New Year’s Resolution Planning

For many people, the new year is the perfect time for resolutions. Although common resolutions include losing weight or saving money, choosing to have your will drafted or updated is another great resolution! Here are a few things to consider:

1. Analyze your financial situation

Make a comprehensive list of your assets and debts, so you can better understand your financial situation. Your list should include the following:

Assets

• Bank and investment accounts
• Personal property (i.e., jewelry, collectibles, cars)
• Retirement plans (401k, IRA)
• Life insurance
• Real estate
• Business

Debts

• Credit cards
• Car loans
• Personal loans
• Student loans
• Mortgages

2. Develop a plan

Take the time to write down your goals and review them with your estate planning attorney, cpa, and/or financial advisor so that your estate plan is completed correctly. You will feel good when your plan is in writing, knowing that both your hard-earned assets and your loved ones are protected.

3. Determine your beneficiaries for every asset

When considering who to name as a beneficiary, most people choose their spouse, children, grandchildren, or their favorite charity to inherit their belongings. Often choosing is easy but understanding the implications and how certain assets are distributed can be confusing. One idea is to make a list of your assets and then make a list of your beneficiaries. Now with your professional advisors, review the tax implications of each inherited/gifted asset that will be distributed and then make the determination which is the best way to make that distribution/gift.

For those who do not have the ability to make a significant gift to charity in their lifetime, estate planning provides a perfect opportunity to make such a gift. There are several tools available to donors to help fulfill their charitable planning wishes, including lifetime gifts, beneficiary designations on death, or bequests in wills.

Life insurance policies are frequently overlooked sources of funds for charitable gifts. Life insurance policies can be used as a lifetime gift or on death to provide for our Club that you love. The gift of a life insurance policy can be a gift of the policy itself or of a portion of death benefit by making a beneficiary designation. 

A second asset you that should not overlook when planning your estate are your retirement accounts (401k, IRA) which have unique tax implications. Retirement plan gifts are often a preferred gift for charities as compared to other assets. Why? A charity (our Club) does not pay income tax on gifts from retirement accounts in the same manner as would your individual beneficiaries.  Also, if you are 70 ½ or older and are considering lifetime gifts, there are specific tax provisions that you may want to review when deciding on what source of funds to use for those gifts. You can currently gift up to 100,000 per year from your Traditional IRA tax-free and it is not counted as income to you. (Qualified Charitable Distribution, QCD).

Finally, a Donor Advised Fund (DAF) is an account that is managed as an investment portfolio for charitable purposes. With a DAF you receive an immediate tax deduction for your contribution. The donor also has flexibility in the timing of their DAF charitable gift distributions. Funding a DAF is very popular, especially when a donor finds himself facing a large income tax obligation in a particular year, such as when he is selling a business, real estate, or a farm. In those circumstances, a donor may benefit from a larger immediate tax deduction by setting up a DAF. Many large financial institutions and Community Foundations offer Donor Advised Fund management, and our Club has/can receive Donor Advised Fund gifts.

4. Once established, revisit your estate plan goals annually

Take the time to review your will regularly and update your documents after key life events occur such as new beneficiaries (charities or grandchildren), marriage status changes (divorce or widowed) or a significant change in your total assets. An annual review will help ensure your plan aligns with your current wishes. If your charitable intent includes our Club, we are happy to work with you and your professional advisors to make your legacy goals a reality! Thank you for all you do for the kids in our community!

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Disclaimer: This communication does not constitute legal, tax, or financial advice, which we do not provide. Please consult professional advisors concerning the legal, tax, or financial consequences related to your charitable planning.