Estate planning can be a huge relief for you and your loved ones. A quality estate plan means a sense of security that your family and other important people in your life will be provided for at the time of your death.
You’ve worked hard for what you have, but the saying is all too true: you cannot take it with you when you die. So, you may as well pass along your assets through an airtight estate plan to people you care about, as opposed to the government.
To that point, there are important, not-so-obvious benefits of an estate plan, such as avoidance of specific taxes and fees.
Here are several ways to get the best benefits out of your estate planning:
Federal estate tax
The federal estate tax applies to high net worth individuals; for 2018 the estate tax exemption is $11.2 million/individual (up from $5.49 million in 2017 due to the new tax law). What does that mean exactly? It means that any one individual could leave up to that amount to heirs and pay no federal estate tax. For married couples, the limit is $22.4 million. These are important rates to know because estate taxes can be as high as 40 percent. (Which is pretty harsh!) The good news is that smart estate planning strategies exist to legally avoid the federal estate tax.
Customized estate planning
Without a customized estate plan, you and your estate may end up paying more in the long run in professional fees, court costs, and taxes. A customized estate plan is essentially a thorough plan that takes these potential future charges into consideration. It includes elements such as a managed distributions, which can help alleviate much of the tax burden on your beneficiaries.
Professional fees can include costs for services provided by accountants and lawyers. Using a flat rate with an attorney will be much more straightforward and to your long-term economic advantage. Why? Paying someone on the front end means less work and hassle down the road when your family is coping with your passing.
Allocating charitable contributions
This is my favorite strategy for avoiding a large brunt of taxes and fees. Mutually beneficial for both nonprofit organizations and estate beneficiaries, charitable contributions are a way to secure a lasting legacy, make a tangible community difference on the way out, and secure helpful tax deductions.
There is no one-size-fits-all approach to estate planning, and a legal professional can help you identify financial advantages and benefits. (Yet another reason why you need a reputable attorney to craft your estate plan.)
If a charitable contribution is made to a foreign organization, the donor generally cannot deduct the contribution for income tax purposes. Exceptions may apply in very limited situations; specifically, the U.S. has tax treaties with Canada, Israel, and Mexico. Generally, though, if the donee is a foreign charitable organization an income tax deduction is unavailable. Interestingly enough, both the estate and gift tax charitable deductions are available for gifts to foreign charitable organizations.
So, assume Jill Donor wants to help Charity X, which is organized and operated in Paris, France. If Donor made the gift during lifetime then no income tax deduction would be allowed because gifts to foreign charities normally are not deductible for federal income tax purposes. Note, however, that the lifetime gift removes the asset from Jill’s estate, so the gift would have the same effect as a charitable bequest from Donor’s will.
It is important to know where the charity is organized and operated. If the organization is operated organized in a foreign nation – such as our example charity organized and operated in Paris, France – donations to such organizations are not eligible for the federal income tax deduction. This is true regardless if donations to a similar organization in the U.S.–such as a similar organization organized and operated in Paris, Texas–would be eligible.
A donor in doubt about a deduction can seek information from the charity, of course. And, a donor can search for the charity using the IRS’ “Select Check” online search tool.
Of course, if concerned about deductibility, a potential donor should also seek advice from a professional advisor. I’m happy to help, so don’t hesitate to reach out via email (gordon@gordonfischerlawfirm.com) or by phone (515-371-6077) if you’re considering making a donation to a foreign-based charity.
https://www.gordonfischerlawfirm.com/wp-content/uploads/2015/11/dawid-zawila-279998.jpg23393509Gordon Fischerhttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngGordon Fischer2017-09-12 13:57:192020-05-18 11:28:57Donations to Foreign Charities not Deductible for Income Tax
I’m excited to present an upcoming Expert Edge Seminar hosted by the Iowa City Area Chamber of Commerce. The presentation topic, Succession Success: Business Planning in Six Simple Steps, is super important and relevant for entrepreneurs and business owners.
Why? Because taking calculated risks in business is often smart, but taking risks with the future of your business is a gamble you don’t want to chance.
Business owners should certainly have a personal estate plan, but also a business succession plan as well.
Through my practice I’ve worked with many business owners(and nonprofit leaders) on the “what, why, and how” of planning for a lasting legacy. My (interesting, engaging, and not boring) presentation will include the important elements:
What is a “business will?”
Why do you need a business succession plan?
How can your small business support your favorite charities and your retirement simultaneously?
Six essential steps for succession success
Take some time out of your work day to invest in your future; I would love to see you at the presentation on Wednesday September 13, 11:30 a.m.-1 p.m. The cost includes lunch and is $15 for members and $25 for non-members. The location will be at the beautiful BioVentures Center, 2500 Crosspark Road, Coralville.
https://www.gordonfischerlawfirm.com/wp-content/uploads/2017/08/18193950_1323317771092067_4551680708065664092_n.jpg650960Gordon Fischerhttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngGordon Fischer2017-09-07 02:29:252020-05-18 11:28:57Upcoming Presentation: Succession Success, Business Planning in Six Simple Steps
Benefits of Smart Estate Planning: Avoiding Taxes and Fees
Estates & Estate Planning, Taxes & FinanceEstate planning can be a huge relief for you and your loved ones. A quality estate plan means a sense of security that your family and other important people in your life will be provided for at the time of your death.
