There are many different issues to take into account while making your estate plan, specifically when it comes to beneficiary designations. This article by Forbes highlights seven of the most common issues that can really impact your plan if your beneficiaries were not carefully chosen. While it may seem like a simple task, but there are many factors that ultimately can undermine your intended plan. It is very important to go over your choices and your overall plan with a qualified estate planning attorney. Here are just a few of the possible issues you should look out for when making your estate plan.

1. All about the cash – Make sure that you have enough money in your estate if you plan to give monetary gifts to people or various charities.
2. Make sure to have your estate tax liability covered – if assets pass outside of your estate to a beneficiary, there should be enough money in your estate and trust to pay estate liability tax.
3. Keep your tax savings protected – it is a good idea to make sure enough assets go into your trusts to maximize estate tax savings. If there aren’t enough assets in your trust, your beneficiaries may end up paying more in taxes.
4. Double Check Everything – Make sure all information on the change of beneficiary form is correct and up to date.
5. Choose wisely about naming your spouse as a beneficiary – This may defeat your estate planning.
6. Think twice about making any last-minute changes – It could be wise to trust the choices that have already been made with much thought and consideration.
7. Be Wary of Qualified Accounts – Always consult your attorney before naming a trust as a beneficiary of a qualified account such as an IRA.

If you want to revisit your estate plan and beneficiaries, contact us today. We can work with you to help make the best decisions for your specific plan.

Talking about you or your loved ones’ inevitable passing can be uncomfortable, but it is necessary in planning your estate. It is very important to discuss your assets and estate plan so that when you do pass, the people who are closest to you won’t have added difficulty on top of their grief. This article explains the importance of having all of your assets are updated and your estate plan is current.

According to the article, roughly 50 percent of people do not have an estate plan in place. If you are one of these people, the state will designate your assets. This will, more often than not, result in ways you would not have intended and is usually very complicated and time consuming.

There are a few dos and don’ts for estate planning that you should know. If you have a blended family, there is a statutory formula that depends on how many children there are and can affect who gets what. It’s important to sort these things out now, as it can get very complicated. Do make a plan and keep it updated as your family grows.

Also, while difficult to discuss, it’s important to consider who you want in charge of your healthcare decisions should you become unable to do so yourself. Who would you trust to make the tough choices if you were hit by a bus tomorrow?

Don’t assume that a will can control all of your assets. A lot of people don’t realize that a will does not control things like joint bank accounts, life insurance policies, or retirement accounts. It’s very important to designate a beneficiary on these accounts.

If you are ready to make an estate plan or update an existing plan, Rhodes Law Firm is here to help. Call or come by our office today!

Donation word written on wood block. Donation text on table, concept.

You know what they say — giving is better than receiving. That might be why donor advised funds, or DAFs, rocketed past $100 billion for the first time in recent years.

Want to give but don’t know if a donor advised fund is right for you? Have questions about charitable planning?

There are many things to know before pledging donations to a charity. Our guide to sponsored donations will answer any questions you have about guidelines and regulations related to charitable giving.

What is a Donor Advised Fund?

The IRS defines a donor advised fund, or DAF, as a separate account run by a 501(c)(3) organization. Multiple donors contribute to the one account, called a sponsoring organization.

Once funds are placed in the sponsoring organization’s control, they are the ones in charge of the money. The donor at this point can’t make a guarantee or specific pledge with the assets.

What Assets Can Go Into a DAF?

While money is always an easy option, it’s not the only thing to put into your DAF. Anything valuable that the charity can use is welcomed.

Some options are stocks or even real estate. Valuable holdings, like artwork, can even be put into your sponsoring organization’s account.

This flexibility is one of the reasons a DAF is appealing to so many people. Let’s examine some other reasons you might want to set one up for yourself.

Benefits of Having a DAF

DAFs are a popular way for individuals to give back to their favorite charities. There are tons of benefits to managing your donations through them.

As we mentioned before, you can use almost any kind of asset for donations to your sponsoring organization. You can donate as often as you’d like as well.

When you work with a DAF, you don’t have to stick with just one charity. You can suggest different ones, and ask to allocate funds accordingly.

