Estero Estate Attorney

Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, I can help you protect everything you love – family, friends and favorite charities.

What Tax-Savvy Givers Know

Are you a charitably-minded taxpayer who wants to wring every possible tax benefit available under the Internal Revenue Code (IRC)? If yes, then first confirm that the charities soliciting you are legitimate charities or your contributions will not be deductible. Assuming they are legitimate, then you need to understand some savvy fundamentals regarding how to best leverage the timing of your philanthropy and the assets you have to give. For example, what are your best tax-savvy options if you choose to give now or, perhaps, choose to give later on?

Giving Smart Now

Sometimes opportunities to do good with our assets come up right now. Think of this as tactical giving. Whether it is a collection plate being passed around for an immediate need or a capital campaign for a building project, funds are needed now while you are alive. When these opportunities present themselves, remember to think tactically.

In other words, before you give cash, determine whether you have any highly-appreciated assets like real estate or stock you can contribute to the cause. Why? If you give cash, then the charitable deduction you may claim is limited to the value of the cash. Nothing more.

However, all things being equal, if you give appreciated real estate or stock instead of cash, then your charitable deduction will be based on the full fair market value (not your “basis”) of the real estate or stock you contribute to the cause. That can be a great advantage.

Smart Giving Later

Perhaps you want to make sure you do not need charity yourself during your lifetime. After all, who knows what can happen economically or with your own health. There is international economic volatility, life expectancies are lengthening and health care costs are only increasing. As a result, you may want to keep control and ownership over your assets as long as you are living, but benefit your favorite charity (or charities) after you pass on. This is a very responsible approach.

Many charitable taxpayers make a common mistake when it comes to the most tax-efficient assets to transfer to loved ones or leave to charity (or charities). For example, what if you want to leave $100,000 to charity and an equal amount to your children at your passing? If you have $100,000 in an IRA and $100,000 in highly appreciated stock, then you need to understand postmortem income taxation. Which asset is better to leave to your loved one versus your charity (or charities)?

Understanding Basis

For starters, appreciated assets enjoy a stepped up basis at your passing. For example, what if you own stock in XYZ Corporation and you bought it for $1. If it is worth $100,000 on the day of your passing, then your loved ones would inherit it at the $100,000 value for determining any capital gains taxes upon its sale. When they inherit it and then sell it for $100,000 (assuming it has not gone up in value after the date of your passing), then they pay no capital gains taxes and inherit the full $100,000 tax-free. If you left the stock to your favorite charity (or charities), then the tax consequences would be the same.

What if you left a $100,000 IRA to your loved ones? Since the IRA has never been taxed, every dollar remains taxable as ordinary income when withdrawn by your loved ones. Interestingly, your favorite charity (or charities) pay no income taxes and would receive the full $100,000 tax-free. As you can see, this is rather complicated.

For more information, please check our website at http://www.bvflaw.com, or call us at 239-703-7210, or email us rblackwell@bvflaw.com.

What Tax-Savvy Givers Know

Are you a charitably-minded taxpayer who wants to wring every possible tax benefit available under the Internal Revenue Code (IRC)? If yes, then first confirm that the charities soliciting you are legitimate charities or your contributions will not be deductible. Assuming they are legitimate, then you need to understand some savvy fundamentals regarding how to best leverage the timing of your philanthropy and the assets you have to give. For example, what are your best tax-savvy options if you choose to give now or, perhaps, choose to give later on?

Giving Smart Now

Sometimes opportunities to do good with our assets come up right now. Think of this as tactical giving. Whether it is a collection plate being passed around for an immediate need or a capital campaign for a building project, funds are needed now while you are alive. When these opportunities present themselves, remember to think tactically.

In other words, before you give cash, determine whether you have any highly-appreciated assets like real estate or stock you can contribute to the cause. Why? If you give cash, then the charitable deduction you may claim is limited to the value of the cash. Nothing more.

However, all things being equal, if you give appreciated real estate or stock instead of cash, then your charitable deduction will be based on the full fair market value (not your “basis”) of the real estate or stock you contribute to the cause. That can be a great advantage.

Smart Giving Later

Perhaps you want to make sure you do not need charity yourself during your lifetime. After all, who knows what can happen economically or with your own health. There is international economic volatility, life expectancies are lengthening and health care costs are only increasing. As a result, you may want to keep control and ownership over your assets as long as you are living, but benefit your favorite charity (or charities) after you pass on. This is a very responsible approach.

Many charitable taxpayers make a common mistake when it comes to the most tax-efficient assets to transfer to loved ones or leave to charity (or charities). For example, what if you want to leave $100,000 to charity and an equal amount to your children at your passing? If you have $100,000 in an IRA and $100,000 in highly appreciated stock, then you need to understand postmortem income taxation. Which asset is better to leave to your loved one versus your charity (or charities)?

Understanding Basis

For starters, appreciated assets enjoy a stepped up basis at your passing. For example, what if you own stock in XYZ Corporation and you bought it for $1. If it is worth $100,000 on the day of your passing, then your loved ones would inherit it at the $100,000 value for determining any capital gains taxes upon its sale. When they inherit it and then sell it for $100,000 (assuming it has not gone up in value after the date of your passing), then they pay no capital gains taxes and inherit the full $100,000 tax-free. If you left the stock to your favorite charity (or charities), then the tax consequences would be the same.

What if you left a $100,000 IRA to your loved ones? Since the IRA has never been taxed, every dollar remains taxable as ordinary income when withdrawn by your loved ones. Interestingly, your favorite charity (or charities) pay no income taxes and would receive the full $100,000 tax-free. As you can see, this is rather complicated.

For more information, please check our website at https://www.ricblackwelllaw.com, or call me at 239-703-7210, or email us ricblackwelllaw@gmail.com.