Berkeley's Donor Advisor Newsletter
Gift Planning Now is a quarterly electronic newsletter which aims to educate professional advisors on gift planning techniques, up-to-date tax information, and campus happenings. Please note that all first quarter issues will be the mailed tax pocket guide for the upcoming year.
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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.
In this spring issue of Gift Planning Now, we share how a retirement unitrust can provide the double benefits of income tax relief and supplemental retirement income, along with a hedge against inflation. Next, we discuss the ins and outs of the new trend of check-writing privileges for IRA accounts. We then present a California case where the charity was “not charitably inclined” to the elderly life tenant. After that, we explore how small business owners can avoid the capital gains tax by reinvesting ESOP shares in QRP, and then gifting the QRP to charity. Finally, we present some creative and charitable ways to offset the cost of a Roth IRA conversion.
In this fall issue of Gift Planning Now, we share how adult children acting as caregivers can benefit from creating a charitable remainder unitrust or charitable gift annuity to benefit parents while also qualifying for an income tax charitable deduction. Secondly, we discuss the like-kind exchange provisions and how a charitable reminder unitrust may be the solution to minimizing a client’s capital gains tax. We then explore how to be creative with philanthropic clients by allowing them to exceed the standard deduction threshold and save on income taxes. Lastly, we share the appeal of flexible gift annuities for Baby Boomers.
In this summer issue of Gift Planning Now, you will read about the increase in charitable gift annuity rates giving your clients, or their friends and family, the two-fold benefits of both a reliable income stream along with a charitable deduction. We also describe the specific two-step process advisors can take to assist their clients with making charities the beneficiaries of their IRAs, 401(k)s and other qualified plans. In addition, we shine the spotlight on our Fiat Lux Scholarship Program which continues the Berkeley tradition of making a college education available to quality students of all income levels. Finally, this issue summarizes a recent court case involving a charitable lead trust where no trust distributions were made to the charities due to conflicting claims, and whether or not these charitable beneficiaries were entitled to receive payments of interest accrued during that time period.
In this spring issue of Gift Planning Now, we highlight the features of the 2017 tax reform legislation focusing on both provisions that have changed and those that have remained constant. You will read about the new restrictions on itemized deductions, and a strategy called “bunching” that will assist your clients with continuing to reap the benefits of itemized deductions. Another article introduces the exciting new term endowment program, recently launched by the UC Berkeley Foundation. This issue also discusses how the IRS has provided some clarification to DAF sponsors regarding incidental benefits and pledges. Finally, we discuss a recent Tax Court decision disallowing the deduction for a modified trust.
In this fall issue of Gift Planning Now, we discuss tax planning for donations of unusual assets and highlight strategies to make gifts of non-qualified stock options. We also take a look at the benefits of charitable lead trusts at current §7250 rates, and review a cautionary Tax Court case in which a tax deduction for an intended gift of real property was denied due to the donor’s retention of control over the property.
In this summer issue of Gift Planning Now, we explore how closely held stock might be the right asset to use to fund a charitable remainder or lead trust. We also examine a Tax Court case in which a gift of a partnership interest to a charitable lead annuity trust was held includable in the donor’s estate. In addition, we discuss how to mitigate the gift tax issue for charitable remainder trusts or charitable gift annuities by retaining the right to revoke payments to the beneficiaries or annuitants.
In this spring issue of Gift Planning Now, we highlight philanthropy by the numbers – facts, figures and statistics for charitable giving in our state and country. Another article discusses possible tax changes that may come about with the new administration in Washington. This issue also discusses the use of estates and trusts to make charitable gifts. Finally, we show you how your clients can convert US savings bonds into life income gifts with little or no tax on the built-up interest in the bonds.
In this fall issue of Gift Planning Now, you will read about the new IRS Revenue Procedure that may make charitable remainder annuity trusts a more viable alternative in the current low interest rate environment. Another article highlights why a year-end charitable gift annuity can be an advantageous way to both capture the recent stock market gains and make a meaningful gift to a favorite charitable organization. This issue also discusses several reasons for clients to make that IRA charitable gift now.
In this summer issue of Gift Planning Now, you will read about the variety of assets that can be transferred at death pursuant to beneficiary designations rather than through a will or revocable living trust. We also discuss ways to structure a revocable trust to be a source for charitable giving, both during life and at death. In addition, this issue summarizes two recent court cases. The first is a California U.S. District Court holding that permanently enjoins the California Attorney General from requiring the Americans for Prosperity Foundation to file a Schedule B to their Form 990 which discloses donors to the 501(c)(3) organization. The second case upholds charitable gifts set forth in a will using language that provided for dollar amounts “up to” certain limits where the decedent’s surviving spouse and executor claimed such language was merely precatory.
In this Spring issue of Gift Planning Now, you will read about the new permanent IRA qualified charitable distribution, a new scholarship matching program, Donor Advised and Donor Designated Funds at Berkeley, and the best assets for funding Testamentary Charitable Remainder Trusts.
