Last time, we looked at two concepts: compound interest and present value. Turns out they’re two sides of the same coin. If you grasp the idea of compound interest, you also grasp the idea of present value, maybe without realizing you do. Compound interest tells us what $1 (or $1 million) will grow to after… read more

Compound interest theory is at the center of financial analysis. What is compound interest? It’s the interest earned on money invested over time. Invested at some fixed interest rate. Let’s assume $1 is invested at 6% interest (.06 mathematically) for exactly one year. At the end of the year, the $1 has grown to $1… read more

The process of receiving fund left through IRA designations is often time consuming, complex, expensive and, in some cases, in violation of the custodian’s fiduciary duties and federal tax law. For example, many IRA custodians or administrators have adopted a process that requires charities to establish an “inherited IRA” in order to receive their charitable… read more

The three stages are 1. the drafting of the trust instrument 2. the funding of the trust and 3. the administration of the trust The drafting stage: IRS has provided specimen agreements for annuity trusts and unitrusts, which makes the drafting of CRAT and CRUT documents relatively easy. But there are some cautions here. Some… read more

Gift planning has focused traditionally on squeezing maximum tax benefits out of a gift arrangement. There are, however, some good gift arrangements for which little or no tax benefits are available. “Good” here means good for the donee organization. Let’s consider some specific examples. Donor contributes a valuable painting she painted: Donor’s income tax charitable… read more

WHY DOESN’T THE DONOR REALIZE GAIN WHEN GIVING AN APPRECIATED ASSET SUCH AS APPRECIATED STOCK? Gain is realized only on the sale or exchange of an appreciated asset. Note that a gift annuity funded with appreciated stock involves a sale or exchange (it’s a kind of bargain sale). Note too that a gift of mortgaged… read more

These regs are important. They deal with gift receipts and qualified appraisals, documents on which IRS auditors focus. The new regs take effect January 1, 2019. Without a correct gift receipt, Donor will have his or her entire federal income tax charitable deduction disallowed on audit. Same result as to an appraisal that doesn’t meet… read more

Life estate gifts involve the gift of a personal residence or farm subject to a retained life estate. The retained interest also can be an estate for a term of years. “Estate” means the exclusive right to occupy or the right to rents (e.g., in the case of a farm leased to a tenant). “Personal… read more

When working on an estate where you are the primary beneficiary, it can be worth checking www.missingmoney.com for lost assets. This is a joint website set up by 42 (so far) state unclaimed property agencies to help find missing assets. Just plug in your or your organization’s name and see what pops up. It also offers… read more

Everyone who has worked on lots of planned gifts from Baby Boomers, hold up your hands. Just as I thought. Sure, there are gift plans that fit. Lead trusts in some cases. Term-of-years CRTs. Deferred payment gift annuities. Virtual endowments. The writer hasn’t seen more than a few window shoppers and at most only a… read more