Dealing with philanthropy after tax law changes

| Mar 30, 2018 | Estate Administration & Probate |

People in Georgia may be wondering about the best way to handle their charitable giving through their estate planning after the changes to federal estate taxes implemented following the passage of the Tax Cuts and Jobs Act of 2017. Historically, bequests to charities have been exempt from federal estate taxes, helping these philanthropic gifts to be even more appealing to donors whose heirs faced tax burdens on the remainder of their estate. As part of the changes to tax law, however, the individual exemption to estate taxes has doubled, from $5.49 million per person to $11.18 million.

Today, this means that 99.8 percent of Americans will leave behind estates that are not subject to federal taxation, meaning that estate taxes are far less likely to be a factor when making an estate plan that includes charitable giving. However, these gifts also reflect social values and priorities and are unlikely to suffer an overall decline following the changes.

While estate tax treatment changed significantly beginning in 2018, the law has not changed the treatment of charitable trusts and other instruments. In fact, these trusts can help to provide instant benefits for annual income taxes for people thinking about the future of their assets and how to handle their estates. The standard tax deduction for couples over 65 has grown to $25,600, but gifts to a charitable remainder unitrust could fulfill that deduction and help donors to itemize additional expenses.

Having a vision for one’s estate can be important to make the best decisions for the future. An estate planning attorney may be able to create important documents like wills, trusts and financial powers of attorney as well as provide legal advice about how to structure an estate planning process to preserve the maximum value of one’s assets while providing benefits to one’s heirs.