In this November issue of Gift Planning Now, our lead article discusses several charitable gift planning ideas for small business owners. Another article reviews a recent Tax Court case on the appropriate valuation method to use in calculating the charitable remainder interest of a net income with make-up charitable remainder unitrust. A third article summarizes a recent California Supreme Court case that holds a will can be reformed by extrinsic evidence with “clear and convincing evidence” of the testator’s actual intent, a significant reversal in California case law. Finally, we highlight year-end gift options beyond cash and securities that your clients may want to consider.
In this summer issue of Gift Planning Now, our lead article discusses ways charitable gift annuities can meet a variety of planning goals for your clients. Annuities can assist with many objectives, including capitalizing on the full value of the funding assets for re-investment, providing tax-advantaged ways to deal with savings bonds’ sales proceeds or providing current support for an older loved one. Another article summarizes a recent case that sought to enjoin the California Attorney General from requiring disclosure of the names of ‘significant’ donors on a charitable organization’s tax filings. Here, the Ninth Circuit upheld the District Court’s denial of the preliminary injunction by finding disclosure would not create a chilling effect and did serve a significantly important government interest. In another article we review a recent Tax Court case which upheld the IRS’ denial of an estate’s income tax charitable deduction where it found the monies were not ‘permanently set aside’ for charitable purposes as required under the tax code.
In this spring issue of Gift Planning Now, our lead article highlights opportunities for real estate gifts. Lately the market has been quite strong and values in many areas are again reaching record highs. For clients with a low tax basis in their property, this can be an excellent gift that provides a substantial charitable deduction. A gift of real estate often makes good sense even if the client wants to gift only part of the property. Another article explores the benefits of gifts of retained life estates in personal residences (including vacation homes) in this low interest rate environment. Your client can take advantage of the income tax deduction and enjoy stewardship opportunities with their favorite charity, while still residing in their residence for the rest of their life. Another article examines potential pitfalls when a trust is the beneficiary of an IRA account and a portion of the IRA proceeds are used to satisfy charitable gifts contained in the trust. Finally, our UC Berkeley Planning Pointer discusses considerations for making 2015 IRA charitable rollover gifts now rather than getting squeezed with year-end timing concerns
In this fall issue of Gift Planning Now, our two lead articles highlight charitable gift planning ideas both for individuals whose estates are not likely to be subject to federal estate tax as well as for those who are likely to have taxable estates. Another article summarizes a recent case that demonstrates the importance of precisely defining what constitutes “tangible personal property” when drafting a will or trust for artists or other creative individuals. Our UC Berkeley Planning Pointer discusses the increased interest in charitable remainder trusts in an environment that has seen significant gains in the stock and housing markets, as well as increased tax rates for higher income individuals. A final article presents an interesting option when a client is at the end of the 1031 exchange road and wants to finally get out of the rental real estate business.
In this summer issue of Gift Planning Now, our lead article highlights once again the importance of strict adherence to the Internal Revenue Service’s requirements for a “qualified appraisal” in connection with gifts of real property to charitable organizations. The charitable deduction claimed in connection with such gifts can be wholly defeated by not fully complying with these requirements. Another article discusses a former executor’s lack of standing to challenge a trust amendment that he alleges raised significant issues of the settlor’s capacity and undue influence. The findings of a recent survey by the American Council on Gift Annuities are summarized in another article. These findings reveal the current demographics and characteristics of gift annuitants, as well as the increasing popularity of both deferred gift annuities (the donor makes their gift now but elects to begin annuity payments at a fixed future date) and flexible deferred gift annuities (the donor makes their gift now and elects to begin payments during a range of dates with the specific start date decided on by the donor at a future time). These survey results may be helpful in guiding discussions with potential gift annuity clients. Finally, we explore some ways to begin the charitable conversation with your clients that we hope you will find useful.
In this spring issue of Gift Planning Now, our lead article highlights a few of the many new ways that testamentary charitable remainder trusts and split interest gifts can be structured if qualifying for an estate tax charitable deduction is no longer a critical parameter. With an applicable exclusion amount for 2014 in excess of $5.3M per person and $10.6M for a couple, fewer and fewer donors will need to worry about the estate tax. Instead, these donors can structure their testamentary gifts in ways that more closely meet a beneficiary's needs while still providing for a gift to charity upon the beneficiary's death or after a term of years. Another article discusses the benefits for many donors when making a charitable gift now from their IRAs, even as we await news as to whether the IRA charitable rollover provisions will be extended for 2014. We also address common scenarios in inter vivos charitable remainder trust planning that can have unexpected pitfalls, and provide solutions for modifying the approaches to make sure the trusts qualify under Internal Revenue Code Section 664.
