There are many considerations that go into making a planned gift, including the maximization of its impact. There are three types of planned giving: lifetime giving, giving at death, and hybrid planned giving. Factors to consider are whether you have the capacity to make sizeable gifts during your lifetime, the potential for income streams during life, and the tax effects of making the gift during life, or at death.
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There is great responsibility when serving the ultra-high net worth clients, especially those who are concerned about preserving a family legacy and the successful transfer of their wealth and/or business. In this issue of Family Wealth Advisors Insights, three areas of concerns are addressed for the advisors and their families: maximizing their foundation endowment funds for social impact; what business owners need to know about their 2018 taxes; and the rise of self-made female billionaires and what it means for the future of philanthropy in the U.S.
The Tax Reform and Jobs Act was signed into law on December 22, 2017. A side-by-side comparison between the old law and the new law highlights the key changes, including the difference between the individual rates, deductions, exemptions, and effective dates.
Many nonresidents of the U.S. are unaware that they may be subject to U.S. estate tax based on their ownership of U.S. situs assets. This can can lead to unexpected results for foreign taxpayers who invest in U.S. assets during their lifetime. After the foreign taxpayer’s death, the executor of their estate may have U.S. tax reporting requirements related to U.S. situs assets. There are planning opportunities to reduce or eliminate a nonresident’s U.S. estate tax.
In order to sustain their businesses for the long term, successful business owners tend to be thoughtful in their investments. They act like chess masters, deciding their next five moves in order to maintain a competitive edge and stay in the game. Yet throughout this business cycle, the RSM US Middle Market Business Index has shown that middle market leaders have been slow to increase capital expenditures, despite incentives provided in the 2017 Tax Cuts and Jobs Act. This is concerning in light of today’s rapid pace of business transformation.
With the passage of the recently enacted Tax Cuts and Jobs Act, a significant opportunity exists for investors to defer capital gains tax owed via the establishment of the newly created Federal Opportunity Zones (the “O-Zones”). By investing in Qualified Opportunity Funds, investors can defer tax on capital gains that arose in the last 180 days or prospectively in 2018 and future years.
The Tax Cuts and Jobs Act of 2017 (the “Act”) brought extensive changes and a need to contemplate the doubling of the federal exemption from $5.6 million to $11.2 million for the estate, gift and GST taxes, along with planning for the sunset of the increased exemption amounts on December 31, 2025. Planners should also factor in the Federal Reserve trend to raise interest rates and how international families continue to establish trusts in the United States at a record pace. These trends provide advisors and planners powerful opportunities in 2018 and beyond.
The Tax Cuts and Jobs Act went into effect on January 1, 2018, and some experts suggest there could be a significant impact on charitable giving. Kim Laughton, President of Schwab Charitable, sat down with Hayden Adams, CPA, Director of Tax and Financial Planning at the Schwab Center for Financial Research (and former IRS agent) to discuss the new tax law and implications for charitable giving. Hear their thoughts on the matter, including strategies to help donors give more efficiently in the new tax environment.
By temporarily increasing the federal exemption from $5.5 million to $11.18 million for the gift, estate and generation-skipping taxes, the Tax Cuts and Jobs Act of 2017 (the “Act”) has created estate tax and income tax planning opportunities as well as traps for the unwary. In this multipart series, we explore all of these in depth. First we will look at potential pitfalls, including the risks that the Act could thwart a goal to make your spouse the first priority under your estate plan.
Despite the easing of estate taxes on many taxpayers, many family-held businesses continue to be burdened with large potential transfer taxes. Using a real-life story of one family business, we show how the family successfully addressed this problem. While the names have been changed, and the figures and structure have been simplified, the example reflects the real-life facts and steps that the patriarch took to shift the ownership and wealth in a tax efficient manner.