Massachusetts Estate Planning In 2015

Estate law is an excellent way to consider these options. More information is available here:

• Voluntary transfer of money or property to a permissible donee
• Deduction allowed in year of contribution
– Federal income tax deduction (limited)
• Excess can be carried forward for up to 5 years
– Unlimited gift tax charitable deduction
– Unlimited estate tax charitable deduction
• Donor is responsible for keeping records of contributions
– Cash contribution requires canceled check or receipt
– Contribution of $250 or more requires written acknowledgement from charity
– Deduction of more than $500 for property other than cash or securities requires filing Form 8283
– Deduction of more than $5,000 (other than cash) requires a qualified appraisal

50% of AGI Limit Gift of cash to public charity or private operating foundation
30% of AGI Limit Gift of long-term capital gain property to public charity or private operating foundation
Gift of cash to private foundation
20% of AGI Limit Gift of long-term capital gain property to private foundation
• Outright Gift or Bequest
• Charitable Gift Annuity
• Pooled Income Fund
• A Massachusetts Estate Planning Attorney can help you with your medicaid planning etc.
• Charitable Remainder Trust
• Charitable Lead Trust
• Private Foundation
• Donor Advised Fund

• Contract between donor and charity

• Donor makes a contribution and receives fixed payments for life of one or two people
• Annuity may begin immediately or be deferred
• Annuity rate is set by charity based on age (most use ACGA table)
– E.g., current suggested rate for a 68 year old is 5.6%*
• Treated as bargain sale –income tax deduction equals value of remainder interest
• Portion of each annuity payment is treated as tax-free return of principal, portion as ordinary income and long-term capital gain, depending on assets transferred
• If there is a successor annuitant, there may be gift tax issues
– Donor can retain right to revoke interest and avoid a completed gift
• Pooled income fund is a trust maintained by public charity
• Charity may often have multiple funds with different investment objectives
• Donor makes a contribution which is invested along with gifts from other donors
• Fund’s net investment income is distributed each year for life of up to two beneficiaries
• At income beneficiary’s death, charity receives Smoke tip
• Donor receives income tax deduction equal to present value of charity’s remainder interest (based on fund’s highest annual rate of return for past 3 years)
• Income payments to beneficiary treated as ordinary income
• Split-interest trust: income interest belongs to a non-charitable beneficiary and remainder interest belongs to charitable beneficiary
• CRT can be established during donor’s life or at death by transfer of property to irrevocable trust
• Requirements:
– Trust must be irrevocable with no possibility of reversion to non-charitable beneficiaries
– Trust must be valid under local law
– Trust must be annuity trust or unitrust
– Income recipients must include a non-charitable beneficiary
– Remainder must be distributed to a charitable organization or retained in charitable trust
– Trustee cannot be restricted from investing to produce a reasonable amount of gain.
– Trust must designate a contingent charitable remainderman

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