Interesting opportunities as a result of the new tax law

Image result for Interesting opportunities cartoonSlowly, we are starting to realize there are interesting opportunities as a result of the new tax law.  Many will take months or longer to come out.

Here is one – in addition to the most obvious that people with estate planning attorneys are likely going back to them as we speak:

No longer needed life insurance!

Yes, many life insurance policies were created specifically to pay any federal estate tax liability – saving the principal of the estate for the family.

But now the estate tax exemption just jumped to $11.2 million per person from $5.6 million per person.  In other words, anyone who had such a life insurance policy should be talking to their insurance/financial planner.  Why not do something charitable with that policy?

Want to get up to speed on the new tax law and various planned giving options?



Time to get your planned giving act together!

Related imageBaby boomers getting older….

The wealth transfer is coming….

Blah, blah, blah.  The same old, same old and no real difference in the numbers for planned giving.  Right?

I know what I am about to say is self-serving (this is a blog and I’m constantly promoting myself and my services) but if you have a minute, read what I am about to write carefully.

The estate tax exemption just doubled (i.e. people can leave more to family estate tax free).  Bad for planned giving?

Wrong. Amazing for planned giving!!!


People with means are going to their estate planning attorneys.  Considering options. Redoing their estate plans.

How often does this happen with your typical planned giving prospect?  You usually have no idea unless someone tells you.

So, I am telling you this (from my estate planning practice – more than half of my business):  your wealthier donors are meeting with their estate planning attorneys NOW.

That means NOW is the time to make sure they are considering YOUR institution for some sort of planned gift!

In other words, you need to wake up your sleeping planning giving program. You need to train your staff (click here to see more on my upcoming training!). You need to put some budget towards planned giving.

Meaning: it’s time to get your planned giving act in order! The boomers will start moving on. There are a lot more of them than their predecessors and they actually have a lot of money.  Planned Giving will grow dramatically in the next few years.  You and your organization need to get ready!

Excuses in French: Did I go overboard last time? More on the new tax law

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I probably could have been more tactful in my previous post.

Maybe I was little ornery about other things when I saw that statement?

So, after a strongly worded voice message from the unnamed firm that put out the statement, and some reflection, I want to address the issue again.

Here is the quote that I took issue with (regarding the impact of doubling of the personal exemption in the tax bill):   “Although the legislation maintains the current-law income tax charitable deduction, it will significantly reduce the number of taxpayers who itemize and effectively eliminate the income tax charitable deduction for a vast majority of Americans.”  (I especially disliked the part I bolded as it makes it seem like they just effectively took away the income tax deduction – which is not true!)

Clearly many Americans will no longer need to itemize on their tax returns, and therefore may have less incentive to give to charity. I say “may” because we really have no idea what impact this will have on contributions, particularly looking at the typical profile of those who may no longer itemize.

I can tell you that for those still in the workforce, who pay real estate taxes and mortgage interest, and/or pay for their own medical insurance and/or have dependent children, and for sure those households with significant income (let’s say $150,000+), will surely continue to itemize. In fact, the charitable deduction will be more important to those people as the bill limited some other deductions.  In other words, your major gift prospects will still be incentivized to make charitable gifts!

What about planned giving donors? The other provider I quoted in my last post claimed that “Planned giving donors are still expected to itemize their deductions.”  Now that my bias has been revealed, this statement doesn’t seem to be 100% true either.  For “planned giving donors” who are really major gift donors creating planned gifts like CRTs, yes – they are likely to continue to itemize on their tax returns.

But, the largest group of  planned giving donors are those who make simple bequests (over 80% of planned giving dollars to higher education from FY05 – FY16 came from charitable bequests – see my VSE talk from the summer).  In other words, many typical bequest donors are older and have already moved out of the workforce, may have downsized and no longer own real estate, and may in fact be the precise community in America which will have less incentive to make charitable gifts!

Of course, I have found that donors who average $50 gifts and have made 15 or more gifts to an organization (my own testing from various client situations) seem to be the best profile for a charitable bequest.

Is the $50/multi-year donor going to hold back on gifts because he or she may no longer be required to itemize? I doubt it but time will tell.

Clear take away message – these bequest planned giving donors are perfect for IRA direct rollover giving!!! So, start working on promoting it to compensate those who no longer itemize!  In any case, you may get gifts from those who still itemize.

Lastly, the Washington Post – the reigning anti-Trump champions who drive me crazy with their unabashedly biased reporting – published a piece on this topic (click here to see it) claiming that charities are seriously worried and upset that they will have to focus more on wealthier prospects (kind of ironic since that is already the case!). Of course, I disagree with anything the Washington Post has to say because everything that seems to come out of that paper is biased and agenda driven.

Nevertheless, while I still disagree with their premise, I do see something good coming from this mini-movement claiming that charities are getting hurt by the tax bill.  Maybe the Republicans can be shamed enough to throw nonprofits a tax bone or two?

How about allowing anyone age 59.5 and older the ability to use the IRA charitable rollover provision?

Or, a universal deduction for charitable giving? Change where it shows up on the tax return so it applies whether you itemize or not.

How about allowing IRA rollovers to establish planned gifts like CRTs or CGAs?

If something can be squeezed out of this hysteria, that would make the hysteria worth it.

So, do I apologize? Yes, for the tone and for singling out one provider (even though I didn’t mention their name).  But, I can’t back off on my critique of the substance.

For good summary of the changes in the tax law impacting nonprofits, check out this link from Lowenstein Sandler (NJ law firm):—tax—key-tax-exempt-organization-tax-provisions.pdf


When are the tax riots going to begin?

Remember this headline?  71 STUDENTS ARRESTED IN TUITION PROTEST ON RUTGERS’ HOME CAMPUS (Philadelphia Inquirer – May 13, 1989)

“Rutgers University students and police clashed yesterday when officers moved to break up a sit-in at the dean’s office by students protesting 13 percent tuition increases…”

Yes, Rutgers in 1989 raised their tuition by 13% and 71 students rioted and got arrested.

On January 1, 2013, tax rates are scheduled to increase as follows:

  • Dividends by up to 190%
  • Capital gains by up to 59%
  • Income tax by up to 13%
  • Estate tax by around 290% (for someone with approximately $10 million in assets)


You would think that people might be upset.  Sit-ins, no.  But, media coverage…where is it?!

Of course, those in the fundraising arena, planned giving in particular, need to be ready for what might be the most favorable tax-incentivized atmosphere for planned gifts since the late 1990s.

By the way, the tuition increase at Rutgers in 1989 amounted to a $296 bump that brought the Fall 1989 in-state tuition to $2,576!  Boy have times changed.