Planned Giving News and Information
 
September, 2016
The following is intended as general information and does not represent legal or tax advice. The information presented is the view of the author. Individual circumstances vary - please consult your legal and tax advisors about your specific situation. To return to the general planned giving pages, please close this browser window. This News and Information section has been compiled by Future Focus.

I deem it the duty of every man to devote a certain portion of this income for charitable purposes; and that it is his further duty to see it so applied and to do the most good for which it is capable.

Thomas Jefferson

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Understanding the Net Investment Income Tax
It's been around since 2013, but many are still struggling to come to grips with the net investment income tax. The 3.8% tax, which is sometimes referred to as the Medicare surtax on net investment income, affected approximately 3.1 million federal income tax returns for 2013 (the only year for which data is available) to the tune of almost $11.7 billion. Here's what you need to know.

Value of $100
This map shows the real value of $100 in each state. Prices for the same goods are often much cheaper in states like Missouri or Ohio than they are in states like New York or California. As a result, the same amount of cash can buy you comparatively more in a low-price state than in a high-price state.
The Bureau of Economic Analysis has been measuring this phenomenon for two years now; it recently published its data for prices in 2014. Using this data, we have adjusted the value of $100 to show how much it buys you in each state. So, how far does $100 go in your state?

IRS Urges Taxpayers to Check Their Withholding and Some Refunds Delayed in 2017
The Internal Revenue Service today encouraged taxpayers to consider a mid-year tax withholding checkup following several new factors that could affect their refunds in 2017.  Taking a closer look at the taxes being withheld can help ensure the right amount is withheld, either for tax refund purposes or to avoid an unexpected tax bill next year.

The withholding review takes on even more importance this year given a new tax law change that requires the IRS to hold refunds a few weeks for some early filers in 2017 claiming the Earned Income Tax Credit and the Additional Child Tax Credit. In addition, the IRS and state tax administrators continue to strengthen identity theft and refund fraud protections, which means some tax returns could again face additional review time next year to protect against fraud. Read more.

Inside The New 529 ABLE Savings Accounts
What do a STABLE account, an ABLE TN and an Enable Savings Plan have in common? They’re the first three 529-ABLE programs available nationwide to families looking for a tax-free savings option for special needs individuals. The STABLE out of Ohio launched June 1, the ABLE TN out of Tennessee launched June 13, and the Enable out of Nebraska launched June 30. The ABLE United launched in Florida July 1 but is open to Florida residents only for now (it plans to go nationwide in 2017).
“ABLEs are hot off the press,” says Bernard Krooks, an elder and special needs lawyer in New York City who says he expects many of his clients to have both an ABLE account and a special needs trust. “The ABLE isn’t a substitute for a special needs trust, but it’s a good solution to improve the life of someone with a disability, save a little on taxes and give them self-esteem,” he says. Read more.

Your Revocable Trust Is Not Protecting Your Assets
Everyone should be concerned with asset protection, which involves taking legal steps to keep assets safe from creditors or civil judgments against you. It is especially important for wealthy people because they have more assets at risk and could be more frequent targets of large lawsuits.
Unfortunately, in my experience, people tend to confuse certain tools used for estate planning — which is the process of determining what will happen with your assets when you die — with asset-protection tools. That can lead to large gaps in asset protection. The most commonly misunderstood tool is the revocable living trust. Read more.

Social Security and IRAs
Social Security benefits alone are not adequate to replace retirement income. They were never intended to be the only support in old age, merely part of a “three legged stool” in association with personal saving and employer-provided pensions. Unfortunately, millions of Americans save too little to support their preretirement living standard after they stop working. Many workers do not have a tax-favored retirement plan, such as an employer-provided pension, a 401(k), or an IRA, to fully fund them when they are available. The attached dataset is designed to suggest the major advantages of beginning to save early in life in tax-favored retirement arrangements, and how well private saving can perform relative to the returns available from Social Security. Read more.

