Idaho Estate Planning

Your IRA Can Benefit Your Favorite Idaho Charity

One thing you should never forget about your IRA – even though you make contributions with pre-tax dollars, and once inside these accounts your money grows tax-free, the government is counting on getting their share of tax revenue from you at some point. Which is why only those over age 70-1/2 are eligible to make tax-free transfers (of no more than $100,000) from IRA funds directly to charity. By limiting eligibility and capping the transfer amount, the government limits their exposure to lost revenue.

So, why might you want to utilize this IRA-to-Charity strategy? A Charitable IRA Rollover lets you give to your favorite charity while avoiding taxes on IRA distributions. Consequently, this is a very popular win-win strategy for taxpayers who have accumulated a lot of money in their IRAs, but don’t need the money to live one – and would rather be “voluntary philanthropists” as opposed to “involuntary philanthropists.”

A recent Kiplinger article titled “Who Can Transfer IRA Funds to Charity?” explains the ins and outs of Charitable IRA Rollovers. If you think this strategy would be appropriate for you, beware. There are strict rules governing the proper execution of these transfers, as well as their ultimate tax-treatment.

While Congress generally approves the use of this strategy on a year-by-year basis, the good news is that they already approved it for this year. This means you should have plenty of time to plan if you’d like to make a charitable transfer this year.

For more information on IRAs and other estate planning subjects, contact Idaho Estate Planning and schedule a consultation. Remember, good planning is no accident.

The Value of Art Gifts May Be Questioned by IRS

Giving someone art rather than dollars can be complicated, especially when it comes to taxes and the IRS. So the need for a qualified appraisal is critical in this gifting situation.

When it comes to art valuations, however, you should know that the IRS certainly will not take your word for it, or even the word of a decent appraiser, until they get their own expert opinion from their own experts: the Art Advisory Panel. A fair question to ask, then, is how fair is the Art Advisory Panel?

The question of the Panel and fairness was addressed in a recent Forbes article titled “Is Art Advisory Panel Giving Taxpayers A Fair Shake?” Here’s how the competing interests play out. First, if you are a taxpayer giving art to a loved one or bequeathing it as a part of your estate, then you likely want a lower valuation. Why? Because you want a lower tax bill. On the other hand, if you are selling that very same piece of art, then you will want to command the absolute top dollar. Likewise, a body in charge of taxation is pretty much always going to be interested in a high valuation because it triggers a higher tax bill.

So, statistically, how much of taxpayer appraisals does the government Panel accept? Would you believe only 51%? In addition, the Panel “adjusts” the other 49%, and of that adjusted percentage generates a net 47% increase on items in estate and gift appraisals.

Of whom are you more cynical, the IRS or the taxpayer?

When considering the gift of art, be sure to have your valuation set and ready to go. Remember: there’s nothing an expert likes better than disagreeing with another expert - and the IRS keeps them on staff.

Gift Valuations in Idaho Can Be Complex

You may think that being eligible for the charitable tax deduction is as simple as making your gift and then claiming the deduction.  Not so. In order to qualify, there are important steps to take regarding documentation and valuation of your gift.

Fundamentally, you need to prove the value of what you have given, but that can get complicated when you are giving in the form of things. You need an appraisal of any thing you give (e.g., art, a house, an easement, or a service), and you need that appraisal to answer all the tax man’s questions even before he asks them. In short, appraisals can get tricky.

For example, if you give art you need an art appraiser, and if you give real estate you need a real estate professional. However, what if you give interest or stock in a company? Then the appraisal becomes even trickier.

When you are giving less than obviously valued interest, then you might want to consider the advice given in a recent Forbes article titled “It's Hard To Satisfy The Qualified Appraisal Requirement For A Charitable Contribution If You Appraise The Wrong Property.” The problem with interest or stock in a company is that the interest or stock is different than the things the company owns. So, 10% of the stock in a company with $5 million in assets is not (necessarily) equivalent to 10% of $5 million. Such is the case, even when the sole purpose of the company is to hold well-documented and appraised assets worth $5 million.

In a “simple case,” the IRS likely will provide leniency and determine that such and such an appraisal was “substantially compliant” if not fully so. Nevertheless, the greater the business complexity, the greater the risk of misstep and attending (and costly) determination of insubstantial compliance.

To avoid any questions being raised about your gift, obtaining an appraisal is an essential step when recognizing the tax implications of any transfer of property that is more than simply money itself. At Idaho Estate Planning we have a large network of resources to help you accomplish your goals. Call us today for a consultation and let's get to work for you and your loved ones. Remember, good planning is no accident.

