The Charitable Remainder Trust:
A Great Way to Donate

Americans are known for their individual and collective generosity, whether in good or bad economic times. Interestingly, the charitable tax deduction has been part of the Internal Revenue Code since the federal taxation of taxpayer income began. Accordingly, taxpayers have some control over whether to be involuntary philanthropists (paying taxes) or to be voluntary philanthropists (making charitable gifts). One practical roadblock to making substantial gifts is the continuing need of many taxpayers for the lifetime income generated by their assets, even highly appreciated assets that generate little or no income. Fortunately, charitable trusts are designed to allow you to donate a generous gift to your charity, while benefiting yourself and your loved ones with tax and non-tax benefits.

The Charitable Remainder Trust
The Charitable Remainder Trust (CRT) is a popular form of “split-interest” charitable gifting. In short, a CRT can help you increase your current income, enjoy current income tax deductions and eventually leave a substantial financial legacy for your favorite charity (or charities).Is something this good for taxpayers and charities too good to be true? No, actually Internal Revenue Code § 664 was enacted in 1969, specifically authorizing “split-interest gifts” like the CRT. The federal government sought to encourage taxpayers to support private sector charities by making it possible for charitably-minded taxpayers to give and receive.

If you think a split-interest gift like this might fit into your charitable plans, call our office to learn more or schedule an appointment. Every individual circumstance is different, so we would need to look at the entire picture to know whether this might be a good strategy for you.

Should you avoid sweets? Should you avoid grinding your teeth? Should you wear a mouth-guard while playing sports? The answer to all of these questions is most likely a definite yes. These three things have been proven to result in disease or injury. While probate might be like having the dentist put in a new filling, it is for the best and the short-term unpleasantness is outweighed by the long-term benefits of the process. The same might be said about probate.

What Exactly is Probate?
Probate is the legal process through which a court ensures that the decedent’s just debts, taxes and expenses get paid before the estate assets are distributed according to the decedent’s will. Although probate has its detractors, a will is designed to ensure that your estate passes to your family with a minimum amount of time, expense and red tape. Without a will, the decedent is said to have died “intestate,” and his or her assets are distributed according to state law, usually with close relatives (spouse and children) receiving set fractional shares or percentages. Intestate succession is a one-size-fits-all solution that rarely fits what the decedent would have wanted. Alternatively, a will can make special provisions for such concerns as family members with special needs, substance addictions, creditor problems, unstable marriages or blended families.

Reviewing the title of assets in your estate and completing all of your beneficiary designations for life insurance, IRAs and other investment plans, so that they are consistent with your estate plan, can make the probate move more smoothly or perhaps even make it unnecessary.

So if I Brush and Floss Can I Avoid Probate?
Your dental health is dependent on being smart and taking the necessary steps to avoid fillings (and root canals and …?). Eat a healthy diet and brush and floss regularly. Likewise, the goal of estate planning is to take the necessary steps to make sure you have conveyed your wishes after you pass and you have provided for your family ­— as well as other individuals and organizations that are important to you. This means drafting a will, financial planning and possibly a trust. In some cases you may be able to avoid probate, but what you should not do is avoid planning ahead.

Plan Ahead – Plan Now
Avoiding probate may not be possible or even appropriate for your unique circumstances, but working with your attorney is the best way to make sure everything is in order and your wishes are clear and will be followed when you pass away.

Probate avoidance is a process that really begins with proper legal planning now. Planning ahead will involve engaging an experienced estate planning attorney about your future and your objectives. He or she will have the experience to create a strategy most appropriate for your circumstances. Estate planning is not a do-it-yourself project and, just like oral surgery, should be left to the professionals.

Whether a loved one’s passing is unexpected or not, dealing with the  death can be extremely stressful. Aside from the funeral, mortuary services and hosting a gathering of relatives, an important part of this event is knowing what should be done as far as that person’s finances.

Multiple Copies of the Death Certificate
If you happen to be the executor or executrix of the decedent, it is critical that you obtain certified copies of the death certificate as soon as possible. You will need several copies — 20 copies are not too many. Banks, the state and federal governments, creditors, insurance companies and many others will not even give you the time of day to discuss your loved one’s financial affairs until you are able to produce a death certificate. Do not underestimate the importance and the necessity of getting these copies right away.

Other Important Documents
Experts say that one of the most arduous tasks in tying up the financial affairs of someone who has passed away is collecting the various pieces of documentation that should be retained routinely. If the decedent has not done a good job of keeping records, it can be like searching for needles in haystacks — a real frustration. It is best to create a list of all your assets, accounts and property while still alive, and keep it safe. Let your spouse or other trusted person know where the list is kept. When you pass, the executor of the estate will have an easier time organizing the assets and settling matters more efficiently.

Some of these important documents include:

• the ultra-important copies of the death certificate;
• will and trust documents;
• life, health and other insurance policies;
• recent credit card statements;
• investment accounts and pensions;
• checking and other financial account statements;
• recent mortgage statements;
• the past two years’ tax returns;
• all relevant marriage and birth certificates; and
• an up-to-date credit report.

Obtain Letters Testamentary or Letters of Administration
You will need proof that you have authority to deal with the decedent’s financial affairs prior to contacting the institutions with which the decedent was doing business: you need letters testamentary or letters of administration. An estate planning attorney can handle obtaining these documents and assist with probate. When probate is opened, the will is validated, and the court gives the authority (via the letters testamentary) to settle the estate and act on behalf of the decedent, as specified in the will. Again, get multiple certified copies.

If there is no will, the court can issue letters of administration to a surviving spouse or next of kin after a death certificate has been produced. This individual likely will be the administrator of the estate.

Make Notifications
Notify these organizations of your loved one’s death:

• the Social Security Administration;
• his or her employer;
• insurance companies;
• credit bureaus and credit card companies;
• the post office; and
• creditors.

Cancel subscriptions, memberships and credit cards right away. You should transfer any utilities, such as the water or cable, to the surviving spouse.

Speak to an Experienced Estate Planning Attorney
One thing that will reduce stress is to seek the advice of a qualified estate planning attorney. He or she can simplify the process of settling an estate and avoid any issues.

You have had the phone calls with James. You understand the value of a consistent marketing foundation that generates new, preferred clients. You know Integrity Marketing Solutions’ Essentials program and staff have the experience necessary and proven track record of success to boost your practice to the next level. But now what? Now the fun begins! Over the next few weeks I will be highlighting one of the six weekly meetings you will have with your Personal Account Manager and what to expect in order to align your marketing strategy for success.

Part one in a series of three.

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A New IMS Client Experience

You’ve had the phone calls with James.  You understand the value of a consistent marketing foundation that generates new, preferred clients. You know Integrity Marketing Solutions’ Essentials program and staff have the experience necessary and proven track record of success to boost your practice to the next level.

But now what?

Now the fun begins! Over the next few weeks I will be highlighting one of the six weekly meetings you will have with your Personal Account Manager and what to expect in order to align your marketing strategy for success.