Give Your Estate Plan a Good Spring Cleaning
It’s that time of year when many householders are tackling clean-up/fix-up chores. Why not do the same for your estate plan?
- Dust off your will. When was the last time you reviewed your will? Changes in your life may affect the currency of your will. Events that should alert you that your will needs revising are: (1) marriage, (2) divorce, (3) birth of a child or grandchild, (4) death of a spouse or beneficiary, (5) increase in your assets (receipt of an inheritance, for example), (6) relocation to a new state or (7) unavailability of persons you named as executors or trustees.
- Straighten up your life insurance. Just as your income, assets and family situation change over the years, so do your life insurance needs. Don’t neglect your life insurance policies when reviewing your estate.
- Take inventory of your current worth. The estate tax exemption was recently increased to $5.25 million ($10.5 million for married couples), but you may face taxes if you own property in states with inheritance or estate taxes. Check with your advisers.
- Polish your tax awareness. Tax, estate and financial planning are becoming increasingly complex and demanding. Try to familiarize yourself with the relevant issues and concepts. Sign up for an estate planning seminar. Subscribe to periodicals that provide coverage of tax and financial planning ideas. Watch the financial and investment programs available on television.
- Consider “leaving a legacy” to our future. Many annual donors find satisfaction in perpetuating their lifetime support by including us in their wills or as beneficiaries of revocable living trusts, retirement accounts, life insurance, brokerage accounts or other financial arrangements.
Lock in Stock Profits, Increase Spendable Income
No one can predict where the stock market is headed, but some investors may be looking for ways to harvest profits and diversify into lower-risk investments – without paying a premium in capital gains taxes. One possibility is to transfer stock to a tax-exempt charitable remainder trust that can cash in on gains without paying taxes, and then reinvest in bonds or dividend-producing stocks. This strategy may help you sleep better at night, and you’ll also enjoy a large charitable deduction plus the satisfaction of helping our programs. Friends who wish to add a fixed-income component to their portfolios can exchange highly appreciated securities for a charitable gift annuity that minimizes capital gains taxes and provides deductions, as well. Call us for details.
A Planning Idea You Can Flip Over
The most recent innovation in charitable remainder trusts is called a “flip unitrust” – and it may be perfect for friends who:
- want to make a gift today, obtain a tax deduction and receive lifetime income – but postpone most or all of the income until some future date (the year they retire, for example);
- want to provide for our future and at the same time arrange for young grandchildren (or children) to receive payments when they start college – five, ten or 15 years in the future;
- want to fund charitable remainder trusts with assets such as vacant land or closely held stock that produce no income and may be hard to sell immediately.
The flip unitrust initially pays little or no income, depending on how the trust is funded or invested. The trust assets may appreciate greatly in value for several years. Later, after a specified date or “triggering event,” the trust “flips” to become a standard unitrust that pays beneficiaries a fixed percentage of, say, 5% or 6% of an expanded trust principal.
Most friends who set up unitrusts want their income to start right away. But the “flip trust” is ideal for people who want to reduce taxes, save more for retirement, establish a college fund, or achieve other goals – while helping our programs, as well! Call our office for details.
Gifts of Excess Group Life Insurance
Here is a special gift opportunity for employees and executives whose companies provide them with group life insurance. Generally, if an employer provides an employee with more than $50,000 of group term life insurance, the employee is taxed on the excess coverage each year. But if a qualified charitable organization is named as the sole beneficiary of any portion of the coverage in excess of $50,000, the employee will not have to pay income tax on that portion of the coverage. It’s a simple gift as well – you need only fill out a form. You’ll need our correct legal name to arrange this gift, so please call our office.