National Estate Planning Awareness Week is October 21-26

Did you know that 67% of Americans do not have an estate plan in place?  If you are in that 67% group, we encourage you to create an estate plan so that your wishes are carried out, so that family disputes may be avoided, so that you provide for your loved ones, and if need be, so that any unique circumstances like minor children, beneficiaries with special needs or blended families are addressed.

Whether you’re 22 or 102, you need a will (and/or a trust, as well as other financial- and health-related documents). Below you will find some tips and advice on estate, tax, and financial planning.  If you need help on how to proceed, please call the Foundation at 864-725-4256.

1. Donate appreciated stock to fund your gift. 

Most individuals understand how easy it is to write a check when you want to make a gift to your favorite charity.  However, if you can remember to pause before you pull out your pen, it really does pay off to consider whether gifts of appreciated stock, mutual funds and other appreciated assets would be a better way to make your charitable gifts. When you give shares of long-term appreciated stock and other assets, you can be eligible for a charitable income tax deduction at the fair market value of the shares.  When you gift the stock, you are not hit with any capital gains tax. By contrast, if you were to sell those shares and give cash to your charity from the proceeds, you would be liable to report the gain on your income taxes and have much less cash to work with after the capital gains tax payment.  The Self Regional Healthcare Foundation is happy to help you learn more about how easy it is to take advantage of this tax-savvy giving technique.

2. Plan ahead for your business exit.

If you own all or part of a private business, keep in mind that charitable giving can factor into your eventual exit strategy. You could be sitting on substantial unrealized capital gains if the business has grown substantially over time. Upon a sale, capital gains tax will be triggered, reducing the proceeds you get to keep. No capital gains tax will apply, however, to the sale of the portion of the business owned by a charity. Plus, you can be eligible for a charitable income tax deduction in the year of the transfer based on the appraised fair market value of the shares owned. It is important to remember that a strategy like this only works with careful advanced planning.  The Foundation will be happy to work with you and your advisors to help achieve your personal, charitable, and financial goals. 

3. Start paying attention now to the estate tax exemption sunset.

The estate tax exemption or the total amount a taxpayer can leave to family and other individuals during their life and at death before the hefty federal gift and estate tax kicks in, is scheduled to drop, rather precipitously after December 25, 2025. For 2024, the estate tax exemption is $13.61 million per individual, or $27.22 million per married couple, an increase over 2023 thanks to adjustments for inflation. Later this year, the IRS will issue inflation adjustments for 2025.  For 2026, without legislation to prevent it, the exemption is scheduled to fall back to 2017 levels, adjusted for inflation, which would roughly total $7 million per person. That is quite a drop! This means many more people, maybe including you, could be subject to estate tax in the not-too-distant future.  We’ll be happy to work with you and your advisors to explore how charitable giving techniques can help you avoid estate tax and become a member of the Foundation’s Legacy Circle program which recognizes individuals that have remembered the Foundation in their estate plans. 

4. If you can take advantage of the QCD, do it.

A Qualified Charitable Distribution (“QCD”) from your IRA is a very smart way to support charitable causes. If you are over the age of 70½, you can direct up to $105,000 from your IRA to certain qualified charities such as the Self Regional Healthcare Foundation. If you’re subject to the rules for Required Minimum Distributions (RMDs), a QCD gift/transfer counts toward your RMD requirement. Through a QCD, you avoid income tax on the funds distributed to our Foundation. Our team can work with you and your advisors to go over the rules for QCDs and evaluate whether a QCD is a good fit for you.  You can also make a one-time QCD up to $53,000 to establish a life income agreement, such as a charitable remainder trust, that benefits you or your spouse with a lifetime income stream and the Foundation with funds in the future.

5. Review your IRA beneficiary designations. 

As you review your assets and how they are titled, perhaps in connection with an annual financial and estate plan review, pay close attention to tax-deferred retirement plans such as 401(k), 403b and IRAs. Typically, you’ll name your spouse as the primary beneficiary of these accounts to provide income following your death or to comply with legal requirements. However, as you and your advisors evaluate whom to name as a secondary beneficiary of these tax-deferred accounts, don’t automatically default to naming your children or your revocable trust. You and your advisors may determine that naming a charity is by far the most tax-efficient upon your death and establish a philanthropic legacy. A bequest like this avoids not only estate tax, but also income tax on the retirement plan distributions. That’s why non-retirement fund assets may be better suited to pass to children and grandchildren.