Some Gifts End Up Costing The Charity & Cannot Be Returned

Ever been in possession of a gift you cannot return? No, I’m not talking about a post-Christmas conundrum where you don’t have the receipt or the tags are missing. What happens if you can no longer keep a gift given to you through someone’s will? This is a problem so many museums face each year in regards to gifts they receive through the wills of deceased art collectors.

One museum currently on the hook is the Brooklyn Museum in New York. The New York Times recently reported on its plight regarding a gifted collection in an article titled “Brooklyn Museum Finds Some Problematic Gifts Can’t Be Returned.”

It seems that in 1932, Colonel Michael Friedsam gave a massive collection to the then fledgling museum. Nevertheless, since then the museum has grown and has too much to put on its walls, no longer displays items like historic battle axes, and half the Colonel’s collection turned out to be fakes or “not of museum quality.” Bottom line: the museum wants to give or sell the artworks and stop paying the exorbitant storage and restoration fees.

Now, it’s not that the museum is unappreciative. No, it’s more complicated even than that. Unfortunately, the Colonel’s will legally excludes any option the Colonel’s estate executor hasn’t signed off on. Even more unfortunately, the last executor died in 1962.

The lesson for those with artworks worth preserving for future generations is to include alternatives permitting like-minded individuals (executors) to further your objectives for your gifts in the future.

Frankly, the Colonel and his estate planners couldn’t have foreseen the next 90 years. But let that be a lesson when it comes to your planning. Predicting the future can be a very tricky thing. So, how are your gifts structured?

At Idaho Estate Planning we are the experts you need to know and trust. Work with us and we'll put together a plan that works for you and your loved ones. Remember, good planning is no accident.

Mixed Numbers For Charitable Giving in 2012

A new year of giving has begun, but many are curious about the sum from wealthy donors for 2012. The numbers are starting to come in -- how did last year compare to 2011? Unfortunately, and according to a summary post by the Chronicle of Philanthropy entitled “America’s Wealthiest Donors Slow Their Giving,” 2012 was not a good year for charities or a big year for donors.

In fairness, 2012 will first and foremost go down as a year of great indecisiveness, whether it was the presidential election or the deal that brought us over the fiscal cliff. But political indecisiveness gives rise to a tricky environment for charitable intentions. That said, the largest gifts by American philanthropists totaled a whopping $5.1 billion, except when you account for the fact that Warren Buffet gave away $3 billion of that total. By comparison, the largest gifts by American philanthropists totaled $2.6 billion in 2011. Without Buffet’s gifts, the 2012 total would have been $2 billion, falling under 2011’s totals.

Now, this kind of assessment isn’t an entirely fair estimate of the direction of the charitable energies of all donors. In fact, the list only accounts for the top ten public donors, thereby ignoring the many small donors who you may recognize as those not being featured on the cover of Forbes. Nevertheless, it seems to be indicative of an overall mood.

So, if 2012 was all indecision and waiting, what can we expect in terms of philanthropy for 2013 now that we’ve got some answers and direction on the tax front? No matter what 2013 brings as far as taxes go, or any financial concerns for that matter, you can make the new year a better year by planning now. Call us and we'll help you accomplish your goals. Remember, good planning is no accident.

Wounded Idaho Veteran Gets a Little Color in His Life

Nicholas DeNinno was in the 1st Infantry Division, Fourth Brigade, 2-16 Infantry in Fort Riley, Kansas. His brigade was one of the first deployed to Iraq during the surge in 2007. After getting wounded he received a medical retirement in January 2012, and the family moved to Boise. His house was in dire need of some color as the walls were covered in what he calls "heavy handed metalic wallpaper".

A crew of painters from Colorquest in Wendell decided to come to the families rescue and painted the interior walls. You can read the Idaho Statesman story here.

There are opportunities to serve our veterans all around we just need to do something.

Antonio DeNinno, 20 months, looks at his newly painted, mint-colored room, with his mom and dad, Sasha and Nicolas DeNinno. Katherine Jones — kjones@idahostatesman.comBuy Photo Read more here: http://www.idahostatesman.com/2012/10/30/2329287/bringing-some-color-to-the-lives.html#storylink=cpy

Helping Our Homeless Veterans in Boise Idaho

American Postal Workers union, Local 650 in Boise is reaching out to homeless vets and asking for the public’s help. They are putting together backpacks to be handed out on Veterans Day. You can find out more about the project in the Idaho Statesman article found here. You can help by putting together a backpack yourself or by donating money. If you’re building a full pack, here’s what should be inside:

