Berkeley's Donor Advisor Newsletter
Welcome to The Advisor, our every-other-month digital newsletter for Berkeley's donor advisor community. We’ve teamed up with Sharpe Group, expert philanthropic consultants, to provide you with expanded and relevant gift planning content six times a year instead of four. Each issue provides you with information on how charitable giving can fit into your clients' overall estate and financial planning goals. Included in each issue are IRS rulings and court cases, planning ideas, and industry news.
Among the changes included in the SECURE Act (Setting Every Community Up for Retirement Enhancement) at the end of 2019 was the demise of the stretch IRA for most death beneficiaries. Previously, an IRA owner could name a younger individual as beneficiary, knowing required minimum distributions and income taxes could be spread over several decades. For example, if a 9-year-old grandchild was the named beneficiary, withdrawals could be made over the child’s 73.8-year life expectancy. Assuming a $500,000 IRA, the required distribution the first year would be $6,775 ($500,000 ÷ 73.8). The IRA could continue tax-deferred growth, with only modest withdrawals in early years. The stretch IRA option now is available only for surviving spouses and beneficiaries who are disabled, “chronically ill” or not more than 10 years younger than the IRA owner. Minor children of the IRA owner are also an exception, although once the child reaches the age of majority, remaining benefits must be taken within 10 years. READ MORE ...
In theory, a donor advised fund allows a donor to make a current gift, receive an income tax charitable deduction but postpone decisions on exactly which organizations should receive the funds to use for their charitable missions. In practice, however, some say donor advised funds hold billions of dollars indefinitely, with little being put to use.
Donor advised funds are offered by financial companies, such as Fidelity, Vanguard and Schwab, but also by community foundations and national charities. An estimated $140 billion is held in DAF accounts. Senators Angus King (I-ME) and Chuck Grassley (R-IA) have introduced legislation—The Accelerate Charitable Efforts (ACE) Act—designed to encourage faster distribution of funds in DAFs to “working charities.” READ MORE ...
Past issues of Gift Planning Now, our previous digital newsletter, are available for download below.
Do you have clients who might benefit from establishing a charitable lead trust (CLT)? If you’re not sure, now is the perfect time to explore this exciting opportunity. But wait, you may ask, aren’t CLTs only for my clients who are uber-wealthy? To find out, let’s “do the math” to discover that a broad range of your clients, not just the very wealthy, now have a “golden opportunity” to benefit from these giving vehicles. In fact, CLTs may be just the right vehicle to meet some of your clients’ financial and estate planning objectives.
Happy New Year! Your annual tax pocket guide is in the mail and on its way to you. Included with the guide is Sharpe Group's 2021 Pandemic Relief Tax Update. We hope you find these resources useful as you work with your clients in the coming year. Please reach out if there is anything our team can assist you with.
Here are some BASICS about Charitable Gift Annuities (CGAs) that may be of interest to you and your charitably minded clients in both stable and unstable economic climates. B - Benefits Berkeley and your Clients: Why a CGA? If your clients want to support Berkeley as well as receive an income stream, Charitable Gift Annuities (CGAs) can make sense. Donative intent. Charitable intent should be the driver, and for your clients where the shoe fits, CGAs can be great tools as part of a well thought out long-term financial plan. Unlike the purchase of a commercial annuity, establishing a CGA enables your clients to “pay it forward” - experiencing the joy of giving while receiving fixed income during their lifetimes.
Due to the passage of the SECURE Act, “Stretch” IRAs set up for the benefit of your clients’ non-spouse heirs are no longer an available planning option in your toolboxes. Under the new rules, most IRA inheritors are required to take full distribution of the IRA assets within 10 years, which could expose them to much higher tax bills during what might possibly be their highest income-earning decade. A potential work around for your clients with IRAs/401(k)s/retirement plans who want to provide an income stream for their heirs, and who are charitably inclined, is to establish a Testamentary Charitable Remainder Trust (Testamentary CRT) and to name that trust as their IRA beneficiary.
The CARES Act, or The Coronavirus Aid, Relief, and Economic Security Act, was signed into law and became effective on March 27, 2020. The SECURE Act, or The Setting Every Community Up for Retirement Enhancement Act of 2019, was signed into law on December 20, 2019 and became effective on January 1, 2020. You may be wondering how these new laws affect your charitably minded clients.
Happy 2020 to our donor advisor community! As promised, the year's first issue of Gift Planning Now Quarterly comes in the form of our ever-popular tax pocket guide. The guide comes in a hardcopy format and will be mailed to you. If for some reason you did not receive yours, please email us at email@example.com and request another copy.
As you all likely know, the Tax Cuts and Jobs Act of 2017 effectively doubled the standard deduction for future tax years beginning with 2018 and simultaneously eliminated and modified some itemized deductions. Now it’s full sail ahead as we approach the final stretch of tax year 2019, and the standard deduction has risen even higher (through inflation adjustments) to $12,200 for individuals and $24,400 for married couples filing jointly. These deductions are further increased for taxpayers age 65 or older or who are blind. These tax law changes are effectively rocking the boats of many of your clients who routinely itemized in the past but are now choosing the standard deduction.