Planning Ahead
Deborah Miller, JD, Director of Planned Giving, West Virginia University Foundation, Inc.
Recent passage of the
American Taxpayer Relief Act
of 2012 has made permanent
the $5 million tax-free amount
that each person can give to
family and friends during
lifetime or through their estate
without owing any gift or estate taxes. The $5
million base amount will be indexed for inflation each
year. For 2013, the tax-free amount is $5,250,000.
Above the tax-free amount, gift/estate taxes of up
to 40% are owed on gifts to family members (except
spouses) and friends.
For a married couple, if one person’s estate
cannot use the full $5.25 million (or the current
amount in effect at the time), the balance is
“portable” and is available to the surviving spouse to
use.
This means that the great majority of Americans
do not have to be concerned about those taxes and
can give away more during lifetime as well. Previous
laws had restricted the total of lifetime giving to
family and friends.
As in the past, all assets transferred to a spouse
are tax-free, but it may not make sense to “bunch up”
significant assets in only one person’s estate. Instead,
the use of trusts can assure tax-efficient results,
especially for couples with assets in excess of $10.5
million.
Many choose to give portions of their estate to
grandchildren and skip the taxation that would occur
when a child inherits the funds first. The generationskipping transfer tax which made doing that an
expensive direction earlier is now also effective only
after exceeding the $5.25 million level of assets.
As in the past, charitable support can be carried
out through a will or revocable trust and earn a tax
deduction for the estate.
70 ½ and older and have funds in IRAs can make
direct transfers of up to $100,000 during 2013 to
qualified nonprofit organizations. Such transfers
avoid income taxes and satisfy the required minimum
distribution for 2013.
While estate taxes have become less of an issue, it
still makes sense to take the time to set up an estate
plan to provide control of the assets in the way you
feel is important. The laws that govern what happens
when a person dies without a will do not provide the
same result.
Although it can take time to establish everything
needed for your estate plan, the effort can benefit
you during your lifetime through getting financial
and medical powers of attorney finalized for use as
needed.
That’s good planning.
Learn how
gifts of land
can help students
attend WVU
For details, contact the
WVU Foundation
304-284-4000
[email protected]
For lifetime charitable giving, those who are age
West Virginia Farm Bureau News 13