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Rows of 100 dollar bills

There’s that pragmatic, and slightly depressing saying that the only sure things in life are death and taxes. But what about taxes on death? Just like you can’t escape taxes in life, they government can tax your estate at death. Indeed, it’s often referred to as the “death tax.”  And, just like taxpayers file both federal and state income taxes, there are both federal and state estate taxes.

People having a meeting at a desk with papers

What is an Estate Tax?

When a U.S. resident dies, an estate tax may be levied against the gross estate, which includes the fair market value (FMV) of all owned property, as well as any assets the deceased had interest in (e.g. assets like life insurance). Think of it like the gross income figure you calculate for income tax returns.

Federal Estate Tax

Let’s start with federal estate taxes. Because this is a federal tax, this applies regardless of what state you die in.

Not too long ago, I reviewed the Tax Cuts and Jobs Act’s (TCJA) impact on estate planning. (Why? Because smart estate planning accounts for taxes and employs strategies that minimize said taxes.) One of the most significant changes from the “new tax law” was with the estate tax exemption. This is the figure subtracted from an estate’s gross value in order to calculate federal taxes.

For tax years 2018 through 2025, the exemption from estate, gift, and generation-skipping taxes was raised from $5.49 million per individual to an approximated $11.2 million. (Why do I say approximated? Because the exemption base is indexed, so the base for the 2017 tax year was $5 million; for the 2018 tax year, the base is now $10 million and indexed for inflation.) In plain terms, this means each individual should be able to pass over $11 million to their heirs before any estate, gift, and generation-skipping taxes apply.

If you’re married, this means your estate exemption now equals $22.4 million. (Or, you could think of it like each couple now has an additional $11.2 million in assets available to gift or make a testamentary transfer with thoughtful estate planning.)

The bottom line: if your estate is worth less than the federal exemption rates, it will be free from the estate taxes after you die. If you have an estate valued at more than the exemption threshold (and smart estate planning strategies are not appropriately implemented to shield assets from being counted in your estate’s gross value), your taxable estate will met with a tax rate of up to 40 percent.

State Estate Taxes

The caveat (and good news for residents of the majority of states) is that not all states have a state estate tax…including Iowa! Currently, 12 states and D.C. also impose an estate tax on residents. It’s important to note that the exemption rates for these state estate taxes are much lower than the federal exemption rate. For instance, our neighbors to the east in Illinois have an exemption rate of $4 million and a graduated marginal tax rate of of o.8 to 16 percent.

Here’s an incredibly helpful map from Tax Foundation that illustrates this.

estate tax map

Note: figures may have changed since time of publication of this map.

Is there any reason an Iowan would need to account for state estate taxes in their estate planning? Only if they own real estate in another state. Let’s consider a hypothetical example to explain this better.

Alice with her Minnesota Lake House

Alice is an Iowa resident. She died in March 2018 owning a vacation home on her favorite lake in Minnesota. Alice’s gross estate totals $2.8 million. What estate taxes will Alice’s estate be responsible for?

Iowa’s Inheritance Tax

While Iowans largely escape the state estate tax, there is a state inheritance tax. The inheritance tax is different than the estate tax (although they they are often incorrectly used interchangeably). The estate tax is based purely on gross value and regardless of who inherits what; the inheritance tax is only charged against the share of inheritance of certain estate beneficiaries.

There’s a lot to note about Iowa’s inheritance tax, so I’ll do a deep dive into that here on the GoFisch blog later this week!

Questions about how taxes (and other fees) may affect your estate plan? Need to revise your current plan after changes to the tax code? Don’t hesitate to contact me via email at gordon@gordonfischerlawfirm.com or by phone (515-371-6077).

My first attempt at a post to celebrate the spring equinox was a bad pun off of “springing power of attorney” (get it?!) that just didn’t work. Instead, I got by with a little help from my Facebook friends the following query:

March 20 is the very first day of Spring. What’s your most very favorite thing about Spring?

