Year End Estate Planning Made Easy

October 2nd, 2012

By: Sander D. Bleustein, CFP®
Planned Giving Committee Member

 

The end of 2012 is quickly approaching and due to the looming changes in the estate tax law, many individuals are updating their estate plans. As part of this process, one of the decisions you face is to what extent you would like to leave wealth to your heirs and benefit charity.

Current Estate and Gift Tax Law
The federal government taxes transfers of wealth you make to others, both during your life and at your death. In 2012, the federal gift, estate, and gen¬eration-skipping transfer tax is imposed on transfers in excess of $5,120,000 at a top rate of 35 percent. In 2013, the gift and estate tax exemption will revert to $1 million and the GST tax exemption will revert to $1 million adjusted for infla¬tion, with a top rate of 55 percent, unless Congress acts to change that.

Charitable Gifting
Careful planning is needed to minimize transfer taxes, and charitable giving can play an important role in your estate plan. By leaving money to charity, the full amount of your charitable gift may be deducted from the value of your gift or taxable estate. A few Charitable Gifting strategies to consider are:

  • Outright Gifts
    An outright gift is one that benefits the charity immediately and exclusively. With an outright gift, you get an immediate income and gift tax deduction.
  • Will Bequest sand Beneficiary Designations
    These gifts are made by including a provision in your will, or by designating charity as the beneficiary of your life insurance policies, retirement accounts, and annuities. The charity receives the gift at your death, at which time your estate can take the income and estate tax deductions.
  • Charitable Lead Annuity Trust (CLAT)
    A Charitable Lead Annuity Trust is a charitable and estate planning technique where the Grantor initially establishes and transfers assets to the trust. The trust can last for a set term of years or the Grantor’s lifetime. Each year, an annuity payment is made from the trust to one or more charitable organizations, such as the David Lawrence Foundation. At the conclusion of the trust’s term, the remaining trust property is distributed to, or held in further trust, for the non-charitable beneficiaries.
  • Charitable Remainder Unitrust (CRUT)
    A Charitable Remainder Unitrust is a charitable and estate planning technique where a Grantor initially establishes and transfers appreciated assets to the trust. The appreciated assets are typically sold, thus deferring income tax. The trust can last for a set term of years or for the lives of the trust beneficiaries. Each year, the trust distributes the unitrust amount to the beneficiaries (typically the Grantor and their spouse). The unitrust amount is a percentage of the fair market value of the assets of the trust. At the conclusion of the trust’s term, the remaining trust property is distributed to one or more charitable organizations, such as the DLC.

To learn how Charitable Gifts can be incorporated into your estate plan and benefit the David Lawrence Center, call Stephen Wheeler at 239-354-1416.To make a donation online today, click here.

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