Thursday, April 30, 2009

Day One - Book Launch St. Thomas Virgin Island

I arrived 2 pm yesterday in beautiful, sunny St. Thomas. The weather could not have been any better. I am staying at the Marriott Resort. I only had a few moments to check in before I was off to Dockside Bookstore, the first of 3 stores that I will visit during this trip. The store is well stocked with books from all over the world on all topics. My publishing company, Second Wind Press, was in touch with the manager who greeted me upon my arrival. After a tour of the bookstore, we took pictures and greeted customers, sharing the flyers regarding the June, 2009 release of the book.

Well, it was an interesting experience. I talked with the manager about the marketing and promotion of the book when it arrives. She was very helpful. The more locals that know about the book, the better sales will be. I will spend the next few days working on that recommendation. She also thought that a spot on Oprah would not hurt either. Well, I will work on that as well. Any recommendations out there from any of my readers?

After a cable car ride to the top of the cliffs and a magnificient view of the Island, I concluded the day at Agave Terrance restaurant, a must try whenever you visit this wonderful Island.

If today was indicative of the rest of the week, we are in for quite a marvelous time. The people are lovely and inviting. There could not be a better place to launch a book on the importance of estate planning. And, yes this too is a Beach read!!

So order your copy of Stop! What are Waiting For? Your Step-By-Step Guide to Estate Planning today.

Wednesday, April 29, 2009

Estate Planning Is a Time to Celebrate Your Life

Today, I will travel to St. Thomas, Virgin Islands for a pre-release event for my book. I want people to realize that estate planning can be a celebratory event. It is not just a time of somber contemplation about your immortality. It is a time to reflect and project - reflect on just how awesome your life journey is and has been and project how your life's work and worth can impact another generation and beyond. That is why I choose Carnival time in St. Thomas to launch a book on Estate Planning.

So travel with me over the next 5 days for an experience that I hope might encourage you to take the estate planning ride. Become a participant observer through my daily blogs on the festivities, one of which will be my pre-release party. Let's have some fun!!!

Tuesday, April 28, 2009

The Stimulus Package and Estate Planning

Have you thought about how the Economic Stimulus Package might affect you? I have given it some thought as it relates to my clients and perspective clients. I encourage my current clients to take this as an opportunity to revisit their estate plan. Your estate plan should be updated as your personal and financial circumstances change. Another time to revisit your estate plan is when there are significant law changes impacting you and your family's future. We are in such a period now.

For perspective clients, I encourage you to look at this economically challenging time for our country as your wake up call to plan for the future of your children. An estate planning professional can help you sort through those aspects of the stimulus package that might be of importance to your circumstances. Call our office for a free consultation.

Monday, April 27, 2009

Stop! What are you waiting for?

My new book is coming soon!!! It is an exciting time. The publisher has scheduled a pre-release event this month in St. Thomas, V.I. I will also be in all of the major markets once the book is released. You can order your book NOW, in ADVANCE!!!

This is the book that my clients encouraged me to write so that I could share my message to more and more people. The message is that estate planning is ESSENTIAL for everyone and it DOES create lasting WEALTH!!

The book is a comprehensive guide to preserving your wealth. It will provide information on the benefits of estate planning. It will address how estate planning
(1) Protects your assets;
(2) Saves you money;
(3) Creates your legacy;
(4) Distributes your wealth;
(5) Addresses your special circumstances;
(6) Insures you peace of mind; and,
(7) Discerns needs as you age.

More importantly, this book will challenge you to reflect on your life. You can engage the estate planning process as a process of self-discovery to help you understand the life that you are living. It may be the first time that you plant an idea of your purpose that can begin to germinate into your legacy.

Order your advance copy of the book today!!!