There were many excellent responses and it made me all that more excited to say hello to baseball season (go White Sox!) and goodbye to any “Nor’Easter” storms. Because the GoFisch blog has a knack for tying U.S./world news and events in with the mission to promote and maximize charitable giving in Iowa, I thought this start to the season fits in swimmingly with takeaways for Iowa nonprofits.

Winter Is Not Coming

As might be expected, some folks were simply glad winter was (seemingly, mostly) over. Carol Phillips, Polk County Bar Association executive director, bluntly stated her fave thing about spring was “[t]hat it isn’t winter!”

Ken Fuson, Simpson College’s media strategist, hoped for the “possibility that we may not have any more freezing rain for, say, three months.” Retired Iowa Judge Robb Thorson provided his opinion that he’s glad to travel and visit friends and “not have to worry about the weather.”

bulbs in basket

Nonprofit Lesson: Seasons Change

All nonprofit organizations – no matter how successful – suffer through times of “winter.” Times when things seem bleak, cold, dark, icy, treacherous, and you just can’t get warm enough. But, always, these times pass. Sometimes, the best strategy is to just hang in there, as the seasons – metaphorical and real – always change and this too shall pass.

Flora . . .

Teacher Amy Faralli Grider can’t wait for “the smell of a spring rain . . . . “

And Amy’s rain brings flowers. Attorney Patricia Shoff loves “flowering trees!” and she’s not alone in her affinity.

bee with pink flower

Riki Saltzman and Orchard Place’s Nancy Bobo are partial to lilacs, while Iowa Public Radio’s  Kate Payne likes blooming of both lilacs and daffodils. Bleeding Heartland writer Laurie Belin exclaimed: “Wildflowers!” Tamra Saltzman of Creative Visions Human Development Institute loves tulips.

Peggy Huppert, executive director of NAMI Iowa, includes “green grass, tulips, and flowering crabs,” in her list of fave spring things.

Lynn Meadows, of the College of Human Services at Iowa State University, took it several steps forward: “Everything! Longer days, the bright green grass, the pink and purple and white flowers on the trees…ahhhh…signs of hope and renewal.”

Nonprofit Lesson: Flower Power

The most beautiful flowers require lots of proper ingredients and care. And, are you taking care of your nonprofit’s staff, board members, volunteers, donors, and stakeholders, so they can flower and bloom into the beauty of your mission and vision.

. . . And Fauna

Peggy Rosky loves to hear “birds singing in the morning,” and Mary Brunkhorst likes when robins return. DMACC Dean MD Isley is a big fan of morels and new foals. Phil Specht notes spring is when “fish start biting.”

But perhaps spring-iest comment came from teacher Heather Anderson-Morrow, who can’t wait for her students to help her hatch baby chicks in her classroom!

chick bunny flower outline

Nonprofit Lesson: Take Care of Yourself

Nonprofits are typically understaffed and undercapitalized. Whether it’s a nature walk to hear birds trilling, hunting morels, fishing, or spending time with kiddos, it’s important to engage in your hobbies and peaceful activities to recharge, refresh, and start anew.

 

Everything!

Ann Dickinson Nida wrote about spring: “The anticipation of what was planted last year coming up. Playing in the dirt. Warm sunny days. Hope. Budding trees. Sun. Forsythia. Seed catalogs. Can you tell spring is my favorite?”

Former college basketball standout and current awesome teacher, Ann Cavey Jameson, was similarly effusive: “Flowers! Butterflies! Birds! Hiking, thunder storms, budding trees…so much!”

flowers in hand

Nonprofit Lesson: Time for Spring Cleaning?

After a long Iowa winter, spring is always a welcome and refreshing thought. Yet, on top of all the wonderful aspects of emerging from frozen hibernation, this change of seasons reminds us that 2018 is moving quickly! The second quarter of the year is upon us. What are your favorite nonprofit’s plans moving forward?

Let me suggest one “spring cleaning” project. Whether you’re on a nonprofit board, serving as staff, formed your own organization, or are an active donor or volunteer, the Nonprofit Policy Special: 10 For 990 is an important offer to consider and/or pass along to your colleagues, friends, and clients.

