Blog
Apr
In the U.S., individuals donate almost $400 billion every year to qualified charities that are in need, helping people from all over. By doing some charity planning and making an effort to track your giving, you can ensure that you get the most tax benefit that you can from your giving. While you shouldn’t give only for the tax benefit, getting relief on your taxes is a welcome benefit to most Americans.
Here are five ways to ensure you get the most from your next contribution.
1. Itemization Required
If you really want to maximize your charitable donations, you need to itemize all of your deductions. This is the only way that you can ensure that you make the most out fo things on your tax return.
Most people start off with the standard deduction on their tax return, but by itemizing deductions, you can sometimes deduct even more. When itemized deductions end up being higher than standard deductions, that’s when you’ll find your charity works in your favor. If, when itemized, you end up with a lower number than the standard deduction, charity ends up meaning very little, at least in terms of tax benefits.
One of the most common ways for people to have enough deductions to itemize is by deducting home mortgage interest. For homeowners, this is a valuable tool. For people who don’t own a home, it’s hard to donate enough to make it worth your while.
If you work freelance or have a lot of other business-related expenses to deduct, you could end up getting a lot back thanks to your charitable donations.
2. You Need Substantial Donations in a Given Year
When you’re thinking about making charitable deductions work for you, planning is important. While it seems obvious to some, there are charitable pledges that come up throughout the year that people forget about. When you pledge to give in future years, it doesn’t count towards your current tax year.
To count towards a tax return, the actual cash or the property that you donate needs to be forfeited in the year of your tax return.
If you want your donation to qualify, keep all of your receipts or keep a record of your donations. If you make a commitment to donate in the following year, set a reminder so that you can ensure that you get documentation next year. Don’t mix your documentation for the upcoming donation with the donations that you’ve already made.
3. You Can’t Just Donate to Anyone
While you might want to donate cash or property to someone or some organization that you think needs it, it won’t count unless they’re qualified. For you to consider what you’ve given as a charitable donation, the cash or property needs to be given to an organization with 501(c)(3) status. Any group that takes a donation from you otherwise is simply receiving a gift.
The IRS only recognizes what’s given to a 501(c)(3) or a religious organization as a charitable donation. Anything else that’s donated won’t qualify and the tax deduction won’t count legally.
If you want to claim a donation on your return, find out whether or not this organization has the right status. While it isn’t necessarily a waste to donate otherwise, it’s not going to give you the benefits that you might be looking for.
If you can’t find the information online, your tax professional can usually help.
4. Individuals Don’t Count
While you might think that the donations that you give to individuals mean the most, they mean little to the IRS. Although you might not necessarily be wrong that giving someone a car is more powerful than donating a car to a non-profit, that organizational apparatus matters. Without that organization set up, your donation won’t matter all that much.
Giving to homeless people is nice or giving money to a friend’s GoFundMe campaign is a good thing to do. However, these aren’t going to matter when it comes time to do your taxes.
There is a loophole, however. You can help people with their personal, medical, or education expenses so long as you don’t give the money to the individual. Giving money to the individual keeps you from being able to write things off.
When you pay a hospital directly, you can write off your expenditure. Paying an academic institution rather than the student who is going to school makes the payment deductible.
5. Property Has Limits
If you’re contributing a non-cash donation that’s worth more than $500, you have to use Form 8283. This form covers furniture, clothes, property, or even automobiles. This form takes all of the vital information that lets the federal government know what exactly you donated.
Non-cash donations are a little bit harder to track. They can be faked or manipulated, so the government requests a little more documentation to prove their veracity.
Make sure that you keep good records for everything that you’re aiming to deduct. Documentation not only protects you from issues but it also ensures the government that you’re being honest with them. In case you get audited, having good records and receipts ensures that you won’t have to pay back anything you claim.
Charity Planning Gives You the Maximum Benefits
If you’re not charity planning your next major charitable contribution, you could be failing to get what you deserve for it. You should be able to get a reasonable amount of benefit from whatever you donate, so keep good records and verify that your giving counts.
For more about why charitable planning matters, check out our latest guide.
Mar
Having a will and estate plan in place are very important steps toward securing the future of your assets. However, it is almost equally important to update your estate plan in the event of a large milestone or change in your life, such as a divorce or retirement. This article recommends that once a person begins accumulating assets and going through life changes, they should also have an estate plan in place that is continuously kept up to date.
If you’re thinking about getting married and starting a family – it’s important to have financial conversations with your partner. Before you begin having children, it’s important to get a plan in order. Who would you choose to raise your child in the event of your passing? Which of your assets will go to your children? These are tough questions, but it is vital to have these plans in place.
If you’ve recently divorced your spouse, be sure to update your estate plan to reflect this and to change your beneficiary designations. If you neglect to do this, your ex-husband or ex-wife could benefit financially from your death.
Contact Rhodes Law Firm today if you need to reassess your estate plan!
Feb
Don’t Wait – Plan Your Estate Today
Estate planning is different for everyone and it’s an extremely personal process. It’s also not just for married couples with children – single individuals and couples without children still need to have an estate plan in place. Without one, you might be inadvertently putting your loved ones in a tight spot if something should happen to you. If you don’t make a plan as to who inherits your assets, the laws of your state will do it for you. This article lists a few considerations you should make when working on your estate plan.
According to the article, one important piece of this plan is having an advanced directive for health care and a power of attorney that can make legal and financial decisions on your behalf should you become incapacitated or incapable of making such decisions. If you do not have these documents, your relatives will be forced to enter a court proceeding known as a guardianship.
