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.
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.
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.
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,
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.
https://www.gordonfischerlawfirm.com/wp-content/uploads/2020/04/Screen-Shot-2020-04-07-at-12.25.33-AM.png6881044Gordon Fischerhttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngGordon Fischer2020-04-05 23:32:072020-05-18 11:28:333 Ideas for How to Help Nonprofits During 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!
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.
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.
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.
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.
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.
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.
https://www.gordonfischerlawfirm.com/wp-content/uploads/2019/04/Screen-Shot-2019-04-02-at-12.02.37-PM.png6791030Gordon Fischerhttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngGordon Fischer2020-04-01 06:43:192020-05-18 11:28:33No Fooling Around: These Estate Planning Mistakes are Not Funny
3 Ideas for How to Help Nonprofits During COVID-19
Charitable Giving, Estates & Estate PlanningConsequences 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.
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.
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,
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.
Estate Planning & Charitable Giving during COVID-19: 2 New Iowa Lawyer Articles
Charitable Giving, Estates & Estate Planning, From Gordon's Desk...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!
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.
No Fooling Around: These Estate Planning Mistakes are Not Funny
Estates & Estate Planning, Trusts, Wills, Wills, Trusts & EstatesHopefully, 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.
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.
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.
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.
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.