Tax-exempt organizations need to have specific guidelines in place to be compliant and meet the IRS’ expectations. It’s never too late to invest in comprehensive internal and external policies and procedures to help your organization work toward and achieve its mission.

Most annual information filing forms are due May 15, which is why through April 15 Gordon Fischer Law Firm is offering a special offer for 10 important policies asked about on Form 990. This also includes a comprehensive consultation and one full review round. Click here to learn more or contact me at gordon@gordonfischerlawfirm.com or 515-371-6077.

red ornaments Endow Iowa Tax Credit

Merry Christmas Eve and thank you for reading the 25 Days of Giving series! In the spirit of the holiday season I’m covering different aspects of charitable giving…perfect to get you thinking about your end-of-year giving.

There are many, many reasons Iowa is great place to live and work. One reason is the Endow Iowa Tax Credit Program—a smart way to stretch your charitable dollars. Iowa community foundations provide exclusive access to the Endow Iowa Tax Credit program. Giving through the Endow Iowa program allows Iowa taxpayers to receive a 25% Iowa tax credit, in addition to the federal charitable income tax deduction, for qualifying charitable gifts.

gift with glitter ribbon

The Endow Iowa Tax Credit Program provides unique opportunities to meet philanthropic goals while receiving maximum tax benefits. Highlights of this program include:

  • A variety of gifts qualify for Endow Iowa Tax Credits including cash, real estate, grain, appreciated securities, and outright gifts of retirement assets. In fact, appreciated assets, like stocks or real estate, can provide even better value because the donor may avoid capital gains taxes.
  • To be eligible, gifts must benefit an Iowa charity.
  • Tax credits of 25% of the gifted amount are limited to $300,000 in tax credits per individual for a gift of $1.2 million, or $600,000 in tax credits per couple for a gift of $2.4 million, assuming both are Iowa taxpayers.
  • Eligible gifts will qualify for credits on a first-come/first-serve basis until the yearly appropriated limit is reached. If the current available Endow Iowa Tax Credits have been awarded, qualified donors will be eligible for the next year’s Endow Iowa Tax Credits. Donors should be encouraged to to act as early in the year as possible to ensure receipt of credits as soon as possible.
  • All qualified donors can carry forward the tax credit for up to five years after the year the donation was made.

There is one “catch.” Funds can only be granted at a spend rate of 5% per year. It should also be noted that the Endow Iowa Tax Credits are capped. The Iowa Legislature sets aside a pool of money for Endow Iowa, and it’s available on a first-come, first-serve basis. Submitting an application at the beginning of the tax year is advised, as tax credits often run out toward year’s end. In fact, this year approximately $6 million in tax credits were awarded and there are no more available credits to be granted. However, you can submit your application to be placed on the wait list for 2018 tax credits.

In exchange for 25% Iowa tax credit and the opportunity to have an even greater impact on their philanthropic interests in the state of Iowa, now and into the future, the Endow Iowa Tax Credit Program should be seriously considered by all. Any questions or thoughts on how the Endow Iowa Tax Credit Program could mean big benefits for your finances and your state? Don’t hesitate to contact me.

estate plan sale

WHAT IS AN ESTATE PLAN SALE?

For a limited time only (June 15 to July 15, 2017), you can receive a standard estate plan (which consists of six “must-have” estate planning documents) for only $500 (five hundred dollars). You will be billed only at the conclusion of this process, when you are executing the documents. So, obviously, you won’t pay anything until you are completely satisfied with both the plan and your understanding of the plan.

man working at desk on computer

What if you need or want, something more than the standard estate plan? Like, say, a revocable living trust? A standard estate plan, including a revocable living trust, will only cost you $1,000 (one thousand dollars). A revocable living trust accrues several benefits, including avoiding probate; saving costs, taxes, and fees; getting bequests to beneficiaries more quickly; and privacy.

