Giving to Charitable Trusts

There is still a lot
of uncertainty in the tax law, from estate planning to retirement planning.
Though the State of the Estate Tax continues to grab financial headlines,
especially each time a multi-billionaire dies during this tax-free year, there
is another little-known aspect of uncertainty affecting charitable giving. For
the past few years, older people (at least age 70-1/2) have been able to make
tax-free distributions from their IRAs to qualified charities. In fact, the law
allowed a senior to donate as much as $100,000 a year from their IRA to
charity, and count it as their required annual IRA distribution, and avoid
paying tax.

This special
“qualified charitable distribution” provision ran out at the end of 2009. While
everyone seemed to think it would be extended, lawmakers left Washington for
their summer break without addressing the issue, so it’s still up-in-the-air.

What does this mean
for you? If you are considering donating IRA withdrawals to charity, the best
advice right now, according to The
Wall Street Journal, is to “Sit tight.” You can still make donations right
up until December 31st. Wait and see what Congress does – or does
not do. In the interim, three points to keep in mind:

You cannot
take an additional tax deduction for these donations;

Some types
of charities (such as donor-advised funds and private foundations) typically
don’t qualify under this provision; and

Your gift
must go directly from the IRA to the charity. Don’t withdraw the money and put
it into your bank account first.

To learn more, visit our website.  Also, be sure to read this month’s
e-newsletter on the same topic: Charitable Planning Opportunities.  If you are not receiving our Newsletter, go
ahead and subscribe to our free NEWSLETTER
to stay on top of senior issues.

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