Five Ways that the House GOP Tax Plan Would Make the Tax Code Simpler (and One Way it Wouldn’t)
Last month, Congressional Republicans unveiled a tax plan that would make major changes to the U.S. tax system. So far, much of the news coverage has focused on the plan’s promise to “dramatically simplify our broken tax code.” But how, exactly, would the plan go about doing this?
By my count, there are at least five major elements of the new House GOP tax plan that would significantly simplify the U.S. tax code. Read more.

Screenings You Need and Don’t Need
While getting regular tests for certain diseases and medical conditions can prevent health problems down the line, two tests can do more harm than good.
Many Medicare and other healthcare plans urge their clients, especially older ones, to get regular health screenings, such as colonoscopies. Finding serious medical issues early can mean a longer and healthier life, as well as financial savings for both you and the healthcare plan. Yet, despite all the recommendations, less than 25 percent of Americans ages 50 to 64 and less than half of those over age 65 are up to date on screenings.
Which tests should you get and which don’t you need? Researchers are questioning the value for older adults of two common tests. Read more.

Mary had a little stock whose gain was quite a bit!
Sometimes, combining planned gifts can have tremendous benefits, especially when the donor really doesn't give up much at all. Sometimes (most times) it pays to think outside the box. In this article I’ll be showing you how Mary can sell her stock, reduce her income taxes on the capital gain from the sale and make a significant charitable gift without changing her lifestyle. You’re probably thinking this is a charitable remainder trust, but it’s not.

Mary is age 70 and has a significant amount of zero basis stock in a single company where she worked for many years. She would like to diversify to increase her income, but she doesn’t like the thought of the taxes she would have to pay. So what can she do? Read more.

Position Optimization
Achieving higher after-tax returns, both over your clients’ lifetimes and for subsequent generations, is the main goal of most portfolio strategies.  However, while most advisors spend a great deal of time and energy determining the mix of assets and securities that their clients will invest in, many are overlooking another tool for maximizing returns: position optimization.
Position optimization strategies take into account the tax characteristics of three types of investment accounts — traditional IRAs, Roth IRAs and non-qualified accounts — in allocating assets.  All three of these account types have unique tax attributes that can affect wealth accumulation over time. Read more.

How do I change or revoke a will?
Your will does not take effect until you die. You can create a new will or revoke or amend an existing will up until your death.
A will remains valid until properly revoked or superseded. Revoking your will must be done very carefully. Most state laws require that the will be revoked by a subsequent instrument (a new will) or by a physical act (e.g., destroying or defacing it). This means the will must either be burned, torn, or canceled with the intent to revoke. You might, for example, write REVOKED across the will and sign and date the revocation.
You can amend (change) your will by executing a codicil. A codicil is a separate, written, and formally executed document that becomes part of your will. More specifically, a codicil is a supplement or addition to a will that explains, modifies, or revokes a previous will provision or that adds an additional provision. A codicil generally should be used only for minor changes to your will. You should execute a new will if there are many changes or a major change.
An example of a codicil is available on our website. Read more.

Stolen Identity Refund Fraud Prevention Act of 2016
On May 16 the House of Representatives passed the Stolen Identity Refund Fraud Prevention Act of 2016 (H.R. 3832). The Senate Finance Committee previously passed a similar bill. The act now moves to the full Senate for a vote. The bill was introduced by Rep. James Renacci (R-OH). He and his wife were victims of tax refund fraud. The bill is designed to facilitate better IRS assistance for identity theft victims. There are four major provisions in the act.

  • IRS Contact – There will be a central contact in the IRS offices for all identity theft victims.
  • IRS Notice – If the IRS suspects identity theft, the IRS will notify the affected taxpayer.
  • Filing Study – The IRS will conduct a comprehensive study to review options for victims to opt out of electronic filing. Filing paper returns will protect most victims from a second theft.
  • Information Sharing and Analysis Center (ISAC) – The IRS will develop a single center to collect and analyze identity theft data. The goal will be to find new methods to reduce identity theft.

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Please note, individual financial circumstances will vary. The information on this site is meant as general information and does not represent legal or tax advice. The information presented is the view of the author. As with all tax and estate planning, please consult your attorney or estate specialist. All material is copyrighted and is for viewing purposes only. This News and Information section has been compiled by Future Focus. Please report any problems to webmaster.