Estate Planning for Financial PlannersCharitable contributionsLifetime Charitable GiftsAmount deductibleSlide 5SubstantiationSlide 7IRA ContributionsCharitable TrustsTrustsSlide 11Slide 12Pooled income fund© 2007 ME™ (Your Money Education Resource™)1Estate Planningfor Financial PlannersChapter 9:Charitable Giving2© 2007 ME™ (Your Money Education Resource™)Updated on 12/12/062Charitable contributionsQualified organizationsPublic charity: charitable, religious, education, governmentNot: your neighbor who lost his job; not RepublicansPrivate charity: foundation3© 2007 ME™ (Your Money Education Resource™)Updated on 12/12/063Lifetime Charitable GiftsMust give cash or propertyNot value of timeOnly out-of-pocket expenses deductibleMust reduce contribution by value of benefit receivedRaffle ticketsRight to purchase athletic tickets: 80%Paid before end of yearCredit cards4© 2007 ME™ (Your Money Education Resource™)Updated on 12/12/064Amount deductibleCash50%: public charityCarryover for five yearsCapital gain property: deduct FMV30%: public charityCarryover for five yearsElect 50% limit if use basis instead of FMV5© 2007 ME™ (Your Money Education Resource™)Updated on 12/12/065Amount deductibleTangible personal propertyRelated use (car to car museum): deduct FMV30%: public charityCarryover for five yearsElect 50% limit if use cost instead of FMVUnrelated use: deduct cost50%: public charityCarryover for five yearsOrdinary income property: deduct cost50%Carryover for five years6© 2007 ME™ (Your Money Education Resource™)Updated on 12/12/066SubstantiationMust have:a bank record (check) for contribution ordocumentation from charityNo deduction for:Cash contributions toSalvation ArmyChurch?They generally will provide documentation7© 2007 ME™ (Your Money Education Resource™)Updated on 12/12/067SubstantiationNoncash contributionsOver $500: attach Form 8283 including descriptionNo deduction for used underwearOver $5,000: must have qualified appraisal8© 2007 ME™ (Your Money Education Resource™)Updated on 12/12/068IRA ContributionsMust be over 70 ½Can contribute up to $100,000 per person in 2014. Why do this?Income tax savingsRMDAGI limitsEstate tax savings9© 2007 ME™ (Your Money Education Resource™)Updated on 12/12/069Charitable TrustsContribute appreciated property to trustReceive income for lifePortion capital gains, portion interest, portion return of basisGet a charitable deduction for value of remainder interestValue of gift – PV annuity paymentsOld person: value of remainder is largeSection 7520 rate: used for discountAs of 01/14: 2.2%10© 2007 ME™ (Your Money Education Resource™)Updated on 12/12/0610TrustsCRATPays fixed amount or percentage of initial value to noncharitable benficiaryMust be at least 5%- similar to a bondMust be paid even if need to reduce principal of trustPV annuity increases as section 7520 rate decreasesRemainder goes to charityVersus lead trustValue of remainder interestMust be at least 10% of value of assets transferred to trustDecreases as section 7520 rate decreases11© 2007 ME™ (Your Money Education Resource™)Updated on 12/12/0611TrustsCRUTPays percentage of annual value to noncharitable beneficiaryMust be at least 5% of annual valueEquity interestRemainder goes to charityVersus lead trustValue of remainder interestCan add assets to a CRUT; not CRAT12© 2007 ME™ (Your Money Education Resource™)Updated on 12/12/0612Charitable TrustsDonor is happyCharitable deduction for remainder interestIncome for lifeAsset is removed from estateCharity is happyHeirs are sadBuy life insurance in ILIT to replace value of asset transferred to charity13© 2007 ME™ (Your Money Education Resource™)Updated on 12/12/0613Pooled income fundCombined with contributions of other individualsProvides diversificationDonor retains life interestReceive annual income based on performance of fundRemainder goes to charityValue of remainder