One of the biggest reasons DAFs remain popular? You get an almost instant tax refund from contributing to them — a win/win!

Different Kinds of DAFs

In general, there are three types of DAFs. Each comes with their own set of guidelines that donors and sponsoring organizations are to follow.

Here’s a quick overview of the three main kinds you’ll see:

• Single-issue funds: usually focused on one cause or institution, like a university or religious institute
• Commercial funds: managed by separate non-profit branches of commercial investment services, like Goldman Sachs
• Community-foundation funds: these are more local and engaged organizations, great for those who want to be involved but need help

There are overall legal guidelines each DAF has to follow. The type you choose to join might have its own set of rules and regulations you’ll have to abide by.

Make sure to ask questions before committing your funds in any specific organization.

Pledging Donations Through a DAF

Now that we understand the basics of sponsoring organizations, what about fulfilling pledges using a DAF? The IRS has made some changes in recent years to clarify their position on the matter.

The short answer is that no, your DAF can’t be used to fulfill a legally binding pledge. If the IRS suspects that any of your DAF funds have been used to fulfill a pledge, they’ll tax it.

Ultimately, if the donation is assumed to give some sort of benefit to the donor, it’s taxable. In this example, it would be because the donation fulfills the original donor’s pledge.

But there is a gray area. Let’s look at ways your DAF can help you fulfill a pledge.

Gray Areas for Pledges

Once an asset is handed over to the DAF, the donor loses control of it. They can’t get it back, either.

At that point, the donor becomes the advisor. The sponsoring organization is under no obligation to use funds as suggested by the original donor.

Each state has its own laws concerning what it means to fulfill a pledge. Adding on that, each case of donation is different, too.

As you can see, this muddies the waters when trying to determine if someone does or doesn’t fulfill a pledge. Because nailing down these facts is murky, the IRS doesn’t require DAFs to figure out if a donation qualifies as a pledge.

One note of concern: the charities themselves can’t ask the sponsor if the gift is for a pledge. The sponsoring organization can’t mention pledges either.

What to do Instead of a Pledge

Sounds complicated? It doesn’t have to be.

When you can’t fulfill a pledge through a DAF, you still have options.

For example, recommending a pledge isn’t the same thing as demanding it. As we mentioned before, your sponsoring organization is under no obligation to fulfill it.

As long as your pledge isn’t legally binding, you can suggest your funds be used to fulfill it. Some organizations even have online forms where you can mention non-legally-binding pledges.

Be Careful with Your Wording

The most important thing is to stay vague. Don’t make written promises and be careful with anything you say.

Some states consider verbal promises a legally binding pledge. Make sure that you’re within what local laws allow.

A non-binding letter of intent can also be your friend in this situation. That way you can give your preferred non-profit an idea of how much they can expect in the future and budget accordingly.

Make Your Donations Count and Pledge the Right Way

Pledging donations through a DAF can be a little complicated but not impossible. It’s important to make sure any promises made aren’t legally binding, or considered so, in your state.

Our guide can help you with the basics of charitable planning. If you want to do it right, consider finding someone to help you navigate the murky waters of donating with a DAF.

There are financial institutions that can help you form a sponsoring organization. There’s also those with knowledge of local laws ready to help.

We’re here to answer any legal questions you might have about charitable giving. Contact us today and get the answers you need!

The Tax Cuts and Jobs Act law created sweeping changes to the income tax system in 2018, but it also impacted federal estate and gift taxes. For high-net-worth planners, the impacts were simple in terms of legislation. However, the implications of the large increase in the estate and gift tax exemption are complex and affect everyone planning their estate – not just the small percentage who will still file estate tax returns. This article featured on The Tax Adviser reviews the changes to the tax framework and discusses how the changes affect the 99% of people who will not be filing a Form 706 (United States Estate and Generation-Skipping Transfer Tax Return).

As of 2018, only 17 states as well as Washington, D.C., maintain either an estate tax or inheritance tax. The state exemption amounts have also increased dramatically for a number of those states. Because of this, the number of taxable assets has gone from small to microscopic. Between the increase in the federal level exemption and states eliminating their estate taxes, the landscape of estate tax planning has drastically changed in the last 20 years. Pair this with how infrequently the average person revisits his estate documents and there are more likely than not a vast number of outdated estate plan documents in most people’s dusty file drawers.