I should note that either package comes with as many consultations (meetings, emails, and phone calls) with me as you reasonably feel we need to finish your estate plan. Again, you’re not sitting down to execute the documents, and so you’re not being billed (let alone paying anything!), until you are completely satisfied with both the process and the results of the process.

Gordon Fisch Estate Plan

WHY?

Why have an estate plan sale? Several reasons, actually.

To begin, the mission of my law firm is to promote and maximize charitable giving in Iowa. Straight up, the more estate planning Iowans do, the more charitable giving will occur.

Sure, not everyone who constructs an estate plan uses it to give to charities, but many do. Again – it’s simply a numbers game; the more estate planning, the more money flowing to worthwhile causes.

Also, 60% of Americans don’t have a will/estate planning. I want to help combat that statistic in Iowa. We can do better. Working together, we will do better.

Grandpa face

Finally, everyone deserve access to a secure future and a legacy. For these reasons, I’m offering very special rates.

HOW?

How much money are you saving? Quite a bit actually!

Speaking very generally, an estate plan from my Firm usually costs a single person about $700, and a family about $850. So, under this Estate Plan Sale, that’s a saving of about $200 for singletons to $350 for your family!

Family: mom, son, and dad

Also, speaking very generally, an estate plan including a revocable living trust, from my Firm, usually costs a single person about $1,300, and a family about $2,200. So, under this Estate Plan Sale, that’s a saving of about $300 for singletons and a whopping savings of $1,200 for your family!

WHERE?

Any Iowan is eligible. I am licensed to practice law in Iowa, and I have clients all over the state. In our modern age of emails, scanning, and cell phones, mere physical distance is not an issue.

I have clients from Burlington and Carroll to Sioux City and Urbandale. If you want to work with me, I want to work with you, and we can easily find ways to do so.

HOW?

I write about my process at length, but it’s just five steps! Seriously, it’s not that painful, it truly isn’t. My clients report back to me that they have such relief and peace of mind when it’s completed.

Peace signs at the golden gate bridge

WHEN?

NOW! RIGHT NOW!

Again, the special deal of $500 for a standard estate plan, and $1,000 for a standard estate plan plus a revocable living trust, will last only a limited time, June 15 to July 15, 2017. I’m already backlogged, so ACT NOW. Do not wait!

We all know, of all the seasons, summer goes by the fastest. Time can run out on you; don’t let that happen.

You can reach me most easily by email at gordon@gordonfischerlawfirm.com or call my cell, 515-371-6077. Don’t delay—write or call today.

A great place to start in on the process is with my Estate Planning Questionnaire.

mom and son on street

DISCLAIMERS

The Estate Plan Sale merely relates to pricing and in no way creates an attorney-client relationship, nor any other kind of professional relationship. The Estate Plan Sale merely relates to pricing and does not create a contract or agreement of any kind.
GFLF, P.C. retains full and total discretion as to who it chooses to serve as clients and why. GFLF, P.C. retains the right to refuse service to anyone it chooses.
The Estate Plan Sale may not apply to individuals or families with a net worth of more than $1 million dollars. (You still need an estate plan, very much so, but it necessarily needs to be much more “complex.”).
Babies faces in a grid - Healthy Birth Day

According to the Centers for Disease Control and Prevention, 24,000 babies in America are lost every year to stillbirth. Emily Price learned about this and an inspiring Iowa-based organization, Healthy Birth Day, working to reduce the number of stillbirths in America, for a story she did as a reporter at KCCI-TV. In a recent Des Moines Register article, Price credited the organization with giving her with the knowledge to recognize something wasn’t right with her pregnancy. She brought the concern to her doctor, and ultimately saved the life of her son.

Emily Price

Price (who currently is the Board President, but will assume the role of Executive Director of Healthy Birth Day, Inc. on May 8), said, “Aside from raising our family, it’s the most fulfilling thing I’ve ever done in my life. To hear about a baby saved is the most impactful thing—it stops us in our tracks and we cry tears of joy.”

