Tax Law Changes Provide Opportunity for “Win-Win” Charitable Giving

We have heard President Biden may be interested in amending the current federal transfer tax parameters, i.e., lowering the “basic exclusion amount” currently at $11 Million+ per person and $22+ Million per married couple to something more akin to pre-2017 levels – i.e., ~$5 million per person or below, perhaps to $3.5 million. In English, this would mean for each individual with, for example, a “taxable gross estate” of  $10 Million, currently no federal estate tax would be due at death, and with a change to, say $5 million, 40% of the difference between $5 and $10 million – $2 million dollars –  would be owed in federal estate tax at death. You read that correctly: $2 million dollars.  So what are charitable individuals doing? Tax planning, otherwise known as charitable gift planning, so that $2 million goes to their favorite charity instead – before the tax law changes.

Here’s an interesting piece from the New York Times discussing some of the Biden Administration’s potential tax law proposed revisions:

Biden Estate Tax Proposals Affect Virtually Everyone

“Possible changes to the exemption rate (basic exclusion amount) have weighed on wealthy Americans, who face a choice of whether to use the tax benefit now to make a large gift before any changes can become law or wait to see how the year plays out ….In anticipation, they’re looking to make big gifts now to take advantage of the gift tax exemption. “If I didn’t give it away earlier, I should do it now,” [some are saying].

Charitable giving is something everyone can do. We can donate not only cash, but also real estate, securities, life insurance, annuities, or retirement assets.  Sometimes people prefer not to take required minimum distributions (RMDs) from a retirement account because it might increase the income tax rate and have a net negative financial impact.

If charitable giving is of interest, there is no time like the present, before potential tax law changes go into effect.

Let us know if you would like to have a conversation about ways you might be able to help sustain Interfaith Family Shelter for our shelter families and our community into the future. And we might be able to help you with your charitable and tax efficiency goals. Our Director of Philanthropy, Communications and Planned Giving will work with your trusted advisors to help meet your family’s objectives. From all of us, thank you.