compensate, and retain effective staff, especially the executive director, will be a crucial factor in the nonprofit’s success.
  • No matter how talented and experienced, employees need to clearly know their rights and responsibilities, through written policies and procedures, such as an employee handbook, employee agreement(s), and regular, formal performance review(s).
  1. Adopt “best practice” policies and procedures.
  • The IRS requires certain information from your organization to be submitted annually via Form 990 “Return of Organization Exempt From Income Tax.” To that point, the 990 asks nonprofits about policies and procedures that help ensure the nonprofit is conducting business in a transparent way that’s consistent with their exempt purposes. Specific governance policies encouraged by the IRS limit potential abuse, protect against vulnerabilities and prevent activities that would go beyond permitted nonprofit activities.

25 Days of Giving: Nonprofit Policies Your Organization Needs to Consider

  1. Ensure effective planning.
  • Through planning, the board and staff translate the nonprofit’s mission into objectives and goals, used to focus resources and energy.
  • The board is responsible for actively participating in and approving decisions that set the nonprofit’s strategic direction.
  1. Monitor and strengthen programs and services.
  • Given limited funds, but unlimited demands on those funds, the board ultimately must decide among competing priorities.
  • What the nonprofit actually does, and how well it does it, should guide all board inquiries.
  1. Ensure adequate financial resources.
  • A nonprofit can only be as effective as its financial resources.
  • Although much can and should be expected of the staff, the board is chiefly responsible for ensuring it has the funds it needs and that the organization does not spend beyond its means.

board training at wood table

  1. Provide financial oversight.
  • Safeguarding organizational assets is one of the most important board functions.
  1. Build and sustain a competent board.
  • A major issue the board and executive director need to answer is: How should we define the ideal mix and number of professional skills, backgrounds, experience, demographics, and other characteristics we should seek in our board members?
  • Board members must set and persistently articulate the level of expectation that they will hold themselves and the organization to.

Best Board Ever: Your Nonprofit Needs this Free Guide

  1. Ensure legal and ethical integrity.
  • The organization’s reputation and public standing require everyone to take three watchwords seriously: compliance, transparency, and accountability.

Compliance

The term “compliance” is simply shorthand for the regulatory and legal requirements imposed by the government and regulatory bodies at local, state, and federal levels that are considered part of a board’s fiduciary responsibility.

Transparency

Nonprofit organizations are expected to routinely and openly share more, and more complete, information to the media and the public about their financial condition, major activities, and staff compensation. A charitable nonprofit should make certain information about its operations, including its governance, finances, programs, and activities, widely available to the public.

Accountability

Although the board sets and periodically assesses the adequacy of major organizational policy, accountability measures ordinarily and appropriately fall to management. But the board needs to consistently ensure the organization is accountable to those who it serves, those who support it, and to the greater community.

Collective Responsibilities of Nonprofit Boards

  1. Enhance the organization’s public standing.
  • Board members serve as a link – the vital link – between the nonprofit and its board members, donors, potential donors, employees, volunteers, other stakeholders, and the community at large.
  • Board members should think of themselves as the nonprofit’s foremost advocates and ambassadors, hopefully, even after they leave the board!

Nonprofit Policy Special: 10 for Form 990

Training Beneficial for New and Continuing Members

The “ten basics: as set forth above, tends to be an important training I recommend for all nonprofit boards and both new and returning board members. However, if your board is in need of a different training related to a specific aspect of organizational governance, such as governing midst the consequences of COVID-19, I can tailor the training accordingly. Most importantly, the training needs to be applicable and appropriate for your individual board.

Let’s Discuss What Your Organization Needs

Interested in hosting a two-hour training containing content individualized to your organization? That’s great and we can look to a date when we expect to no longer be social distancing and quarantining.

Generally, I charge a flat fee and this fee means no surprises for you or your budget. I’m also very conscious of pervasive budget constraints and will work with you and your budget.

The fee includes as many conferences as needed in preparation, materials during and following the training, and an active Q&A session throughout the training.

To discuss further, please don’t hesitate to contact me via email (gordon@gordonfischerlawfirm.com) or on my cell (515-371-6077).