Many people think estate planning does not apply to them since the federal tax exemptions are so high. However, the numerous nontax factors warrant attention. These include custody of minor children, how assets will be administered for a surviving spouse, addressing special needs and more. If you haven’t thought about planning your estate or haven’t looked at yours since you created it in the ‘90s, now is the time to give it some attention.

If you are ready to discuss your estate plan, give Rhodes Law Firm a call today!

It is interesting to note that fewer Americans are giving to charity, yet the dollar amount is at an all-time high.

According to the Giving USA 2019 report, in 2018, there was a $20 billion increase from slightly over $400 billion donated in 2017. The donations mostly went to environmental causes, higher education institutions and disaster recovery projects.

Before you decide to donate, there are certain things financial advisers would want you to know. We’ll explore some of these in a little more detail below.

What Should You Know Before Giving to Charity

Making charitable contributions has the advantage of the “feel good” factor for the individual. You can also benefit from tax incentives. Talk to your financial adviser so that you can plan appropriately. Consider the following before writing that check.

1. What Charity Are You Donating To

Many people will donate money to charities that deal with issues close to their hearts. It could be about health, economic issues, social issues or even arts and culture. Make sure that they are using your money efficiently and effectively.

Look at the reputation of the programs they’re running, so that you’re sure that your money is making a difference. Factor in whether they get tax deductions because not all non-profit organizations qualify.

Remember there are so many organizations you can donate to, and it can get confusing. With over 1.5 million registered charities, you need to use the resources available to find the right one. Don’t rush the process, avoid telemarketers who’re asking for money, seek relevant facts and most importantly follow your gut instinct.

Avoid sharing any personal information because you can never quite know who you’re dealing with. Be especially careful about any new organization, because many scammers are operating under the guise of charities.

2. Organize Your Donations to Charities

Donating money to charities is very much like coming up with a business plan. It’s not something you do on the whim of the moment. Try and spread your donations, so that you avoid giving to the same charity over and over again.

Also, ensure that you get a receipt so that you use it for your tax returns.

3. Donating to Appreciated Stocks or Assets Is a Good Idea

You could have avoided paying capital gains tax by donating appreciated stock. The value of the charitable tax deduction will be the full market value, thus savings for you. You will not get the same benefit if you donate cash.

The charity then has the option of selling the stock when they require money for a mission. If you’re giving money to those you love, give them appreciated stocks so that when they sell the assets, they pay less tax.

If you’re dealing with depreciated assets, sell them yourself and give away the cash. You’ll have to bear the tax loss.

4. Gift Tax Exclusions

It’s a good idea to take time to think before you donate. It’ll help you choose the right option. You can, for example, give up to $15,000 as an individual, or $30,000 together with your spouse. You’ll not face any consequences with regards to the gift tax; neither will you require filing a gift tax return.

The best way to do it is to spread your donations as opposed to giving it all at once. You can also avoid gift tax by donating to medical or educational institutions, or paying tuition for healthcare bills for an individual. Talk to your financial adviser on the different consequences of making the donations.

5. Life Insurance Is an Excellent Way to Donate to Charity

You have many options concerning contributions. You can donate a car to charity, or even give a life insurance policy. The death benefit amount will be larger than if you give cash. You also have the option of changing beneficiaries without having to explain yourself to anyone.

If you don’t want to deal with the hassle, you can give up full control of the policy to the charity, but continue to have it as a deduction on your income tax. You’ll enjoy the tax benefit if you continue to pay the premiums.

6. Non-Cash Donations; Best Charity to Donate To

You’ll find several items in your home that you have no use for. How about using this as your donation instead of giving out money. You help retain your cash flow while getting rid of clutter. Since it is a donation, don’t give out anything that no longer has value.

Only donate what you can still use; meaning it should be in good condition. Make sure you have receipts for anything less than $250. Also, have a written acknowledgement for anything you donate that is $250 or more. You may also need an appraisal for items worth $500 and above.

Your time can also be a valuable asset. Volunteer services for certain missions, and enjoy tax deductibles by noting your expenses like auto mileage.