Saturday, April 25, 2009

Uniform Transfer to Minors Act - Children's Trusts

As part of your estate plan, you want to consider the ways to give money to your children. During your lifetime, you or other members of your family can gift money to your minor children. Sometimes that money is placed in a bank account in the child's name and at age 18 the child can withdraw any and all of the money. For larger amounts of money, the Uniform Transfer to Minor custodian accounts are set up. Once funds are placed into a custodian account, the account can not be terminated. The child is entitled to all of the funds at age 21.

For significant transfers of funds to minors and to provide for a longer term, you want to consider a Trust for your children. The Trust provides flexibilty and longivity that most parents are looking for when they want money to serve for the support, maintenance and education of their children.

Consult with our office on all your estate planning needs.

Friday, April 24, 2009

Federal Estate Tax - Update

What will happen in 2010 with the Federal Estate tax remains to be seen. It is one of the hot topics in estate planning that I continue to blog on. Under the current law, there will be no Federal Estate tax in 2010. It was anticipated that Congress would have addressed this issue before now. With less than a year to go people, lots of people, have been talking about the status of the Federal Estate Tax.

One of my financial advisor associates shared an article with me from Investment News, a leading news source for investment advisors. They, like others, are following Congress closely and the most recent congressional bill would have the current exemption amount of 3.5 million to remain permanently.

See the article below for more information and to continue to follow developments in this area. Share your thoughts here. We encourage your comments.

Thursday, April 23, 2009

Transfer Your Deed

Let's say you have a home and you want to leave it to your children. What would be the best way to leave your home to them? This third option (Life Estate and Irrevocable Trust were options discussed the last 2 days) would have you transfer all your interest to your children now while you continue to reside in the home.

Pros of Deed Transfer
(1) If you should need medical assistance in the future, the home would not be subject to recovery by the state since ownership was transferred out of your name to your children. If your deed was transferred to the children (without fair market consideration, ie it was gifted to them) within 5 years of you having to go into a nursing your eligibility for medicaid will be affected.
(2) Upon your death, your children would not have to pay an inheritance tax since they are already owners of the property.
(3) If your home was your only asset then there would be no need to probate your estate.

Cons of Deed Transfer
(1) Since you no longer own the property, you would have to have an agreement from your children that you may live in the house for as long as you like.
(2) If your children have issues with creditors, divorce or bankruptcy, the home is exposed to those issues. You could find yourself evicted by new owners.
(3) Your children would not have the advantage of a "step-up" basis of the property which one receives when they inherit property. Their basis would be the same as yours which is the value of the home at the time of your purchase. This could result in significant capital gain tax upon the sale by your children.

A deed transfer is ideal when: (1) you are well into retirement, late 70s into your 80s and beyond (2) your property is not income producing (3) you want to avoid the inheritance tax and (4) your children do not have issues that might put your home at risk; and (5) there would be no issues with a long term lease from your children.

Consult with our office if you would like to learn more about this estate planning technique.

Wednesday, April 22, 2009

Life Estate

Let's say you have a home and you want to leave it to your children. What would be the best way to leave your home to them? Today, I want to address the life estate with the remainder interest to the children. Over the next few days, we will continue to look at the options and you can decide which alternative might work best for you.

Pros of the Life Estate
(1) The Life Estate allows you to continue to have an ownership interest in the property. You can continue to take advantage of any benefits available to a homeowner, ie real estate tax rebates, etc.
(2) If you should need medical assistance in the future, the home would not be subject to recovery by the state since ownership passes to your children upon your death. If your deed was changed to add the children within 5 years of you having to go into a nursing home, your eligibility for medicaid will be affected.
(3) Upon your death, your children would not have to pay an inheritance tax since they are already owners of the property.
(4) The value of your life estate diminishes as you age so any value to creditors is lessen since upon your death, the home becomes the chidren and is not subject to your debts.

Cons of the Life Estate:
(1) Your interest in your home is diminished and your children's interest is greater
(2) If your children have issues with creditors, divorce or bankruptcy, your home is exposed to those issues

The life estate is ideal when: (1) you are well into retirement, late 70s into your 80s and beyond(2) your property is not income producing (3) you want to avoid the inheritance tax and (4) your children do not have issues that might put your home at risk.