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Doctor Directive: Place Important Estate Planning Documents on File

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doctor and patient

Back before COVID-19 made its way to Iowa I had an appointment at the University of Iowa Hospital. Don’t worry, it was nothing serious. Beyond the facility, technology, and the clearly talented health care providers, what impressed me most was the nurse asked if I had a health care power of attorney and/or living will and if I had them on file there. Of course, I got quite excited that the hospital is putting this important part of estate planning front and center as a part of the checkup where they take your vitals and such.

Now, with a pandemic front and center, this often overlooked step in estate planning is more salient than ever. In case you don’t have a helpful nurse to prompt you to take this important step, allow me to issue the reminder.

Once your estate plan is executed you should store it properly, as well as give a copy of certain documents to your doctor(s). Your doctor doesn’t need your entire estate plan on record, but they should have a copy of your health care power of attorney and health/medical-related documents, such as a living will. You should request these documents to be placed in your medical records.

What a Living Will & Health Care Power of Attorney Mean for your Medical Care

What Do YOU Want?

A major benefit of this simple action is that if anything unexpected happens, your doctors and their teams will have your detailed wishes readily available. Giving a copy to your health care provider(s) is especially important in the case where you have been incapacitated (such as in a coma or under anesthesia) and want a specific person (like a spouse, adult child, or sibling) to be able to important decisions on your behalf. You want there to be no question as to whom you trust to make those decisions. You also want there to be no questions when it comes to personal choices regarding things like blood transfusions and being kept alive on machines.

Health Care Power of Attorney: What it is & Why you Need it

Access to Medical Records

When the health care power of attorney goes into effect, your designated representative will also have access to your medical records (which would otherwise be undisclosed due to HIPAA rules). If your doctor has your power of attorney on file, there will be significantly less red tape to your representative accessing essential information.

Remember Revisions

If you make revisions to your estate plan documents, such as who your designated health care representative is or specifics included in your living will make sure you give the updated version to your doctor’s office. You don’t want them operating off of an old version if an emergency occurs.

5 Scenarios for Estate Planning Revisions

Questions about estate planning? Think it may be time to update your health care power of attorney document? Don’t hesitate to contact me. Want to get started? A great place to start is with this free, no-obligation estate plan questionnaire.

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Pop Quiz: How Much do you know about this Important Estate Planning Document?

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doctor holding stethoscope

Take a break from whatever you’re doing for entertainment during these socially distant days to test your knowledge on how much you know about health care power of attorney—a particularly important estate planning document. Because I’ve never particularly enjoyed tests (who does?), I’ll give you a hint; all the answers can be found in this recent blog post:

Health Care Power of Attorney: What it is & Why you Need it

To make things even easier, all of the statements below are either true or false.

1. An estate plan is a set of legal documents to prepare you (and your family and loved ones) for your death or disability.

2. There are six basic legal documents that nearly everyone should have as a part of an estate plan:

3. A health care PoA is a legal document that allows you to select the person (your “agent”) that you want to make health care decisions on your behalf, if and when you become unable to make them for yourself.

4. Once your health care PoA goes into effect (typically most people elect to have this be the case only if an attending physician certifies you are unable to make medical decisions independently), your agent will then be able to make decisions for you based on the information you provided in your health care PoA.

5. If there are no specifics in your health care PoA relating to a unique situation, your agent can and should make health care decisions for you based on your best interests.

6. The person you select as your health care agent should be someone in whom you have the utmost trust.

7. The agent you select will be able to access your medical records, communicate with your health care providers, and so on.

8. Your health care PoA isn’t just about end-of-life decisions; it can cover many types of medical situations and decisions. For instance, you may choose to address organ donation, hospitalization, treatment in a nursing home, home health care, psychiatric treatment, and other situations in your health care PoA.

9. For people who feel strongly about not wanting to be kept alive with machines, this can be specifically covered in a document that can be part of your health care PoA, known as a living will.

10. If you don’t have a health care PoA and you should become incapacitated to the degree where you are unable to make health care decisions for yourself, your doctor(s) will ask your family and loved ones what to do. Ultimately, if your immediate family members cannot agree on a course of action, they would have to go to an Iowa Court to resolve the matter.

11. Going to court about a person’s medical care is very complicated, time-consuming, and expensive. This is especially true when compared with the convenience of simply putting a health care PoA in place should the need arise.

12. A health care PoA gives you control over how decisions are made for you, and the agent you choose will carry out your wishes.

