Paul Gardner, Fred Hueston and Walt Eilers are thankful for three blessings:
1. We have added the expertise of Fred to our team and for him to have partners who work well together.
2. We have now and in the past worked with exceptional clients.
3. The economy is changing and not-for-profits are looking for consulting help. 2013 promises to be a great year!
Is Your NPO Ready for Planned Giving?
As we saw in the recent election America’s demographics are changing significantly. One of its largest segments is the retiree. 10,000 Americans retire every day. The IRS estimates that 114, 600 estates will face paying the death tax because of planning lapses. That means a huge opportunity for NPOs. You can help your supporters manage their estates and maximize their impact and reduce their tax burden, but you must offer them a Planned Giving Program.
As a part of your fundraising planning your organization should include planned giving in your message and mix of giving vehicles.
Planned Giving requires expertise. Dr. Fred Hueston, CFRE, has the credentials and experience to help your NPO establish a Planned Giving program. Give Fred a call at 1.501.661.6501 or email him at firstname.lastname@example.org.
Are You Prepared for 2013 Tax Law Changes?
If you have been putting off creating an estate plan or have not updated it in years, upcoming changes in tax laws might spur you into action.
The current estate tax laws will expire at the end of 2012. Unless Congress intervenes before that time, you will see significant changes. Here is a preview of what you can expect:
Income and capital gains taxes will both increase and the estate, gift and generation-skipping tax—the shift of property by gift or at death to a person who is two or more generations below that of the person granting the gift—exemptions will change dramatically in 2013. The basic exclusion amount—the amount you can own before your estate is subject to estate taxes—lowers from $5.12 million in 2012 to $1 million in 2013.
The top estate tax rate also increases from 35 percent to 55 percent. That means, for every dollar you own more than the $1 million exemption, up to 55 percent will be subject to federal estate taxes upon your death.
And it is expected to affect many more estates. The Internal Revenue Service, for example, estimates that 114,600 estates of people dying in 2013 will have to pay taxes on their estates. By comparison, in 2011, an estimated 8,600 estates of people who died paid estate taxes.
Thus, if you haven’t drawn up an estate plan yet, there may be no better time to do so. Here are some other federal tax laws affecting estate planning in 2013.
Capital gains and income taxes raised: Capital gains taxes will increase from 15 to 20 percent and the top income tax rate has been raised from 35 percent in 2012 to 39.6 percent in 2013.
Gift tax exemption lowers: The gift tax exemption lowers from a $5.12 million exclusion amount unified with the estate tax exemption to $1 million in 2013. The top gift tax rate will rise from 35 percent to 55 percent. The annual gift tax exclusion—the amount you can give to anyone gift tax–free each year—is projected to be at $13,000 ($26,000 for married couples), adjusted for inflation.
Portability ends: For 2011 and 2012, if one spouse died without using up his or her federal estate tax exemption, the unused portion could be transferred to the surviving spouse. This is called a portability provision. In 2013, however, portability between spouses ends.
All that said, if a new tax bill is approved before Dec. 31, you will need to be ready for the last-minute changes. And you may want to talk to your tax advisor. Gardner & Associates will keep you informed of Congressional action as it happens.
Plan Now to Meet These Tax-Break Deadlines
Timing your gift at year-end can be crucial. The gift date—the date used for tax purposes—is the day you transfer control of the asset. And that depends on the asset and your method of giving.
▪ Checks—The mailing date is the date of the gift.
▪ Credit cards—The day the charge is authorized is considered the gift date.
▪ Pledges—Pledges are deductible in the years they are fulfilled and not the year the initial pledge is made.
▪ Securities—If securities are electronically transferred to West Texas A&M University, the gift date is typically the day the securities enter our account. If securities are mailed, the mailing date is the gift date. It is important to send, by registered or certified mail, the unsigned certificates in a separate envelope from the signed stock power and letter of intent.
▪ Real estate—The day you deliver the signed deed to us is the date of the gift. If your state law requires recording of the deed to fulfill the title, though, then the date of recording is the gift date.
▪ Artwork and other tangible personal property—The gift date is the day you deliver the property with a signed document transferring ownership, if necessary.
Tax-Smart Moves That Can Pay Off This Year
Now is the time to make sure you have a plan in place to protect your wealth with valuable and often overlooked tax deductions.
Start by estimating how much income you expect to bring in by the end of 2012. Knowing this information can help you decide how much you may want to give to favorite causes, resulting in reduced income taxes.
Following are a few innovative year-end giving ideas that can reduce your potential tax hit or even boost your income this year while also providing a tax break.
Immediate Tax Benefit
When you support a not-for-profit, you not only make a difference in the lives of others, but you also receive a tax deduction. You can usually itemize and write off the amount you’re donating, resulting in lower taxable income. If you are unsure whether your gift is tax-deductible, you can always check with us.
Get Lifetime Income From Your Gift
Whether you’re still working or retired, you may decide after assessing your finances that you need more income. Consider setting up a life income gift to benefit the not-for-profit. In exchange for your gift of cash or securities, or possibly real estate, you or a beneficiary you designate receive income for life. Plus, you get a partial charitable tax deduction the year you make the gift. Once the payment period ends—or you or your beneficiary passes on—the remaining value of your gift goes to us.
Use Tax-Smart Strategies to Make Gifts
Consider donating appreciated property instead of cash. If you give to a not-for-profit property you have owned for more than a year, the amount you can write off is the asset’s value on the day you make the gift. So if the property has increased in value while you’ve owned it, you won’t owe tax on its appreciation.
If the property’s value is now below your original purchase price, you could sell to take a capital loss to the extent allowed by law, thus reducing your taxable income. Then donate the cash to the not-for-profit. Both cases are win-win situations—you help a not-for-profit while smartly managing your estate and taxes.