In this fall issue of Gift Planning Now, our lead article highlights the key planning points related to gifts of appreciated securities. With the stock market at record levels and new, higher tax rates in effect for many, this may be an opportune time to counsel your clients on year-end securities gifts. We also summarize the requirements and benefits of making a qualified charitable distribution from an IRA account without having to include the distribution in gross income. The American Taxpayer Relief Act extended this important tax code provision through December 31, 2013, but its fate after that is uncertain given the current legislative environment in Washington. We also discuss a recent IRS Letter Ruling which addresses the issues presented when charitable remainder trust donors-beneficiaries want to terminate their trust and receive the actuarial value of their income interest, and then have the balance of the trust assets pass to the charitable beneficiary.
In this summer issue of Gift Planning Now, our lead article highlights just how important an accurate and complete appraisal is in order to be able to claim a charitable deduction. Another article illustrates that complying with IRS receipting requirements is an "all or nothing" proposition. In a third article we summarize a recent Tax Court case that holds a donor's charitable deduction for a conservation easement is lost by virtue of the donor tying the easement grant to receipt of a county development approval. Finally, we review an unsuccessful challenge to Charles Walgreen's bequests of Walgreen's stock to certain charities based on his lifetime stock gifts to those charities in the same amounts as his bequests.
In this spring issue of Gift Planning Now, our lead article summarizes the deduction reduction and personal exemption phase-out provisions of the American Taxpayer Relief Act of 2012 (ATRA). With ATRA we see the return of the "Pease Limitation", reducing certain itemized deductions. For most Californians the reduction will not adversely impact their charitable giving because their ‘fixed' deductions – state income taxes, property taxes, and mortgage interest payments – will more than absorb the deduction reduction of 3% above the income thresholds. ATRA also reinstates the personal exemption phase-out for those with incomes above certain thresholds. As well, ATRA reinstates qualified charitable distributions from IRAs for 2013. This is an important provision for charitable organizations and donors alike, permitting donors to satisfy their required minimum distribution while excluding the distribution from income. In addition, these distributions are not subject to the AGI limits on deductibility of charitable gifts. Another article in this issue discusses key points to consider with charitable bequests, including whether the gift is best made outright or in trust, and which assets are optimal for such bequests.
In our first issue for 2013, the feature article focuses on ways to combine the charitable deduction with the marital deduction to minimize or eliminate federal estate taxes while also providing for a spouse and children. Another article discusses a tax-efficient way for retiring Baby Boomers to dispose of employer stock that can also benefit charities. In addition, we summarize a recent court case which holds that a defaulting donor's pledge that he advised would be binding on his estate can be enforced against his self-settled trust. Finally, we briefly review two recent IRS rulings – one that deals with a donor's desire to earmark an individual beneficiary for his gift to a church scholarship fund, and one that finds a beneficiary's exercise of a limited power of appointment in favor of a charitable organization would qualify for a charitable deduction by the irrevocable trust.
Although we all eagerly await a conclusive answer to the many questions surrounding next year's tax policies, we also know that many of your clients are looking for ways to take advantage of current tax planning opportunities before they expire. This issue is full of ideas for how to combine charitable giving with today's favorable tax policies. For younger clients who might benefit from a current charitable tax deduction and income later in life, our lead story discusses the potential benefits of charitable remainder unitrusts. For clients who wish to transfer substantial assets to both family members and charity, our article discusses how to take advantage of the $5.12 million gift tax exemption and historically low IRS discount rates through a charitable lead trust. Two articles stand as warnings against failure to meet the exact formalities set-out by the IRS to substantiate charitable deductions. In one, the entire deduction was disallowed when the donors failed to get a qualified appraisal even though the IRS acknowledged that the value of the deduction claimed was less than the actual value of the property on the date of the gift. In another, a charity failed to include language in its gift receipt indicating that no goods or services were given to the donors in exchange for their gift. Again, the entire deduction was denied. Finally, we provide a brief update on a recent private letter ruling allowing the use of stairstep lead trust payments.
In this summer issue, we highlight practical updates that you can use in your practice. Our feature article focuses on the benefits of gifts of charitable remainder trust income interests in the current economic environment. In addition, we highlight the special rules that apply to gifts of tangible personal property. We briefly discuss the IRS's final regulations on estate/trust/local law ordering clauses for payments to charitable beneficiaries. Finally, the perils of restrictive gift conditions are highlighted in our overview of a U.S. Court of Appeals (7th Cir.) decision.
In this issue, our feature article discusses using charitable giving techniques for clients who have maximized the tax benefits of their retirement plan contributions. Additionally, we summarize a recent California Court of Appeal case relating to the use of extrinsic evidence in a will contest, a Massachusetts case on donor transfer instructions, and a Tax Court case that reviews Colorado law to determine if a proposed conservation easement qualified for a federal income tax charitable deduction.
In this premiere issue, our lead article discusses the best gifts in this low interest rate environment including remainder interests in primary or secondary homes, ranches, or farms, and charitable lead trusts.