13. Everyone can have unique issues and concerns when estate planning. It’s completely up to YOU as to what’s contained in your health care PoA. You name the agent(s). You decide what medical decisions will be covered and how. It’s all up to you.

14. Executing a health care PoA is a smart and responsible thing to do.

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All of these statements are true. That wasn’t too bad! How did you do?

Questions about how and why to execute a health care power of attorney document? Don’t hesitate to contact me. Want to get started? A great place to start is with this free, no-obligation estate plan questionnaire.

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Health Care Power of Attorney: What it is & Why you Need it

Right now health and safety are top of mind for most of us due to the COVID-19 global pandemic. Because of the potential medical implications of the virus, it’s incredibly important to consider who you trust to make important health care decisions on your behalf if you are unable to do so. I know it’s difficult to think about, but knowing you have your wishes clearly, legally articulated can provide at least some peace of mind.

A health care power of attorney is one of the documents I advise all Iowans invest in because it’s a document that can save your loved ones so much uncertainty and confusion in the future (if the document needs to be evoked). Just like you may have prepared for social distancing by purchasing the basic necessities, a health care PoA, in my opinion, is a legal necessity.

COVID-19: GFLF Legal Services Still Available & Accessible

Health Care PoA: One of Six “Must Have” Estate Plan Legal Documents

An estate plan is a set of legal documents to prepare you (and your family and loved ones) for your death or disability. There are six basic estate plan legal documents that nearly everyone should have:

1. Estate plan questionnaire
2. Last will and testament
3. Health care power of attorney (option for living will)
4. Financial power of attorney
5. Disposition of personal property
6. Disposition of Final Remains and Instructions

There are numerous other important estate planning tools, such as trusts, but these six documents are a common part of most everyone’s complete estate plan. And, the health care power of attorney document is certainly an important part of your overall estate plan.

Serious Incapacitation

A health care PoA becomes critically important when you’re seriously incapacitated and unable to make health care decisions for yourself. This new state of incapacitation, preventing you from making your own health care decisions, might be the result of serious illness, injury, lack of mental capacity, or some combination of all of these.

alarm clock with red cross on it

How a Health Care PoA Works

A health care PoA is a legal document that allows you to select the person (your “agent”) that you want to make health care decisions on your behalf, if and when you become unable to make them for yourself.

Once your health care PoA goes into effect (typically most people elect to have this be the case only if an attending physician certifies you are unable to make medical decisions independently), your agent will then be able to make decisions for you based on the information you provided in your health care PoA. If there are no specifics in your health care PoA relating to a unique situation, your agent can and should make health care decisions for you based on your best interests. Obviously, the person you select as your health care agent should be someone in whom you have the utmost trust.

Equally important, your agent will be able to access your medical records, communicate with your health care providers, and so on.

Doctor Directive: Place Important Estate Planning Documents on File

Many Types of Health Care Decision

Keep in mind your health care PoA isn’t just about end-of-life decisions; it can cover many types of medical situations and decisions. For instance, you may choose to address organ donation, hospitalization, treatment in a nursing home, home health care, psychiatric treatment, and other situations in your health care PoA.

For people who feel strongly about not wanting to be kept alive with machines, specifically covered in a document that can be thought of as a part of your health care PoA known as a living will.

brightly colored pills

What Happens Without a Health Care PoA?

If you don’t have a health care PoA and you should become disabled to the degree where you are unable to make health care decisions for yourself, your doctor(s) will ask your family and loved ones what to do.

You might disagree with the decision your family makes. Or, your family members may not be able to agree on how to handle your medical care.

Ultimately, if your immediate family members cannot agree on a course of action, they would have to go to an Iowa Court and have a conservator/guardian appointed for you. It may, or may not, be someone you would have chosen. Further, the conservator/guardian may make decisions you wouldn’t have made.

Going to court to plead for a guardianship and conservatorship is all very complicated, time-consuming, and expensive. This is especially true when compared with the convenience of simply putting a health care PoA in place should the need arise. A health care PoA gives you control over how decisions are made for you, and the agent you choose will carry out your wishes.

No “One-Size-Fits-All” HealthCare PoA

All Iowans are special and unique and have special and unique issues and concerns. It’s completely up to YOU as to what’s contained in your health care PoA. You name the agent(s). You decide what medical decisions will be covered and how. It’s all up to you.

What a Living Will & Health Care Power of Attorney Mean for your Medical Care

Do you have a Health Care Power of Attorney Yet?

