Planned Giving Guide
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With the events of the past year fresh in your mind, it is a good time to review and update your estate plans. To help you in this process, we have constructed the following checklist of estate planning actions for you to go over as the end of the year rolls closer.
1. Review your current will and trusts. Wills and trusts may need to be updated because of frequent tax law changes to the federal estate tax exemption amount. Your estate can be worth $3.5 million in 2009 before estate taxes are owed. Estate taxes will be repealed in 2010, but reinstated in 2011 with taxes being assessed at any amount over $1 million. If estate tax planning is not a factor for you now, make sure your executor and trustee designations are accurate.
2. Inventory and make a written record of the contents of any safe-deposit box. Give a copy to a trusted family member and remove any property that does not belong to you.
3. Review and update beneficiaries of your life insurance policies and retirement plan assets. Also review contingent (backup) designations and settlement provisions. If you have a taxable estate, consider shifting ownership of your life insurance to an irrevocable trust or to your heirs.
4. Name designated heirs to receive bank account proceeds at your death. Naming heirs as "joint owners" is generally too risky and may create gift tax issues. Instead, consider using a "payable on death" (POD) designation to redirect an account without unnecessary probate problems. This method is less complicated, but it still does not solve tax problems and is only advisable in cases where estates are worth less than $3.5 million in 2009.
5. Make sure your durable power of attorney for health care and living will are current. Are these medical documents updated and on file with family members and health care providers? Have decisions on anatomical gifts been discussed with your family?
6. Review and revise existing business buy-sell agreements. Prepare agreements if there are none, and value purchase price clauses under those agreements that require periodic review. Buy-sell agreements are critical to preserve the value of a family business.
7. Be careful with annual exclusion gifts to your heirs. Remember, gifts of appreciated assets made during your lifetime retain your cost basis in the hands of the recipient, so there may be capital gains taxes due if the asset is eventually sold by your heirs. The $12,000 annual exclusion, however, is a meaningful tool to reduce the value of an appreciating estate.
8. Offset your capital gains with losses. As volatile as the market can be, many portfolios may have gains and losses. If you plan to make gifts of stock to our organization, it is best to make those gifts with appreciated stocks. If the stock price has declined or has not changed much from its original cost basis, it may make more sense for you to sell the securities and donate the cash proceeds.
9. Finish charitable contributions by Dec. 31. As you think about special holiday gifts for family and friends, remember that making year-end charitable gifts can be a heartwarming experience that also offers you tax benefits. Regardless of the gift arrangements you choose, your generosity comes with many rewards.
We Can Help
If you're still in the planning stages, please ask us for help. We can confidentially address your financial and personal goals with regard to your charitable giving interests, what you want to give, the timing of your gift and how the gift can be made.
Please call Una Murphy at 703-993-8621, or e-mail us at umurphy@gmu.edu, for more information.
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The information on this site is not intended as legal, tax or investment advice. For such advice, please consult an attorney, tax professional or investment professional.