You’ve worked hard for what you have, but the saying is all too true: you cannot take it with you when you die. So, you may as well pass along your assets through an airtight estate plan to people you care about, as opposed to the government.
To that point, there are important, not-so-obvious benefits of an estate plan, such as avoidance of specific taxes and fees.
Here are several ways to get the best benefits out of your estate planning:
Federal estate tax
The federal estate tax applies to high net worth individuals; for 2018 the estate tax exemption is $11.2 million/individual (up from $5.49 million in 2017 due to the new tax law). What does that mean exactly? It means that any one individual could leave up to that amount to heirs and pay no federal estate tax. For married couples, the limit is $22.4 million. These are important rates to know because estate taxes can be as high as 40 percent. (Which is pretty harsh!) The good news is that smart estate planning strategies exist to legally avoid the federal estate tax.
Customized estate planning
Without a customized estate plan, you and your estate may end up paying more in the long run in professional fees, court costs, and taxes. A customized estate plan is essentially a thorough plan that takes these potential future charges into consideration. It includes elements such as a managed distributions, which can help alleviate much of the tax burden on your beneficiaries.
A customized, smart, up-to-date estate plan can mean your estate avoids court costs almost entirely. Optimally you want to avoid the worst case scenario (aka litigation) with certain estate planning provisions.
Professional fees can include costs for services provided by accountants and lawyers. Using a flat rate with an attorney will be much more straightforward and to your long-term economic advantage. Why? Paying someone on the front end means less work and hassle down the road when your family is coping with your passing.
Allocating charitable contributions
This is my favorite strategy for avoiding a large brunt of taxes and fees. Mutually beneficial for both nonprofit organizations and estate beneficiaries, charitable contributions are a way to secure a lasting legacy, make a tangible community difference on the way out, and secure helpful tax deductions.
There is no one-size-fits-all approach to estate planning, and a legal professional can help you identify financial advantages and benefits. (Yet another reason why you need a reputable attorney to craft your estate plan.)
Have questions? Need more information?
Click here to download my free, no-obligation Estate Plan Questionnaire or feel free to reach out any time. You can contact me by email at Gordon@gordonfischerlawfirm.com or give me a call at 515-371-6077.
Donations to Foreign Charities not Deductible for Income Tax
Charitable Giving, Taxes & FinanceIf a charitable contribution is made to a foreign organization, the donor generally cannot deduct the contribution for income tax purposes. Exceptions may apply in very limited situations; specifically, the U.S. has tax treaties with Canada, Israel, and Mexico. Generally, though, if the donee is a foreign charitable organization an income tax deduction is unavailable. Interestingly enough, both the estate and gift tax charitable deductions are available for gifts to foreign charitable organizations.
So, assume Jill Donor wants to help Charity X, which is organized and operated in Paris, France. If Donor made the gift during lifetime then no income tax deduction would be allowed because gifts to foreign charities normally are not deductible for federal income tax purposes. Note, however, that the lifetime gift removes the asset from Jill’s estate, so the gift would have the same effect as a charitable bequest from Donor’s will.
It is important to know where the charity is organized and operated. If the organization is operated organized in a foreign nation – such as our example charity organized and operated in Paris, France – donations to such organizations are not eligible for the federal income tax deduction. This is true regardless if donations to a similar organization in the U.S.–such as a similar organization organized and operated in Paris, Texas–would be eligible.
A donor in doubt about a deduction can seek information from the charity, of course. And, a donor can search for the charity using the IRS’ “Select Check” online search tool.
Of course, if concerned about deductibility, a potential donor should also seek advice from a professional advisor. I’m happy to help, so don’t hesitate to reach out via email (gordon@gordonfischerlawfirm.com) or by phone (515-371-6077) if you’re considering making a donation to a foreign-based charity.
Upcoming Presentation: Succession Success, Business Planning in Six Simple Steps
Events, From Gordon's Desk..., NewsI’m excited to present an upcoming Expert Edge Seminar hosted by the Iowa City Area Chamber of Commerce. The presentation topic, Succession Success: Business Planning in Six Simple Steps, is super important and relevant for entrepreneurs and business owners.
Why? Because taking calculated risks in business is often smart, but taking risks with the future of your business is a gamble you don’t want to chance.
Business owners should certainly have a personal estate plan, but also a business succession plan as well.
Through my practice I’ve worked with many business owners (and nonprofit leaders) on the “what, why, and how” of planning for a lasting legacy. My (interesting, engaging, and not boring) presentation will include the important elements:
Take some time out of your work day to invest in your future; I would love to see you at the presentation on Wednesday September 13, 11:30 a.m.-1 p.m. The cost includes lunch and is $15 for members and $25 for non-members. The location will be at the beautiful BioVentures Center, 2500 Crosspark Road, Coralville.
Definitely save your spot for what should be an informative, interesting, and even fun lunch hour. Click here to register on the Iowa City Chamber of Commerce website.