End-of-Year Giving


By Elizabeth Green, Esq.

Member, PK Law; Chair of The Associated’s Planned Giving Round Table

As the year draws to a close, many people reflect on the year that has passed and plan for the year to come. From an estate planner’s perspective, that may mean finally getting your clients to sign their estate planning documents that have been sitting in the “to do” pile. From the perspective of philanthropic giving and planning, this may involve phone calls from charities looking to shore up budgets before the end of the year, individuals trying to get additional tax deductions or foundations and trusts making sure that they have met required distribution thresholds.

It is a good idea to remind your clients to review their estate planning documents every three to five years. Further, a review of an estate plan is important at the time of life cycle events such as births, deaths, marriages or divorces. In our current climate of constant changes to the tax laws, end-of-year is a great time to reach out to your clients to remind them to come in to review their plans to ensure those plans work with the current changes. As tax laws change, some planning becomes stale and, at times, even unnecessary. As the estate tax exemptions fluctuate, the plan that worked for one size exemption might no longer work for the newer exemptions. On the other hand, a trust which was initially established for one purpose may take on a new, equally valid purpose as circumstances change.

Traditionally, people have made end-of-year charitable gifts in order to get a tax deduction. Under current tax law, the charitable deduction is less relevant for most individuals as they probably use the standard deduction. This certainly does not mean that end-of-year charitable gifts are passé. First, charitable giving is generally not about the deduction; there are other reasons to be philanthropic which extend far beyond the tax deduction. While a person might be less inclined to donate to charities to which he has no connection, giving to charities whose missions are meaningful to them usually is separate and apart from any opportunity for a tax deduction.

Another option which is available to some is to make gifts that will help result in the use of itemization rather than using the standard deduction. This means that if a person has, for example, sufficient medical expenses to qualify for a deviation from the standard deduction, he might choose to make more than one year of charitable gifts in one calendar year. For those with more funds to give to charity, they might choose to make a larger donation to a foundation or a donor advised fund. Those donations would allow a current year, larger deduction while the decision of to whom the contribution will ultimately be made could be delayed to a future time. Additionally, the direct distribution from an IRA to charity remains a viable option for those that qualify and wish to avoid recognition of income.

Year-end planning is important and can take many forms. The reasons for planning are as varied as the people doing the planning. It is important to be in touch with your clients, particularly at year-end, to make sure that their overall estate plans correspond with their personal goals and life cycles.

Elizabeth Green, Esq. is a Member in PK Law’s Wealth Preservation Department. Ms. Green advises individuals and families on basic to sophisticated estate planning. She speaks regularly on topics related to estate planning, including tax implications of certain planning, estate and trust administration and business succession planning.

The Associated’s professionals are ready to work with you and your advisors on ways to help maximize the financial and charitable benefits of any charitable planning strategies available to you. 

For more information, contact Jackie Yahr at 410-369-9248 or jyahr@associated.org.

This is for informational purposes only and should not be construed as legal, tax or financial advice. When considering gift planning strategies, you should always consult with your own legal and tax advisors.

 


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