What’s new in 2014?

Answer: basically nothing.

Last week, I attended our local planned giving group’s annual 2 hour session on “what’s new on the legal front” that impacts planned giving.  Sadly as the author of The Planned Giving Blog, I have nothing to report except to welcome new subscribers to the blog (thank you! – we are approaching 1,000!) and go over some old news.  So here is the recap to think about this January 2014 if you are looking for planned giving ideas:

  • IRA rollover is off for now and possibly for a long time.  The passage of the annual tax extenders used to be driven by the need to patch the AMT problems.  But, AMT got a permanent fix in the fiscal cliff so now we have a group of tax extenders without any driving force pushing Congress to pass an extender bill quickly.  Yikes for all of the expired provisions, including the IRA rollover.  No word on the potential for a permanent fix for the IRA rollover that was proposed in the fall – stand alone bills like these don’t seem to get passed ever.  Legislation only seems to happen in big showdowns with lots of add-ons.
  • You have donors with capital gains to avoid!  Yes, it is true and that means opportunities for planned gifts like gift annuities and charitable remainder trusts.  Talk them up with your likely customers!
  • The federal estate and gift tax exemption is now $5.34 million per person (or $10.68 million per married couple).  That’s a lot less tax incentive for charitable estate planning so there is little reason to promote avoiding estate tax with planned gifts.  Avoiding income and capital gains taxes remains the prime incentives for planned gifts like cgas and crts.
  • While we are on tax issues, the annual gift tax exclusion remains at $14,000.  That means individuals can give up to $14,000 per person to as many people as wished without impacting your $5.34 million estate/gift tax exemption and with no tax, of course.  For a married couple, that means they can effectively gift $28,000 a year to each child and grandchild.  Let’s take a typical family of 3 children (all married) and 3 grandchildren.  This imaginary group of 6 beneficiaries could receive up to $168,000 per year from one set of grandparents with no gift tax.  These numbers add up to quite a bit.  This is the easiest estate planning advice in the book.  Of course, it doesn’t help charitable planning.
  • Higher taxes on the highest earners – the fiscal cliff compromise – hasn’t done much for increasing giving.  Bottom line – if individuals have capital gains to avoid, planned gifts look very good.  The tax rates themselves haven’t driven people to give more.

So there you have it, my boring update for the new year.

Next up – my review of Empty Mansions – the Bill Dedman’s book about Huguette Clark:   http://emptymansionsbook.com/  It turns about to be a really interesting read!   

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