Consult with our office if you would like to more about this estate planning technique.

Tuesday, April 21, 2009

Irrevocable Trusts

Let's say you have a home and you want to leave it to your children. What would be the best way to leave your home to them? Today, I want to address the Irrevocable Trust for that purpose. Over the next few days, we will look at other options and you can decide which alternative might work best for you.

Pros of the Irrevocable Trust:
(1) The Irrevocable Trust allows you to take property out of your estate. Therefore, for purposes of Federal Estate Tax, your home would not be an estate asset at your death and would reduce the value of your taxable estate.
(2) If you should need medical assistance in the future, the home would not be subject to recovery by the state if the trust held your home for at least 5 years.
(3) Upon your death, your children would not have to pay an inheritance tax when the home is transferred to them from the Irrevocable Trust.
(4) Unless your home is rental property, there would not be any income for income tax purposes. Therefore, though the Irrevocable Trust would have its own EIN for tax purposes, when income tax filings are done, there would be no income tax due.

Cons of the Irrevocable Trust:
(1) When the property is transferred into an Irrevocable Trust, there would be a transfer tax due. In Pennsylvania, that would be 6% of the fair market value.
(2) An Irrevocable Trust can not be changed and you can not serve as the Trustee.
(3) If your home is rental property, income taxes would have to be paid at the trust rate which is a higher rate than for individuals.

An Irrevocable Trust is ideal when:
(1) you are well into retirement, late 70s into your 80s and beyond
(2) your property is not income producing
(3) the transfer tax is not a problem for you to pay
(4) you want to avoid the inheritance tax

Consult with our office if you would like to more about this estate planning technique.

Monday, April 20, 2009

Updating your Estate Plan

Timing is everything. Many people procrastinate getting their estate planning done. Even more people procrastinate in updating their estate plan. It is just as important to update your plan as it is to have one in the first place. The reason is that our circumstances change and our plan should reflect those changed circumstances.

There are many reasons that you might need to revisit your plan. These reasons include the birth of a child; the death, illness or incapacity of a loved one; moving to another state; receiving an inheritance or another significant financial change; divorce; marriage; and, change in the laws. I always tell my clients that generational wealth is not about luck. It is about planning and implementation.

Make a difference in the future of your children and grandchildren by reviewing your estate plan. If you need to make a change, call our office for an appointment.

Saturday, April 18, 2009

Generational Wealth

I was listening to an entertainer recently commenting about his neighborhood. He said there are a few other wealthy entertainers living in his area. However, this neighborhood of multi-million dollar homes included many people who do not have multi-million dollar salaries.

This is where generational wealth is an advantage. It is not about what the individual makes. It is about access to wealth and to other sources of assets. Generational wealth is about trust funds, inheritance, gifting and other estate planning techniques. In order for one generation to help another generation, there has to be planning done. It can not be done in a choatic way or at the last minute if your intent is to make a positive financial difference for the next generation.

Whether expensive homes, exotic travels, charitable endeavors or other opportunities are of interest to your heirs, you can make it all possible in a way that is most productive and beneficial to those you love. Let's talk about what your plans might be soon. Call for a free consultation.

Friday, April 17, 2009

Assets - Leaving a Legacy of Encouragement

I just listened to this wonderful singer from Britain's Got Talent, 2009, Susan Boyle. As she said she would, she "rocked" the house with a standing ovation. BUT, do you know how this all started!! It was because she had a dream and her recently deceased mother encouraged her to audition, to follow her dream. In honor of her mother, she did audition and you see/hear the result.