7. Charity Should Not Be a One-Off

Giving donations to charities should be part of your life plan. Allocate charitable donations by setting up trust funds two organizations or even family members. Depending on the advice your financial adviser gives you, you can provide an income to charities long after your demise. A good plan will also include your beneficiaries.

Donor-advised funding will also allow you to claim the tax deductions for any money you give to an investment account, for a charitable organization. You get to recommend how you’d want the money allocated.

By having a plan, you don’t have to deal with every appeal that comes your way. You only give to those you really care about and can leave a lasting legacy.

Donating to Charities Is Fulfilling

We’ve shared with your seven important factors to consider when thinking of giving to charity. You have the benefits of tax deductions and the peace of mind of knowing that you are doing your bit to make a difference in this world. Getting proper legal and financial advice will protect you in the long run.

Remember, it is not all about giving to every charity out there; it requires a more organized thought process on your part to be able to make the most difference. You need a plan, and we can set you on the right path. Contact us for more information.

Female hands holding red polygonal paper heart shape

The non-profit sector is quite large. Did you know the number of non-profit organizations in the USA as per the latest study stands at 1.5 million? The National Center for Charitable Statistics has registered this number, including the private foundations, public charities, and other non-profit organizations.

With such a high number, it would be pretty difficult to discern which one of the reputable charities, deserves your donation. It’s not that hard anymore. If you want to make sure your donation is going to the right place, read further, and we’ll let you know.

How to Find Reputable Charities

Looking for the best charity to donate to can be nerve-wracking. There are many varieties, including:

● Cancer charities
● Children protection
● Animal welfare
● Environment
● Health – mental or general
● Veteran military officials
● Police

As so, searching through this turmoil could need some assistance. Look below for the ultimate guide on the most reputable charities.

1. Use Resources to Search

For many years now, third-party organizations have made it their agenda to source out, vet, and rate these non-profit organizations. This has made it very easy for one to search over the net and make an informed decision.

They search various categories including small or large organizations and different types of organizations.

GiveWell

Their field of expertise is international aid or global health. This resource center does vetting through sophisticated data technology where, after analysis, they produce reports on the best opportunities for donors. They illustrate which charities would largely benefit from additional funding.

Philanthropedia

On a wider base, Philanthropedia deals with local, national, and international charities. They offer expert advice for charities dealing with international disasters, violence on women, and climate change.

Their researchers, professionals, and senior staffs work to showcase on the best and worst charities to donate to.

Charity Navigator

Commonly known to give ratings under consumer reports, this organization has rated over 9000 charities. They look over finances and general performances.

Every month they have new ratings and top ten listings. Although they aren’t all inclusive as per different types of charities, they have the answer to what charity should I donate to.

CharityWatch

The charity watch is another grade master by the American Institute of Philanthropy (AIP). They rate the effectiveness and efficiency of charities based on their total expenses.

According to the BBC Wise Giving Alliance, the charity watchdogs are supposed to accredit charities that maintain these two laws:

● 65% of total expenses are on charitable missions
● No more than 35% of any contributed amount to be used in fundraising.

Universal Giving

They are a specific organization that focuses their energy on what you want to donate. As so, they have a platform that will rank charities on their patriot act compliance or status verification on finance and management status.

They are the perfect place to source out the best children’s charities, among other charities. You can volunteer a specific amount to a particular place or continent of your choice.

Bright Funds

Bright funds is an investment organization fund that provides an easy and simplified way of donating. They create a portfolio that will divide your donations according to the causes you set up. They ensure the charities you will be donating to are the most effective and the most needed of help.

They work under these six target areas:

● Poverty
● Health
● Water
● Education
● Human rights
● Environment

From a single platform, you can donate to the above six areas. Plus, if you want to volunteer to an organization that isn’t part of their pre-built funds base, you can always add it by registering.

2. Avoid Telemarketers

It’s rare to find a charity organization rooting for themselves so that people can fundraise or volunteer or donate. Donations are a personal decision which under no circumstance should one feel they are in duress to offer.

If you receive calls, texts, or any marketing information from a charity organization, you are probably dealing with a scammer. As so, don’t let anyone advise you on how or when you should donate.