She was happy to share more about how Healthy Birth Day began, the significant impact the organization has made so far, and details on some exciting developments coming up in the future.

How did Healthy Birth Day come to be?

Healthy Birth Day Founders

EP: Healthy Birth Day was created by five Iowa moms (Kate Safris, Kerry Biondi-Morlan, Janet Petersen, Tiffan Yamen, Jan Caruthers) who all lost daughters to stillbirth or infant death in the early 2000s. They took their grief, researched stillbirth prevention methods and discovered that by encouraging moms to track fetal movement in the third trimester that some stillbirths and premature births could be prevented.

(Side note: Since its founding, one of the major accomplishments for the organization was getting the Stillbirth Registry law enacted in Iowa, which has brought over $2 million in to the state for prevention research.)

Scientific studies indicate kick counting, a daily record of a baby’s movements (kicks, rolls, punches, jabs) during the third trimester, is an easy, free and reliable way to monitor a baby’s well-being in addition to regular prenatal visits.

Can you shed some light on Count the Kicks? What’s the campaign about and how has it helped mothers in Iowa?Count the Kicks Logo

EP: In Iowa we’ve watched our stillbirth rate drop by 26 percent as the rest of the country’s stillbirth rate has remained stagnant. Some states, like Tennessee, are even seeing stillbirth numbers increase. We have received quite a few stories from moms in Iowa where they’ve been monitoring their baby’s movements, notice a change in how long it’s taking them to get to 10 kicks, call their provider, provider runs tests, tests show a baby in distress, doctor decides to deliver baby via emergency C-section, mom wakes up to doctor telling her, “Congratulations, you saved your baby!” It is incredible to hear and we are so grateful when moms feel empowered to not only count their baby’s kicks, but to also speak up when they notice a change. Sometimes it makes all the difference.

In the five short years after Count the Kicks launched in Iowa, our state went from 33rd worst stillbirth rate to third lowest in the country.

Are there any specific resources related to the organization that people may not know about, but should?

EP: We have a free Count the Kicks! app in Google Play and iTunes online stores that allows expectant moms to monitor their baby’s movement, record the history, set a daily reminder, count for twins, and is available in English and Spanish. We have Count the Kicks Ambassadors in 18 states, a national PSA that’s generated more than 300 million viewer impressions, and a monthly Huffington Post blog that reaches moms across the globe. We also have a growing network of supportive doctors, nurses, hospitals, and clinics that give Count the Kicks materials to their patients. (Count the Kicks materials are free to ALL providers in Iowa, Illinois, and Nebraska!)

We also offer resources on our website and we are on Facebook, Twitter, and Instagram.

Does the organization have specific needs from volunteers or donors at this time?

EP: Yes! We have volunteer needs in graphic design, data collection, research, and clerical work, as well as donations to our Save 6,000 Babies campaign. Just being an advocate for kick counting means the world to us. When you know someone who is pregnant, tell them to download our Count the Kicks! app; tell them about the importance of tracking their baby’s movement in the third trimester. We also love when you spread the word about our organization on social media. Share, retweet, like—it all helps spread the word about our campaign. You never know who you might save.

What’s ahead for Healthy Birth Day?

EP: Oh lots of incredible things are happening in 2017! In February we launched the Save 6,000 Babies campaign (the same month our Founders were featured in O Magazine!).

O, The Oprah Magazine

We have a bold vision to save 6,000 babies each year in the U.S. If we can decrease the entire country’s stillbirth rate by 26 percent, we will save more than 6,000 babies every year.

We have a plan in place that will replicate exactly what we have done in Iowa in all 50 states. We are ready to implement this plan just as soon as we have enough funding. To us, this is urgent as we hear far too often from expectant moms who did not know the importance of tracking fetal movement in the third trimester and find us only after losing their precious son or daughter.

In order to go after our goal of saving 6,000 babies every year in the U.S., we need to raise $2 million for increased staffing and programming. This will completely cover our plan to replicate what we have done in Iowa in all 50 states and set us on a true path to success. Success to us equals saving babies.