A Will does not only address tangible assets, ie money and real estate but also it can address non-tangible assets. You can encourage or provide incentive for someone to pursue a career, make a beneficial lifestyle change, stop smoking, drinking, gamblings or engaging in other potentially harmful activity. Through estate planning you have the opportunity to change the life of the one your love, in many ways, and in turn you give the world a gift, as Susan's mother did for us.

Help your loved ones reach their full potential through estate planning today. Let us help you be as creative as you desire.

Thursday, April 16, 2009

Probate - Who should serve as Executor?

Join me this evening for an Estate Planning presentation. See the information in the left column. Come and bring a friend. Learn more about probate and other matters.

There are many important decisions to make when you are doing your Will. One of those decisions is who will you name as your executor. When making the decision, trust is your number one consideration. After that, you can pretty much pick anyone you would like. It could be a family member, a friend, a professional advisor, a beneficiary under the will, your neighbor, in other words anybody that you trust. They do not need to have expertise in this area or live in your state. Yes, it could help if the person has some expertise in this area or live in your state or close to you. However, all of that is not necessary and you should be guided by the one you feel you trust to do what would be in your best interest. You can then share with them the duties of the executor as provided in the previous blog posting.

We can help you as your make important decisions regarding your estate. Contact our office for a free consultation or post a blog which we will answer for you.

Wednesday, April 15, 2009

Probate - Inheritance Tax Return

It is tax time. Hopefully, you have already done your taxes and are now awaiting a nice, big refund. OK, that may be wishful thinking.

One the major tasks in settling an estate is filing the Inheritance Tax Return (in those states with inheritance tax). The deadline for filing inheritance tax return is not the same as the April 15th, income tax deadline. Inheritance tax returns for states like Pennsylvania are due within 9 months of the death. After determining the taxable assets less all debts of the decedent, the net amount will be subject to the applicable state tax rate. Generally, the will provides who will be responsible for the payment of the tax. However, for ease of administration, it is best if the tax is paid by the estate. Otherwise, if the beneficiaries fail to make the tax payment, the executor might be held responsible.

The executor will want to seek professional advise when preparing the inheritance tax return. Contact our office for that advice and guidance.

Tuesday, April 14, 2009

Probate - Duties of Administrator/Executor

Many times the person appointed as an administrator or named as the executor under the will knows very little about the duties of that position. I advise my clients to tell the person they appoint as executor. It should not come as a surprise to anyone. I then let them know what that person's responsibilities would be so that such information can be shared with their executor.

The main duties of an administrator (one who is appointed during probate if there is no will) or executor (person named under the will) are to:
(a) ascertain the assets subject to probate (not all assets are subject to probate, such as assets owned jointly, assets in a trust, assets transfered by beneficiary designation;
(b) gather and provide an inventory of the assets;
(c) open up an estate account (checking account) to place assets and receive other assets due the estate, including interest, dividends, and other income;
(d) determine the beneficiaries - who is going to get what and how much under the Will (if there is no Will, the state’s "interstate succession laws" apply);
(e) determine or obtain appraisal of the estate’s assets;
(f) give legal notice to potential creditors (generally done via legal advertisement - determine state or local requirements for notifying creditors);
(g) investigate the validity of claims against the estate;
(h) pay funeral bills, outstanding debts, and valid claims;
(i) pay the expenses of administrating the estate;
(k) handle various paperwork, such as discontinuing utilities, memberships and charge cards, and notifying Social Security and others of the death;
(l) file and pay inheritance tax;
(m) distribute the remaining property in accordance with the instructions provided in the Will or under intestate law; and
(n) close probate.

In some states, you may be required to hire an attorney to handle probate. In other states, you proceed without counsel. Call our office if you have a probate issue and we can help you meet the requirements.

Monday, April 13, 2009

Probate - How much does it cost?

