Charitable Donations

There are many charitable donation strategies that may provide significant tax reductions, which also benefit an organization of your choice. Charitable giving at the time of death is an excellent technique used to eliminate or reduce the estate tax while permitting the client to retain control during his or her life.

It is important to consider carefully which items you would like to give away. It is usually good idea to give away assets that appreciate rapidly. However, because of the traps for the unwary, you may want to think twice before giving away items you have taken a loss with.

Many clients set up a family charitable foundation, so their descendants can continue making charitable gifts in their memory. For more information on that, click the "charitable foundation" option. Numerous charities greatly benefit through this estate planning technique.

Charitable Remainder Trust/Charitable Leads Trust/Legacy Trust

A single person having more than $1,500,000.00 in assets (or 3 million married) must take extra steps to diminish or avoid paying estate taxes. A Charitable Remainder Trust (CRT) is used when the estate has a large component of the assets made up of appreciated property such as stocks with a low tax basis or real property, which if sold now, would garnish a large capital gain tax assessment. The CRT names a charity as beneficiary of your trust. Though, during your lifetime, you (and if married your spouse) can receive income from the trust. (It is often used to supplement retirement.)

This can be combined with a Charitable Legacy Trust. The Legacy Trust provides cash distributions upon death of the owner. Upon distribution, the Legacy Trust subdivides into individual trusts for each named heir.

Additionally, there is a reverse CRT, called a Charitable Leads Trust. A Charitable Leads Trust allows the named charity to receive the income from the Trust during your lifetime and your heirs receive the residual amount of the Trust after you pass away. This trust also offers income tax deductions and reduction of capital gains taxes.

Durable Power of Attorney/ General Power of Attorney

In Florida, you can execute a power of attorney to appoint someone to handle your assets in conjunction with you, or instead of you, should it become necessary. You do not need to transfer any assets at the time you create a power of attorney. The person you appoint should be someone you trust and who is qualified to deal with financial matters, or who has the wisdom to hire someone that is qualified when they are unable to properly handle such matters. A Durable Power of Attorney's legal effect will endure a person's incapacitation, whereas, a General or Limited Power of Attorney will not. At a minimum, a Power of Attorney should include the legal ability to conduct the following:

Banking Transactions
Create/Amend Trusts
Make gifts on the person's behalf (subject to limitations)
Real Property Transactions
Stock/Bond Transactions
Tangible Person Property Transactions
Tax Matters

By appointing a power of attorney for financial matters in conjunction with appointing a Health Care Surrogate, you can avoid having the state of Florida appoint a guardian for you should you become incapacitated.

Family Limited Partnership

A single person having more than $1,500,000.00 in assets (or 3 million married) must take extra steps to diminish or avoid paying estate taxes. With a Family Limited Partnership, a person can give away estate value while maintaining control of the assets until death. The assets in the family limited partnership also have added protection from litigation, if someone sues you.

The Family Limited Partnership is a long-term plan that uses your lifetime federal gift tax credit to transfer assets slowly to your heirs over time without incurring inheritance tax.

Guardianships

A guardianship is a legal proceeding in which an individual is appointed to exercise the legal rights of an incapacitated person, or ward. The guardian is bound by ethics and law to make decisions in the best interest of the ward. Guardianship of the ward may allow the guardian to be responsible for determining the ward's residence and consenting to and/or monitoring medical treatment.

In Florida, an attorney must represent a guardian. They are usually required to furnish a bond and may be required to complete a court-approved training program. They also are accountable to the court and must report annually on the status of the ward and account for all financial activity. Guardianship of the estate and property may include protecting property and assets from loss and receiving income from the estate.

An attorney from the Law Offices of Mark C. Bouldin & Associates, P.A. can successfully guide you through this difficult process.