Reunited at Last

Know that feeling when you put your hand in an old coat pocket and find a long-forgotten $20 bill?  Then you may want to check out some websites where you can search for money looking to be reunited with rightful owners.  Most of the money is from dormant bank accounts, unclaimed deposits or uncashed dividend checks that have been turned over to state treasurers’ offices.  Filling out a form available on the websites is the first step to claiming the funds.  You can search by your last name or the name of your business, narrowing the treasure hunt by selecting states where you may have had accounts or financial dealings.  The sites are missingmoney.com and unclaimed.org

The U.S. Treasury Department also operates a service – Treasury Hunt – on its website (treasurydirect.gov) where you can search for U.S. savings bonds that you own. If you discover matured savings bonds, you might want to redeem the bonds and make a charitable gift with the proceeds.  Your income tax charitable deduction should more than offset the income tax you’ll owe on the bond interest.


Beware of Deadlines

December is a busy month for most people, but if you’re thinking of making gifts to family or charity before year’s end, keep in mind a few deadlines:

  • If you mail a check to charity, it qualifies as a 2014 gift for income tax purposes if it’s postmarked by December 31, even though the charity doesn’t receive or cash the check until sometime in January.

  • Gifts given to family members by check are complete for tax purposes when the checks are cashed.  If it’s important that a check to a child or grandchild be considered a 2014 gift, allow enough time for the recipient to get to the bank.  Keep in mind that in 2014 you can give up to $14,000 each to as many people as you wish, with no gift tax due.  Married couples can give up to $28,000.  The $14,000 limit applies also to 2015 gifts.

  • If you’re planning to give stock or mutual fund shares to charity, start the process early.  A gift is considered complete for tax purposes when the shares reach the charity’s account, not when you give the order to your broker.  Stock gifts can be completed in a few days, but mutual fund share transfers can take several weeks.  If you’re giving shares in certificate form, call us for transfer instructions.

  • A charitable gift from an IRA by someone age 70½ or older must be completed by December 31 to be a qualified charitable distribution.  Although the legislation allowing transfers of up to $100,000 to be tax-free expired at the end of 2013, renewal is included in the extender package Congress is considering.  Call us if you have questions about the law’s status or if you plan to make a transfer directly from an IRA.



Add to Your New Year’s Resolutions

Here are a few suggestions that can improve your financial picture in the coming year:

  1. Review your will, living trust and other estate documents to see that they still reflect your wishes.  See your attorney about a new plan if any changes are needed.  If you don’t have a will, make an appointment for early in the year to have your will, and possibly a living trust, drafted.  Whether you’re simply updating an existing plan or having a new estate plan prepared, it’s easy and satisfying to include charitable bequests.  Ask us for suggestions to take to your attorney.

  2. Look at the beneficiary designations on your life insurance policies, IRAs, 401(k)s or brokerage accounts.  Ask your financial adviser about the tax consequences of naming family members to receive retirement accounts.  Coordinate these with the provisions in your will or living trust.

  3. Get organized.  File monthly statements from your bank and brokerage.  Keep track of receipts for items that may be deductible on your 2015 income tax return (e.g., medical expenses, a log of miles driven for charitable purposes, repairs to rental property).

  4. Save as much as possible in qualified retirement plans.  For 2015, those with 401(k) plans at work can put in a maximum of $18,000, plus an added $6,000 catch-up for those age 50 and older.  The maximum for IRAs is $5,500, with a $1,000 catch-up.  Remember, the earlier you begin making contributions, the longer the funds have to grow tax-sheltered.



Insuring Your Legacy

Not that long ago, the estate tax credit sheltered estates only up to $2 million (2008).  As recently as 2003, estates in excess of $1 million were subject to tax.  But for 2015, the credit shelters estates up to $5.43 million.  With the addition of “portability,” spouses can transfer more than $10.8 million free of federal estate tax.  (Some states have estate or inheritance taxes that affect estates far below the federal levels.)  As a result of the increased credit, it’s estimated that only about 4,000 estates per year are subject to tax.

Many people who purchased life insurance to help their family pay estate taxes may find that they no longer need the protection.  It may be possible to cash in these policies, but a far more satisfying option may be to turn the policies into a charitable legacy.  You could:

  • Name a charity as the death beneficiary.  You continue to own the policy and can change the beneficiary, borrow against the cash value or cash in the policy if you need the funds.  Any amounts passing to charity at death qualify for an estate tax deduction, although a deduction is not needed for most estates.

  • Make charity the owner of the policy and qualify for an income tax charitable deduction.  You’ll be entitled to a current deduction for the lesser of the total amount of premiums you paid or the fair market value of the policy.

  • Use the policy to fund a charitable remainder trust that will make payments for life to a loved one before trust assets pass to charity.

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The materials contained on this website are intended only to show some ways by which you can make a charitable gift or bequest and thereby minimize federal tax liabilities, as authorized by the Internal Revenue Code. All examples are of a general nature only and should not be applied to your specific situation without first consulting your attorney or other advisers.