Not only are people interested in how long probate will take (as discussed in the prior posting) but also how much will it cost. The cost of probate depends upon many factors as well. Does the jurisdiction (state) have a specific cost based upon the size of the estate? There are bills that have to be paid, professional service fees for legal and tax matters, cost of posting a bond, if required, legal notice/advertisement costs, cost associated with the sale of assets such as real estate, reimbursement for administrator/executor expenses or payment of a fee, among many other things that may arise. Many of these costs apply whether there is a will that must be probated or a trust that has been set up, depending upon its terms and conditions.

It is important that you address the cost as well as the time associated with probate during the estate planning process. You can save more money for your heirs with proper advance planning. We are available to answer your questions. Call for a free consultation.

Sunday, April 12, 2009

Probate - Time it Takes to Do

Often, I have heard, as a complaint about probate, that it takes a long time before heirs can get their money. As a result, many people seek to avoid probate for that reason. How long probate actually takes depends on a number of factors. Those factors include, the size of the estate, the complexities of the estate, the disagreements among potential heirs, the jurisdiction (which state) where probate occurs, the lack of clarity in the will, the skill of an executor/administrator, the notification period to creditors and potential heirs, the source of payment of inheritance taxes and the efficiency of the Register of Wills, among other factors.

When you are getting your will prepared, you can make sure some of these factors will not result in delaying the administration of your estate. Be clear and concise with the specifics provided in your will. Pick a person who can handle managing the distribution of your estate. Address inheritance tax payments. Know the probate laws of your state and if they provide very burdensome requirements, then consider the use of a trust instead of a will.

Contact our office for a free consultation on this and other estate planning issues.

Friday, April 10, 2009

Probate - Bond Requirement

I have a number of inquiries regarding the probate process. These inquiries are as simple as what does probate mean to the process to challenge probate. Well, probate means to prove a will. Does the will presented to the Register of Wills meet all of the state legal requirements? Of course, many people die without a will. One of my passions is to get people to do a will. Where there is a will there is a way! Got will? Like it or not you need a will. Here is one issue that is faced more often than not by loved ones having to probate an estate; the bond requirement. You can provide in your will that your executor does NOT have to take out a bond to handle your estate. You have picked the person to act as your executor and this person is someone you trust. In many cases, it is a family member who will inherit part if not all of your estate. Paying for a bond would be an unnecessary expense. HOWEVER, if you do not have a will or do not specify no bond requirement in your will then the Register of Wills can impose such a requirement. Generally, the Register of Wills will impose a bond requirement when the Executor (one named under the will) or the Administrator (when there is no will) is out of state. You can avoid this expense for your executor or administrator by taking the simple step of having a will done by a professional who can make sure the right terms and conditions are covered.

Have you had a probate experience that you want to share? Do you have questions about probate? Give us your comments today and we will get right back to you.

Thursday, April 9, 2009

Three (3) options to consider when transferring your home to your children

I grew up in Salisbury, Maryland and my parents still live in the home that we moved to when I was 12 years old. My parents were my first estate planning clients. They often revisit their plan with me to keep it up to date with changing times. They had a question about one thing recently which is often a question posed by many of my clients. As we get older, how should we hold the deed to our property? For many people, their home is their most valuable asset especially in an economy that is kinder then the one we currently face. The answer to this question depends upon your specific circumstances. The 3 primary options that could be considered are as follows:
Option 1. Add your children's name to your deed.
Issue - You expose your home to any issues that your children may have with creditors, banruptcy, divorce, etc.
Option 2. Maintain a life estate with the remainder interest to your children.
Issue - Children take your basis (for tax purposes) in the property and not the step-up in basis received when the property is inherited. This also is an issue in Option 1. and Option 2.
Option 3. Transfer the deed to your children, removing your names as owners.
Issues - All of the issues noted in option 1 and 2. Further, if you are transferring property to avoid nursing home costs, such transfer has to occur 5 years prior to the need to go in the nursing home.

There are other options that you could also consider from not doing anything to transferring the deed into the name of a trust, revocable or irrevocable both of which have their own issues to consider in your particular circumstances. Feel free to ask me a question through the comment section or call my office for a free consultation making reference to this blog entry.

