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Advisors: Giving Season Hot Dots

Four burning issues may be on your clients’ minds this Giving Season. Even if your clients don’t mention these points, they may be thinking about them. If you don’t ask if these tax issues are of concern to them, who will?

1. WHY AM I PAYING SO MUCH IN INCOME TAXES?

WHO:

Those with earned income who pay and complain about high income tax bills.

WHAT:

  • Consider the use of charitable tools to remove taxable income from your W-2.
  • Use charitable giving as a means for offsetting the tax bills you face with charitable deductions.

2. HOW CAN I GET A BETTER YIELD ON THE FIXED INCOME PORTION OF MY PORTFOLIO?

It’s challenging (if not impossible) to garner decent interest through fixed income. Historically, only low interest rates are available on fixed-income investments like CDs, money market, US treasury bonds, and corporate bonds.

WHAT:

Introduce charitable tools that provide regular lifetime income: CRT, CGA, and CPT.

3. WHAT HAPPENS TO MY FAMILY IF THE NEXT PRESIDENT AND CONGRESS MOVE TO COLLECT MORE IN ESTATE TAXES?

Estate taxes may impact more families as the next presidential administration could dramatically reduce estate tax exemption levels from $5.45 million/$10.9 million for couples filing jointly to as low as $3.5/$7 million!

The estate tax rate may rise from 40% to 45%.

WHAT:

Explore ways to remove assets from the taxable estate through charitable gift planning strategies. Gifts of assets: securities portfolios, real estate, business, oil & gas interests, and agricultural commodities.

4. HOW DOES THE IRS SECTION 2704 AFFECT MY FAMILY-OWNED BUSINESS? WHAT CAN I AND SHOULD I DO ABOUT IT?

Family-owned businesses are at risk of losing their “minority discount” valuation when estate taxes are assessed.

WHAT:

Discuss with tax and legal advisors ways to transform the family status into a non-family owned business by bringing in a 20% partner; in this case a charitable foundation who could own a portion of your business while you continue to operate it.