We never know when or if an accident or illness will befall us and if it will render us incapacitated. Of course, we all hope that’s never a reality, but it’s better to be prepared in case the unexpected becomes existence.

Do you have further questions about a health care PoA for you or your family members? You can email me anytime at gordon@gordonfischerlawfirm.com or call me on my cell at 515-371-6077. I offer a free consultation to all, as well as a no-obligation, Estate Plan Questionnaire.

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3 Ideas for How to Help Nonprofits During COVID-19

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four faces covered by health masks

Consequences from COVID-19 including skyrocketing unemployment, mental health concerns, and general basic supply scarcity has meant an increased demand for services from nonprofits in a multitude of sectors. I’ve seen a number of successful efforts to help out local businesses, such as restaurants and shops, that are hurting from lack of foot traffic. These campaigns have focused on alternative revenue streams such as delivery deals and gift cards. The same concept can and should go be applied to your favorite nonprofit organizations as well.

Here are three ways you can help nonprofits while continuing to practice safe social distancing.

Donate cash under the CARES Act

The federal “Coronavirus Aid, Relief, and Economic Security” (CARES) Act was recently passed and among other policy goals, aims to incentivize charitable giving. The CARES Act creates a new federal income tax charitable deduction for total charitable contributions of up to $300. The incentive applies to cash contributions made in 2020 and can be claimed on tax forms next year. This deduction is an “above-the-line” deduction. This means it’s a deduction that applies to all taxpayers, regardless if they elect to itemize.

For those taxpayers who do itemize, the law lifts the existing cap on annual contributions from 60 to 100 percent of adjusted gross income. For corporations, the law raises the annual contributions limit from 10 to 25 percent. Likewise, the cap on corporate food donations has increased from 15 to 25 percent.

Protect yourself from coronavirus

Photo by Obi Onyeador on Unsplash

Gift retirement benefit plans

If you have a retirement benefit plan, like an IRA or 401(k), you may gift the entire plan, or just a percentage, to your favorite charity or charities upon your death. Retirement plans can be an ideal asset donation to a nonprofit organization because of the tax burden the plans may carry if paid to non-charitable beneficiaries, such as family members.

This can be accomplished by fully completing a beneficiary designation form from the account holder and name the intended nonprofit organization(s) as a beneficiary of your qualified plan. The funds you designate to charitable organizations will be distributed directly to the organizations tax-free and will pass outside of your estate, Individuals who elect this type of charitable giving can continue to make withdrawals from retirement plans during their lifetime.

25 Days of Giving: Help a Charity With Your Retirement Assets

Write in bequests to your estate plan

Execute an estate plan, or update an existing one, to include bequests (gifts) to the nonprofit organizations you care about. There are multiple different types of bequests which means testators have flexibility with the structure of their estate plans. An experienced estate planner will be able to advise you on all of your options, but here is a brief overview.

Pecuniary bequest

A gift of a fixed or stated sum of money designated in a donor’s will or trust.

Demonstrative bequest

A gift that comes from an explicit source such as a particular bank account.

Percentage bequest

A percentage bequest devises a set percentage—for example 5 percent of the value of the estate. A percentage bequest may be the best format for charitable bequest since it lets the charity benefit from any estate growth during the donor’s lifetime.

Specific bequest

A gift of a designated or specific item (like real estate, a vehicle, or artwork) in the will or trust. The item will very likely be sold by the nonprofit and the proceeds would benefit that nonprofit.

Residuary bequest

A gift of all or a portion of the remainder of the donor’s assets after all other bequests have been made as well as debts and taxes paid.

Contingent bequest

A gift made on the condition of a certain event that might or might not happen. A contingent bequest is specific and fails if the condition is not made. An example of a charitable contingent bequest might be if a certain person predeceases you,

Estate Planning & Charitable Giving during COVID-19: 2 New Iowa Lawyer Articles

This is just a small list, as there are many ways to efficiently and effectively make charitable donations in a tax-wise manner that benefits both parties involved. Because each individual’s financial situation is unique it’s highly recommended to consult with the appropriate professional advisors.

I’d be happy to discuss any questions, concerns, or ideas you may have. Contact me via email at gordon@gordonfischerlawfirm.com or by phone at 515-371-6077.