We are also about to move into our very first office space thanks to the generosity of Telligen Community Initiative. It will be located in a non-profit incubator space near Gray’s Lake and we are thrilled to move in!

If someone wanted to get involved with Healthy Birth Day, how would they go about doing so?

EP: Please send us an email at info@healthybirthday.org! Thank you so much.


Gordon Fischer works with nonprofits and the donors who support them in a number of different ways including coordinating complex gifts. If you’re a nonprofit or looking to maximize the benefits of your charitable gift contact Gordon at any time by email, Gordon@gordonfisherlawfirm.com or by phone at 515-371-6077.

Marriage document

In Iowa, Spouses Can’t Disinherit Spouses

Can Monica, my wife, disinherit me? In a word, no.

Assuming a valid marriage in Iowa, a spouse cannot disinherit a spouse. Even if a spouse wants to do so, even if that’s the spouse’s true intent—nope.

What If…?

What if in a legal will, the first-to-die spouse includes the following clause:

“I acknowledge that I have a spouse, named Gordon Fischer, who is not provided for in this will. It is my specific intention to not provide for my spouse Gordon Fischer under the terms of my will.”

Even with a clear clause like this, I, Gordon, am not disinherited. Why is this so?

Statutory “Forced Share”

Iowa Seal

An Iowa statute allows spouses to take a “forced share” against the will. In short, the surviving spouse has a choice; the spouse can inherit any property bequeathed to him/her under the will, OR the spouse can take a forced share. So, even if a will leaves nothing for the surviving spouse, the surviving spouse can take a forced share against the will.

Under Iowa law (specifically, Iowa Code § 633.238), a surviving spouse that elects against the will is entitled to:

  • One-third of the decedent’s real property;
  • All exempt personal property that the decedent held; and,
  • One-third other personal property of the decedent that is not necessary for payment of debts and other charges.

In other words, a surviving spouse can choose (elect) after your death to basically ignore your will or trust that doesn’t provide for said surviving spouse, and take approximately one-third of your estate.

For example, if you left your entire estate to your children and not your spouse, your spouse can say, “You know, I don’t like this at all. I’ll take one-third of my dead spouse’s estate. Thank you!” And, pretty much just like that, boom, the surviving spouse can do so.

Oral Agreement to Disinherit

What if Monica and I talk about this matter and come to an oral agreement. Something like this:

Monica: I want to disinherit you. Should you be the surviving spouse, you should get nothing.

Gordon: Wow. That hurts. But if that’s what you want honey, I agree.

Is this agreement enforceable? No, for several reasons. First, it’s not written and oral agreements are generally unenforceable. Also, it doesn’t and can’t displace the plain language of an Iowa statue which allows a spouse to elect a forced share against the will, and gain one-third of the estate. You can’t orally agree to ignore a statute’s clear intent!

Written Agreement to Disinherit

But what if Monica asked me to agree, in writing, to not take a spousal share? Say, we write up a formal contract stating I’m essentially not getting anything under Monica’s will, no how, no way. I also agree in the contract that under no circumstances will I take a statutory share.

Would such a written contract be enforceable? No.

While Iowans have a great deal of freedom to contract, just like the above oral agreement example, you can’t contract in direct opposition to a clear statute.

Postnuptial Agreements

Also, interestingly, Iowa courts have ruled postnuptial agreements are not enforceable.

Married penguin cake toppers

Postnuptial agreements are written contracts between spouses that are executed after the couple has married (as opposed to the prenuptial agreements you usually hear about). Iowa courts have struck down postnuptial agreements for nearly a century, since 1912 when the Iowa Supreme Court first found postnuptial agreements to be of no validity. In re Kennedy’s Estate, 135 N.W. 53 (Iowa 1912).

But Monica, it’s OK. Very likely you’ll be the surviving spouse anyway.


Beyond just your spouse, it’s important to have an updated estate plan to define all of your beneficiaries and wishes for your estate following your death. Have questions or need more information? 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.