Wednesday, April 8, 2009

Leaving It All Behind or Going out in Style

You know it can be difficult picking a title of a book. Some say the title needs to tell the potential reader what the book is about. Some say the title should be catchy whether it explains the content or not. Well, in my case, I did choose a title that I thought would be catchy with a sub-title that explained exactly what the book was about. Stop! What are you waiting for? Your step-by-step guide to estate planning. Coming to a bookstore near you this year!!

There were some really good runners up. Leaving it all behind or Going out in Style What do you think about these title? When one dies, you obviously can not take your assets with you. But others can take it from you if you do not plan. Since you do have to leave it all behind, why would you not have a plan for it, your plan and not the state's plan. Then you can truly go out in style. Your will is your last word and testament. Let it be your signature, your mark, in your style. So the runners up have real credibility and maybe, just maybe, they will be the title of my next 2 books. Never say never, at least that's what I have learned.

Tuesday, April 7, 2009


Last week I took a mediation training course. It was very interesting to look at ways to resolve disputes between parties without litigation. This can be especially helpful in Probate Court when addressing will contests, guardianship (though incapacity can not be determined in mediation), inventory and accounting disputes and fiduciary issues. Another growing area for this practice is in Elder law.

Mediation allows me, as a neutral third party, to work with the disputing parties. My role as a trained mediator is to help parties listen to and talk with each other. I help them gain clarity on their options and the possibilities for moving forward. Often in this process, the parties gain a better understanding of each other's point of view. It is not my role to make the decisions for them or even tell them what to do. Nor, do I act as an advocate for either of the parties. In this transformative mediation process, parties if allowed the necessary space can begin to resolve their own conflict and in turn can save themselves and, if an estate is involved, the estate the growing expense of litigation.

I particularly like mediation because it empowers the individual in the decision making process. As the process progresses, in many cases, you can see the shift that all parties make towards reaching an amicable resolution. It is one that they take ownership of because it was not imposed upon them by legal system. If you happen to be in a dispute, consider mediation. I can help you with that choice. Contact my office today.

Monday, April 6, 2009

Charitable Deduction

Charitabel estate planning can benefit you during your lifetime. Charitable deductions are not only available to your estate when you die but you can engage in charitable estate planning while you are living and take advantage of charitable deductions. The amount of the charitable deduction that you may be entitled to take in any one year is limited to a percentage of your adjusted gross income. The percentage is based upon the type of asset contributed and the type of charitable organizations to which your donation is made. Deduction for contributions of cash to public charities is limited to 50% of your adjusted gross income. Deduction for contributions of appreciated capital gain property (i.e. real estate and stock) to public charities is limited to 30% of your adjusted gross income. If your charity is a private foundation, deduction for contributions of cash is 30% and for appreciated capital gain property, the deduction is 20% of your adjusted gross income.

Your tax advisor can also work to help make sure you get the most out of your charitable estate planning. Start with a call to an estate planning attorney today!!

Saturday, April 4, 2009

What is a Private Foundation?

Private foundations are often founded by an individual or corporation and do not receive support from the public. They are essentially a private tax exempt organization with the purpose of benefitting public charities, including educational institutions, research organizations, or other nonprofit organizations serving the public interest. A private foundation does not provide charitable services but makes grants to provide funding to other qualified charities. Private foundations are established by those who want a greater degree of control over administration, making grants and investment of the assets donated to the private foundation, than is possible with public charities.

More importantly, the private foundation of an individual or family can serve to transfer assets to the next generation. This is accomplished by involving the younger generation in the foundation’s administration, management, and grant making. Children can learn about and engage in philanthropy at an early age. When a private foundation is established by a family, all of the family members’ charitable giving can be channeled into one vehicle, resulting in larger gifts and greater impact on their chosen charities.

