What’s Ahead for 2014 Charitable Gifts from IRAs
Congress ended 2013 without taking action on a variety of “extender” tax provisions such as higher education deductions and the research tax credit. One piece of legislation donors and charities are hoping will be extended for 2014 is the law permitting qualified charitable distributions (QCDs) from IRAs by persons over age 70½. Congress may yet renew the “IRA charitable rollover” and you can contact our office for status updates. But what if Congress fails to take action until late 2014 – as some Washington observers are predicting? (Keep in mind that the IRA gift law was not extended for 2012 until January of 2013.)
Qualified IRA donors who are certain they will be able to itemize deductions for 2014 might consider making charitable distributions up to their required minimum distributions, in the hope that Congress will extend the law. If Congress failed to renew QCDs for 2014, donors would be taxable on their charitable distributions but could take offsetting charitable deductions – if they itemize. If Congress does extend the IRA gift law, a QCD would replace part or all of the donor’s required 2014 IRA distribution, reducing adjusted gross income.
Outliving a Life Insurance Beneficiary
What would happen if a beneficiary of your life insurance were to die before you? It’s a good idea to provide that contingent beneficiaries, such as the heirs of a deceased beneficiary, or an alternative beneficiary, such as our organization, will receive benefits that would have passed to the deceased person, if that is your wish. It’s true that you can fill out a new beneficiary form if a beneficiary dies before you, but what if you become disabled or simply forget to make needed changes? Pre-planning for contingencies provides greater certainty.
Susan should ask the life insurance company about designating Adam, Barry and Carrie as “per stirpes” beneficiaries of her policy. Such language would enable each child’s descendants to “inherit” a share of the policy without Susan having to revise the beneficiary designations. If none of Susan’s offspring has children, she might want to provide that the share of a deceased beneficiary would be divided among the survivors or be paid to benefit our programs. What’s important is that Susan determine her wishes and objectives and consult with her advisers on the best plan.
People who support charitable, religious or educational organizations often have adult children who also give to worthwhile causes. It might make sense for such parents to make charitable contributions on their children’s behalf, covering the kids’ annual gifts and possibly major gifts to capital campaigns. Several advantages should be available:
Would it ever make sense to reverse the process and have children make charitable contributions on behalf of parents? The idea would be for parents to give cash or securities to children, sheltered by the $14,000 per donee annual gift tax exclusion ($28,000 where couples “split” gifts). Children would then contribute to the parents’ charities. This plan may be helpful where:
Parents sometimes find it harder to talk to adult children about their estate plans than it was, years earlier, to have “the talk” about where babies come from. Nevertheless, it’s important for parents to speak to their offspring individually or as a group about estate plans they have made or intend to make. Some or all of the following topics should be on the agenda:
Many of our friends also are proud to share that they are providing a legacy to our future as part of their estate plans. Children almost invariably understand that mom or dad have a desire to leave the world a better place, and that their bequest to support our programs is a source of satisfaction to them.
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.