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Estate Planning & Charitable Giving during COVID-19: 2 New Iowa Lawyer Articles

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Attorney reading The Iowa Lawyer COVID-19

The Iowa State Bar Association recently published a special edition of The Iowa Lawyer, dedicated to legal situations and considerations related to the global pandemic of COVID-19.

Gordon Fischer Law Firm wrote two pieces for this volume. The first article provides tips for supporting nonprofits providing critical aid. The second piece covers best practices for estate planning during coronavirus and how getting even the basic documents in place can provide some peace of mind. The hope is that these pieces provide useful information for all Iowans, not just attorneys. Scroll to pages 15–18 on this PDF version of the publication to start reading!

Iowa Lawyer COVID-19 Cover April 2020

Also in the Iowa State Bar Association’s publication are some interesting stories on: managing anxiety and stress during this chaotic time; how to stay cybersecure while working from home; and what companies’ legal obligations are around the coronavirus, among many other worthwhile reads.

If you’re interested in reading GFLF’s previously published articles in past editions, click here to scan through the archives. Also, the articles got you thinking that it may be time to start on or revise your estate plan, check out GFLF’s free, no-obligation Estate Planning Questionnaire.

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No Fooling Around: These Estate Planning Mistakes are Not Funny

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april fool's day balloons

Hopefully, you didn’t get pranked too bad today or misled by a jokester on social media today. But, if you did, happy April Fool’s Day! We all love a good practical joke now and then, but the subject of estate planning is definitely not one to laugh at. If you already have an estate plan in place, that’s fantastic, but don’t let an old or inadequate estate plan make a fool out of your life, property, and legacy.

Review Your Estate Plan

Let this lighthearted April Fool’s day actually serve as a reminder to review your current documents and determine if you need to consider updated language, additional provisions, or a different strategy (like “upgrading” from a basic will to a trust). When revisiting your estate plan consider these common mistakes I see when reviewing folks’ less-than-optimal documents.

Happy Pi Day: The One Constant in Estate Planning is Change

Living Trusts Missing Retirement Plan Lingo

Many people have a valid portion of the estate assets investing in retirements plans like IRAs and 401(k)s. The mistake comes when people designate their revocable living trust as the beneficiary of these plans, but the trust hasn’t been written or updated to grant the trustee the power to manage the accounts placed in the trust. Without vesting this power in the successor trustee (presuming the testator was the initial trustee and then passed away), the trustee can lack the ability to properly deal with the plan assets and unfavorable income tax consequences can occur.

Uncertain if your revocable living trust properly contains the requisite retirement plan lingo? Simply check with an experienced estate planning attorney and invest in amending.

Retirement Benefit Plans and Charitable Giving

Outdated Living Wills

Also known as an “advanced medical directive,” your living will should contain the appropriate Health Insurance Portability and Accountability Act of 1996 (more commonly referred to as HIPAA) language. (HIPAA involves privacy and who can and cannot have access to your medical records.) If your living will was drafted pre-2001 (before Congress passed new rules governing the Act) it likely doesn’t contain the essential references to HIPPA. I’ve even seen some living wills written well after 2001 that didn’t have the proper provision. It may sound silly, but without this “magic” wording, your designated health care representative won’t have access to your medical records. Without this access, they may not be able to fulfill their duty in making the most informed decisions regarding your health care as possible. This mistake can be especially important if you’ve designated someone other than a close relative (such as a spouse or adult child) as your agent.

6 Things Iowans Should Know About Health Care Power of Attorney

Underfunded Living Trusts

Another mistake I’ve seen is living revocable trusts that are not fully funded. Undoubtedly, without the guidance of a quality estate planner, the funding process can feel overwhelming. When people procrastinate or run into roadblocks when placing assets into their trust they can get frustrated and fail to complete the process. This is a misstep with negative consequences because without funding the trust, it’s best thought of as an empty container waiting for a testator’s assets to fill it up. Without it, if the person with the underfunded trust passes away, the estate will still need to pass through the sluggish and costly probate process. And, quite frankly, the investment in the trust will have been for little benefit or advantage.

Let your estate planner help you through this process. Also, consider if you have any new major assets that need to be assigned to the trust.

Funding and Administering Your Living Trust

All jokes aside, every Iowan deserves a high quality and functional estate plan that meets their goals. Don’t be a fool and let more time go by before reviewing your plan! Please contact me with any questions; I offer a free one-hour consult.

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