Depending upon your level of giving, the private foundation may serve you and your family's charitable giving in a unique and beneficiary way. Want to learn more? Provide your comment here or contact my office for further information.

Friday, April 3, 2009

What is a Qualified Charity?

As I continue to talk about charitable estate planning, it is important to define a qualified charity so that you can make the appropriate choices for your charitable estate planning. A charity which qualifies for charitable gifts is one that is a charitable organization as described in the Internal Revenue Code 501 (c) (3). All nonprofit organizations are defined by the IRS as either "public charities" or "private foundation." Public charities include churches, schools, museum, hospitals, and medical research organizations. All public charities rely on public support. Contributions to a public charity are tax deductible.

Public charities also include community foundations. Community foundations are organized as a permanent collection of endowed funds and charitable donations for the advantage of a defined geographic area. The governing body of a community foundation is made up of representatives of the general community which operate the foundation as a grant-making organizations. The community foundation accept gifts of cash and other tangible and intangible assets. Giving to a community foundation allows you to leverage your contribution with others to help make a greater impact on the recipient of the grant given by the foundation.

Tomorrow's blog will explore the private foundation and how they can be a part of your charitable estate planning. Ask your questions regarding charitable estate planning and I will provide a response for all to benefit.

Thursday, April 2, 2009

Charitable Estate Planning - Charitable Trusts

Another method for charitable estate planning is the establishment of chartible trusts. These trusts have significant tax benefits. There are several charitable trusts to consider, such as the Charitable Remainder Annuity Trust (“CRAT”), Charitable Remainder Unitrust (“CRUT”) and Charitable Leads Trust. The first 2 trusts, CRAT and CRUT, permit you to provide a remainder interest to a charitable organization while you continue to benefit during your lifetime from the asset to be transferred. These trusts are considered split interest trusts. They have both charitable and non-charitable beneficiaries. Your charity is the charitable beneficiary and you are the non-charitable beneficiary.

A third type of trust is the Charitable Leads Trust. It is also a split interest trust. However, it is the reverse of the CRAT and CRUT. The Charitable Leads Trust pays income first to the charity for a term of years and then the remainder amount is paid back to you or, if the trust is established after your death, to your beneficiaries. This means that the charity gets paid first and then the non-charitable recipient get paid. Therefore, the charity leads the non-charitable recipient. That is why this particular trust is referred to as a Charitable Leads Trust. The use of CRAT, CRUT and Charitable Leads Trust can offer financial advantages to you during their lifetime.

With the CRAT and CRUT, you, as the non-charitable beneficiary, have the right to receive, at least annually, an annuity or unitrust amount for life or for a term of years (not more than 20 years). At the end of the established term, the remaining assets of the trust are paid to or held for the benefit of charity. If the interest is an annuity interest, then the trust is considered a CRAT. When it is established, you choose the payout rate. The higher the payment to you, the lower the charitable deduction will be for tax purposes. If the interest is a unitrust interest, the trust is considered a CRUT. In the CRUT, the assets are revalued every year to determine the payout rate each year.

Whether you use a CRAT, CRUT or a Charitable Leads Trust, they should choose appreciating assets to give and place in the trust. Since charities are not taxed, this will avoid a capital gain tax when the asset is sold by the charity. Therefore, for appreciating assets like real estate and stock, Max and Margaret get a charitable deduction during their lifetime and the charity avoids a capital gain tax.

Wednesday, April 1, 2009

Charitable Estate Planning - Bequests

There are many ways to engage in charitable estate planning. One of the most basic ways to make a charitable gift is through a bequest, which anyone can make in their wills. A bequest is appealing to many people because they maintain control of their assets until they die. It is the easiest way to give, and it can also be changed at any time before the person dies.

The bequest is a statement in the will identifying assets that you want to leave and the charitable institution to which you want to leave the assets. This is the simpliest way to remember those institutions and charitable endeavors that were important to you during your lifetime.