Provided by Hamilton's Planned Giving Counsel, Nixon Peabody, their most recent Private Clients Alert contains numbers that will be helpful for 2013 tax preparation and 2014 tax planning.
Prepared as a service to the Hamilton family, the following are highlights of the American Taxpayer Relief Act of 2012 “ATRA”:
What does this mean for personal and philanthropic planning?
A full description of ATRA prepared by Hamilton’s legal counsel can be viewed at Private Clients Alert.
Charitable gift annuity rates are greater than other investment options. For those who wish to benefit Hamilton, charitable gift annuities provide another opportunity to make your assets productive. Please call Ben Madonia '74 at 866-729-0317 or go to the gift calculator.
This may be an opportune time to consider a gift of real estate, regardless of where it is located. By donating a personal residence, commercial property or undeveloped land, you may accomplish philanthropic and personal planning objectives. Read more about a gift of a vacation residence from Win and Lawry Gulick '52.
Charitable Lead Annuity Trusts (CLATs) - A historic low Discount Rate generates high CLAT gift tax deductions allowing donors to make contributions to Hamilton and transfer assets to heirs free of gift tax.
Frequently Asked Questions:
What are the tax benefits of a CLAT? A CLAT allows you to make a contribution to Hamilton and transfer assets to heirs free of gift tax.
What is gift tax? Asset transfers to anyone other than a spouse or charity (for example, children and grandchildren) are subject to gift or estate tax. A CLAT is one of several asset transfer strategies that can be used to transfer wealth to members of the next generation while saving these onerous taxes with rates of up to 40% (after the exemption equivalents are exceeded).
What is the current gift tax exemption? Under present law, the gift tax exemption allows each person to transfer a total of up to $5.25 million free of tax to others during his or her lifetime. A total of up to $5.25 million (including lifetime transfers) may be transferred tax free via one’s estate plan ($10.5 million for a married couple).
Is there an advantage to making a gift today rather than through my estate plan? In most cases, it is better to transfer assets to heirs during your lifetime to save estate tax on future appreciation as well as on the estate tax.
How does a CLAT work? You put assets into a CLAT which makes payments to Hamilton for a term of years. The trustee invests the assets balancing the need to make annual payments to Hamilton while maximizing trust appreciation to benefit heirs. You can “zero-out” gift tax with nearly the shortest term of years and the lowest pay out rate using the current historic low Discount Rate.
What other benefits does a CLAT offer?
Can I use a CLAT to maintain ownership of our family business? Yes, a CLAT can be used to transfer closely-held or private stock to heirs.
How will Hamilton use my gift? You may select the purpose from the College’s most pressing needs to establish an endowed fund, for student financial aid for example, or a capital project.
You are encouraged to consult your financial and tax advisers for further guidance. Please call Ben Madonia '74 at 866-729-0317 for details.
The IRS Discount Rate is used to determine the charitable deduction for planned gifts. In today's low interest rate environment Discount Rates have been near or at all-time lows.
Hamilton received a private letter ruling from the IRS allowing charitable remainder trusts to be invested with the College's endowment.
Hamilton makes a number of resources available to you, including the following: