Personal Planning Ideas

Planned Giving

  • Be Ready for Stormy Weather

    Hurricanes, tornadoes, floods, fires, mudslides — Americans have endured these and other natural disasters over the past year.  Preparing for disasters involves more than just stocking up on flashlight batteries and bottled water.  There’s little that can be done to prevent damage from acts of nature, but there are things you can do in advance to hasten the recovery process.  Most homeowners insurance covers basic losses, but special policies may be needed for certain types of natural disasters.  Here are a few suggestions for preparing for or cleaning up after a disaster:

    • Prepare an inventory of household belongings.  Your insurance agent may have a booklet to help you list major possessions.  Keep receipts for major purchases.  Take photos or make a video of the rooms in your home or special items that you might have to replace.  Keep this documentation in a safe place — possibly even storing it in the cloud — and update it regularly.

    • Tax advisers suggest you retain tax records for at least three years.  You may wish to keep the original returns and other important papers such as insurance policies, birth and marriage certificates in a safe deposit box.

    • Review insurance policies now to make sure you’re covered against the types of hazards possible in your area of the country.  If disaster strikes, contact your insurance agent for the forms necessary to file a claim.

    • If your home is damaged or destroyed, contact an appraiser to establish the value of the lost property.  Take “after” pictures to contrast with the earlier photos you took.

    It’s Gift Tax Time, Too

    Most Americans know April 15 (April 16 this year) is the deadline for filing income tax returns, but did you know it’s also the last day for filing gift tax returns for gifts made in 2017?  If you made taxable gifts to family members in 2017 (more than $14,000 to one individual or any gift that takes effect at some future date), you may need to file a gift tax return.  Filing a return doesn’t necessarily mean you will owe gift tax, however.  If your 2017 gifts, plus prior taxable gifts, were below the sheltered amount ($5.49 million in 2017), taxes may be offset by your credit.

    It’s important to file a gift tax return, particularly if you give assets that may be hard to value, such as closely held stock or real estate.  The IRS has only three years from the time a return is filed to challenge the value claimed for gifts.  Filing a return starts the clock running and “freezes” the value for estate tax purposes if the IRS doesn’t contest.  If no return is filed, the IRS may dispute the value years from now, when proving the value is more difficult.  Let your tax adviser know of any gifts made in 2017, or any plans you have to make gifts in 2018, to help in planning for next year’s taxes.  For 2018, the limit for tax-free gifts is $15,000.

    Counting on Retirement

    The internet offers dozens — maybe even hundreds — of retirement calculators that purport to tell you how much income you’ll need when you retire.  But a retiree who plans to travel the world may need considerably more income than one who plans to stay home and tend a garden.  Other factors — the age at which you retire, the part of the country in which you live, your health and family obligations — also play a part in determining how much income you’ll need.  Some rules apply to nearly everyone, however:

    Start saving early — You can save through a tax-deferred retirement plan such as an IRA or 401(k).  Your stock portfolio should be invested for growth during your earning years, with the goal of shifting investments in the future to provide income to replace your salary.

    Be realistic about your retirement spending — Although you may spend less on commuting and business clothes after retirement, you may spend more on travel and leisure activities.  In the end, expenses may not drop significantly.

    Don’t forget inflation — An individual retiring at age 65 can expect to live another 20 years or more.  The buying power of retirement income may decline over those two decades.  After retirement, ask your financial adviser about putting a portion of your portfolio into investments that will keep up with inflation.

    Plan to spend some of your assets — It’s not necessary to live solely off Social Security and the income produced by your investments.  You can sell assets to generate income.

    Consider charitable gifts from which you can receive payments for life — Charitable remainder trusts and charitable gift annuities enable you to make a gift during your lifetime, secure an income tax deduction that may allow you to itemize your deductions and receive payments for life, often favorably taxed.  Life income gifts funded with appreciated assets may minimize or spread out the capital gains tax.

    Estate Plans: They’re Not Just for Couples

    Do you think that, just because you’re not married and don’t have kids, you don’t need an estate plan?  Think again.  There are several reasons why a single individual needs an estate plan — possibly even more than a married person does.

    • An unmarried individual must designate a beneficiary for IRAs or 401(k)s to avoid having the assets pass to the estate at death and accelerating income taxes.

    • All states have laws governing the distribution of estates of those who die without wills (called intestates).  Intestacy laws permit only relatives to inherit, not close friends or charities.  Single individuals should direct how they wish to distribute their estates by executing a will or living trust.

    • In the event of disability, a close friend will not be allowed to make financial or health care decisions on your behalf.  But with a health care directive and/or power of attorney, an unmarried person can name a friend to act on his or her behalf in certain circumstances.

    • There is no marital deduction to shelter gifts and bequests for those with estates in excess of $11.2 million.

    Consult your attorney about the documents you’ll need for a complete estate plan and make sure your attorney knows of any friends or charities you wish to benefit.



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