• Flashlight with change of batteries
• BIC lighter
• First-aid kit (band-aids and ointment)
• Thermos
• One set of utensils (not plastic)
• Can opener
• Quart size zip-lock baggies
• Antibacterial no-rinse soap
• Disposable razors
• Toothbrush, toothpaste and mouthwash (alcohol-free)
• Shampoo
• Hairbrush
• Baby wipes
• Roll of toilet paper
• Pen and small pad of paper
• Instant heat packs
• Hooded rain poncho
• Emergency blanket (the kind that folds up, found at sporting goods or automotive stores)
• One pair of warm socks
• One ski cap or ski mask
• One scarf
• One pair of insulated gloves
• Ready-to-eat items, e.g. peanut butter, energy or breakfast bars or fig newtons
• Instant beverages
• Single, ready-to-serve soup or other canned goods
• Cereal packs
• Lunch and snack packs

Notes: All items must be new, except for the backpacks themselves. All food and hygiene items must be in manufacturer-sealed packages. Travel-sized toiletries are ideal. Call Bryan Thompson, APWU president, Boise Local at (650) 869-9927 to find out where the backpacks can be dropped off or for more information.

We at Idaho Estate Planning ask you to join us in supporting our troops and our veterans in any way you can.

Estate Tax Frenzy Hits Idaho

We have discussed the coming changes to the Estate Tax especially as it pertains to gifting in many blogs. On Saturday the Idaho Statesman shared another article worthy of your review. You can find it here.

If you are considering using some of the estate tax planning issues covered in the article you are quickly running out of time. Call us today at 208-939-7658. At Idaho Estate Planning we have ther resources you need to put together an effective and thorough plan for you and your family. Remember, good planning is no accident.

Gun Trusts in Boise Idaho

Do you have any firearms that are collectible and likely expensive? Do you have any firearms that are subject to federal regulations on ownership and use? If yes, then careful planning may be required to avoid running afoul of tax and regulatory laws upon your incapacity or death.

Planning to give away your estate property is often about understanding your loved ones and family members, but proper planning is also about understanding the assets you are giving and the snares to avoid. You own different assets in accordance with different laws, so you must take these elements into consideration when giving them away.

Many firearm owners take great pride in their collection and also hope to pass them along to their loved ones. Failing to plan for the legal ownership transfer, however, can result in accidentally triggering illegal transfers. Accordingly, if you own a firearm or even a firearm collection you plan to leave to family or loved ones, then a “gun trust” may be in order. A recent article in AmmoLand, titled A New Breed of Gun Trusts – Protecting Firearms Collectors & Their Collections, makes this point very clearly.

A properly written gun trust can skirt tax and regulatory pitfalls. When drafted correctly, trusts are very powerful and specially-tailored legal tools for giving all sorts of unique assets. In Boise as well as the rest of Idaho you can count on Idaho Estate Planning to be your source for facets of planning for the future. Call us today at (208)-939-7658.

Never Underestimate the Protection of a Revocable Trust

Trusts are powerful devices. In fact, even “revocable” trusts can afford valuable protection. Consider the case of Frank and Geryl Pearl, as reported in a recent Forbes article titled “Pearl -- Transfers to Revocable Trusts Were Not Fraudulent Transfers As To Creditors Of The Settlor.”

Essentially, the Pearl case illustrates the magic of a revocable trust. Frank, upon a cancer diagnosis, moved his business assets under a revocable trust, which meant that he was still effectively accountable for everything because the “revocable” trust was still under his control for all intents and purposes. Frank arranged for the bank to name him personally as guarantor to the business loans. Geryl was named beneficiary to the trust. When Frank died, the assets in the trust that were otherwise entirely accessible to the bank and other creditors passed over to Geryl and were completely inaccessible to the creditors. Poof! How did this happen? As summarized by Forbes:

“It should not be overlooked that a revocable trust can provide near-absolute asset protection to the beneficiaries of the trust after the settlor dies, so long as the trust is well-drafted, has only discretionary distribution, and a solid spendthrift clause. What is no protection for the settlor almost magically turns into fantastic protection for beneficiaries after the settlor’s death. A beneficiary’s interest is simply not acceptable by creditors except in the most extreme cases, such as unpaid child support or if the beneficiary commits a violent crime, etc.”

The issues surrounding how to create the trust are worth mulling over, but just as important is the planning that goes into creating the trust and the correct timing to maximize its value. You can make good use of this timing given the present generous state of our estate and gift tax law, along with the currently depressed asset values.

Again, whether it's thinking about the funds to put in the trust or the future of the inheritor, there's no time like the present! Call us today and schedule a consultation and estate plan analysis. Remember, good planning is no accident.