Keep a third eye open for any solicitors who may offer you vague or fictitious information to persuade you to donate. Claims that don’t explain where your donations shall be used.

3. Evaluate Facts About the Charity Organization

Before you go charity planning, take a deep dive into the charity of your choice and source out information regarding their business model. In this case, their nonprofit organization model.

Look through their mission, vision, goals, and achievements. Compare it to other charities under the same category to see through its finances. The operating costs should lie under the same bracket.

Seek answers to any queries you may have about the organization. If they’re hesitant to give you the information, there are doubts about their credibility.

4. Follow Your Gut

Your instincts play a huge role; if you feel inclined to or uncomfortable with the idea, then you are probably right. Avoid making donations if you are openly unwilling to do so. Chances are, the organizations you see fault in are not reputable charities.

5. Other Miscellaneous Tips

Besides the obvious points above, there are other tiny details that can offset your intentions to donate. They include:

● Never give out your personal information regarding credit, or debit card numbers, bank accounts or others.
● Don’t believe the name only, always dig deep into the company. Most scammers will use similar names to legitimate charities to entice and convince donors.
● Don’t rely only on internet information. Hacking and cyber security can compromise the net at times.
● Look the organization through the Internal Revenue Service website. Legitimate nonprofit organizations will have good records.
● Be cautious of a new organization. Not to say they may not be legit. Actually, they may need the most financial boosting than other large organizations, but they can also be a scam.

Make a Difference with the Right Charity Organization

When you make your donations, you always hope that it will make a difference, whether big or small. That’s why you need to know these reputable charities so that you can be part of something bigger than yourself.

Connect with us and let us guide you through your charitable planning.

While you may feel at ease because you have created an estate plan, it’s important to remember that in order for it to remain effective and successful, you must review and make alterations on an annual basis. This article discusses the 3 major tax threats of which everyone should be aware.

One such issue is not fixing FLPs. It is so important to meet with financial advisors or your estate planning team to reevaluate your FLP or LLC. Do the initial reasons for creating the entity remain? If not, you should address it and consider your options. It could be better that the entity is dissolved altogether to negate any detrimental discounts. Even just revising the legal documents and correcting any oversights would prove advisable.

Another common threat to your plan is not swapping out. If you have an irrevocable trust, both you and the trustee should be aware of the swap powers they might contain and review this annually. It’s important to also note that your attorney can prepare the legal documents in advance so that a swap can be exercised quickly if health issues arise.

One last thing to consider is the selection of trust situs, or the state where your trust is based. While you may default to the state where you live, you should consider a few factors first. What is your home state’s income tax system? Is your home state the best environment for your trust? Is there a state with better tax laws? Discuss the pros and cons with your planning team and find the best trust situs for you.

If you are ready to review your trust, call Rhodes Law Firm today.

Unfortunately, there are many myths surrounding estate planning that often can prevent people from getting involved in the process or updating their existing plans. From assuming that a will is all you need, to thinking that estate plans are only for the wealthy – there are numerous misunderstandings regarding the importance of the planning process. This article lends some clarity and debunks some of the confusion surrounding estate planning.

You may think that you aren’t wealthy enough to create an estate plan for your assets, but that is simply not true. If you own any type of property or assets or are depended upon financially or physically by loved ones, you should have an estate plan regardless. A good, thorough estate plan – not just a will – can help protect the ones you love in more ways than one.

A will is a great start to any estate plan, but it simply doesn’t cover everything. It’s important to work with an estate attorney to discuss other legal documents that protect the rest of your assets not covered by a will. These include a power of attorney, a living will, and a trust.

Another misconception regarding estate plans is that you never need to revisit or make any updates. Any time you experience a change that impacts your life – marriage, divorce, new child or grandchild – your estate plan needs to be updated. It’s crucially important to periodically review and update your documents and beneficiaries.

Above all, communication is key in planning your estate. Make sure your loved ones or a trusted individual knows where your legal documents are located, where your banking accounts are held, and important passwords. This is all important information that can help ease those affected in the event of your death.

If you’re ready to get your estate plan in order or have questions regarding your current plan, call Rhodes Law Firm today!