On December 22, 2017, the President signed into law an “Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.” That’s quite a mouthful, so this article will refer to the law as the “Tax Reform Act” for convenience. There has been some alarm in the charitable community about the impact of this law on charitable giving. The intention of the analysis that follows is twofold. First, it explains which laws affecting planned giving have changed and which laws remain intact. Second, it offers five suggestions on the best ways donors can continue to make tax-efficient planned gifts.
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PG Calc's Jeffrey Frye and his colleagues in our Client Services department have reviewed all the product support calls we received this year and have culled out the ten top calls for 2017. These calls cover a broad spectrum of topics and questions, the answers to which will be of great interest to users of PG Calc's products. We will follow this article with a posting of the top 10 planned giving questions for the year, so keep an eye out for that article in a future eRate.
Under Republican leadership, Congress is working feverishly to complete the details of sprawling tax reform legislation, the Tax Cuts and Jobs Act, and have it on President Trump’s desk for his signature by the end of this year. The House bill was voted on and approved on November 16. On the same day, the Senate Finance Committee approved their version of the package.
There is one important – and often overlooked – question to ask spouses who are funding a charitable gift annuity (CGA) with appreciated securities: “Who owns the securities?” Not knowing the answer to this question can result in a triggering of capital gains taxes never anticipated by the donors - and a donor relations nightmare for the gift officer.
Including revocation language serves two purposes. First, it may enable the donor to avoid making a taxable gift to the annuitant. Second, it preserves flexibility in the event of a change in circumstances, such as the dissolution of a marriage. The decision on whether to include the revocation language is ultimately the donor’s, but it is helpful if the charity understands the issues to help inform that decision.
By their nature, life income gifts (Charitable Gift Annuities, charitable remainder trusts, and pooled income funds) are arrangements where the donor transfers assets now, but delays the charity’s use of the funds until a future date, normally the death of one or more income beneficiaries. A charitable remainder trust can be established for a term of years, but until the expiration of what can be a term of up to twenty years, the assets of the trust are unavailable to charity.
One of the most frequent challenges encountered in the administration of life income gifts is the issue of uncashed checks. The typical response to an uncashed check is to place a stop payment on the check after a specific period of time, and to reissue payment in the form of a replacement check. If the replacement check is cashed within a reasonable period of time, it is assumed that the original uncashed check was just an anomaly and no further action is required. But what happens when the replacement check, and subsequent checks are not cashed? This article addresses what a charity should do when a beneficiary stops cashing life income payments.
Mutual funds are easy to purchase, simple to understand, and they allow for continual reinvestment of income over the long run. As planned gift donors review their financial assets and determine which ones to use as the funding for charitable gift annuities, mutual funds present an obvious choice. But gift planners should be aware of some particular aspects of mutual funds that can cause significant complications in the process. Read about the complexities in mutual funds transactions and tax accounting.
Have you ever hoped that a donor would walk away from a gift? Why would any gift officer want that, unless perhaps the charity was at some risk of liability as a result of accepting the gift? Your goal is to close gifts – to cultivate and engage the donor with the hope of a (big) gift. Read about various scenarios in which walking away from a gift makes sense for both parties.
The extraordinary popularity of donor-advised funds (DAFs) in philanthropy has resulted in non-profits receiving increasingly generous grants from these funds, now estimated to be in the billions of dollars annually. The expanding role of DAFs has not gone unnoticed by the IRS, however, whose watchful eye has turned to these funds and the charities receiving grants. Read this featured article and find about the IRS regulations regarding grants from donor-advised funds.