The article also suggests that you should also consider setting up a trust, which helps avoid probate once you pass away and allows you to give an inheritance in a private and protected manner. A trust allows you to appoint a person who will be in charge of your estate after you’re gone. A trustee will be in charge of ensuring your assets are distributed the way your Trust states.
One thing you don’t want to overlook is your beloved family pets. Who will take care of your pets when you’re gone? You can appoint someone in your estate plan to take care of your pet at your death.
If you’re ready to start making an estate plan, Rhodes Law Firm is here to help you! Give us a call today at 706-724-0405.
Feb
Estate planning is essential to ensuring your assets make it to the right people, yet many people neglect this important step. In fact, 60% of Americans have not yet completed an estate plan.
It’s understandable that people don’t like discussing this subject. People don’t like thinking about their deaths. If you don’t plan though, you can leave plenty of trouble for your loved ones after you’re gone.
Even people that complete an estate plan make mistakes that can cause trouble. These mistakes are easily avoidable though. There are 10 common mistakes you want to watch out for.
What Is Estate Planning?
Estate planning involves protecting your assets for your loved ones. An estate plan includes legal documentation to ensure that your property will get handled the way you want.
Your estate plan leaves full instructions for how your property and other assets get divided between your beneficiaries. These documents include wills, trusts, and charitable gifts.
Estate Planning Mistakes
Estate and trust planning works for everyone, no matter the value of your assets. While the process doesn’t prove complicated in itself, it’s easy to make mistakes if you’re not careful.
You want to make sure you know what you’re doing before you get started with an estate plan. It’s especially important to avoid the most common mistakes.
1. Not Creating an Estate Plan at All
The biggest mistake you can make involves avoiding the estate plan altogether. This mistake occurs for the majority of Americans.
Even celebrities neglect this important process. Notable celebrities such as Aretha Franklin and Prince are known to have died without any type of will in place.
Without a proper plan in place, you leave confusion and complications for those you leave behind. Without clear instructions, people can bicker and fight, or even sell important family heirlooms. The official plan cuts down on these issues.
2. Not Working with a Professional
To save money, many people attempt to complete their estate planning on their own. They wade through the documentation attempting to make sense of it all on their own.
This leaves the estate plan open to missed or wrong information. A professional, such as an estate or tax attorney, can help you make sense of everything involved. They can help you understand all estate and tax laws to ensure you don’t miss anything.
3. Not Paying Attention to the Details
It’s easy to let an estate planner handle all the documents and just sign on the line. This will prove a mistake. You want to check to make sure you understand everything involved.
You also want to ensure there are no mistakes with the completed plan. You want to understand how it works and how to implement the plan. Make sure you ask questions about anything you don’t understand.
4. Failure to Officially Add Assets
When you set up a trust, many assets, such as personal items, are easy to transfer with simple listing. Other items need more official documentation to add them.
- Deeds
- Registrations
- Financial records
These and other items require you to add the trust as an owner to make it official. This ensures the assets can get transferred without issue.
5. Not Understanding Ownership
Personal items are easy to establish ownership with. Other assets, including assets with dual ownership, become trickier when it comes time to transfer ownership.
It’s important to review the ownership of all assets in your name. Make sure you understand how access to these assets works. Update your estate plan if changes to laws or changes to your situation occur.
6. Failure to Understand Retirement Plans
Tax laws can make retirement plans tricky. Many people don’t understand how these tax laws work and end up leaving loved ones paying hefty fees to access the money.
If you add a retirement plan to a trust, you need to understand the tax laws that affect this. You need to word the plan to ensure excess taxes aren’t taken out. You might even consider naming individuals instead of the trust if necessary.
7. Forgetting Gift-Giving
Wills and trusts still get taxed before everything gets transferred completely. People often look at leaving as much as possible without considering how much money their loved-ones lose due to taxes. Giving gifts through the trust can reduce taxes on the estate though.
You can make gifts to individuals for up to $14,000 per year. You can also make gifts to businesses and charities through the trust. Charitable gifts give you the opportunity to reduce taxes while helping others.
8. Ignoring Power of Attorney
Many people forget to add someone to ensure everything gets completed correctly. Ignoring the power of attorney can lead to more confusion.
You need people to act as power of attorney for your estate plan. These people ensure your financial and medical plans get carried out. You also need to make sure this information stays up-to-date and easy to find.
9. Not Updating Beneficiaries
Things happen, and beneficiaries can change. Births, deaths, divorce, a change of mind, all these situations can lead to changes to the people you want to leave assets to.
It’s important to review your documentation and make sure everything stays up-to-date and any changes get made. Make sure your assets get to the right people.
10. Not Taking New Situations Into Consideration
Every major family and life event needs consideration for an estate plan. You might not think of this right away, but you really need to review the plans to ensure nothing gets missed.
When your situation changes, check your plan and make sure life events don’t require changes to the trust. Changes can include assets, property, or even work status.
Finding Help for Estate Planning
If you understand the common estate planning mistakes, it’s easier to ensure your plans get completed correctly. It’s always best to get help from professionals to ensure your assets get divided correctly.
An estate planning attorney can help you manage everything. For more information, contact us to discuss your needs.
Jan
Successful Estate Plan Must-Haves
How would your current estate plan hold up in an unfortunate turn of events? Would your family members have access to your assets? Do you have a designated guardian for your children?
This article highlights several factors that go into creating a successful estate plan that won’t leave things up to chance. Here are some key points:
- A will or trust should be a main component of your estate plan, but isn’t enough on its own.
You will need a will or trust to ensure your property is distributed according to your wishes or to help limit estate taxes. While a will or trust is essential, it is only the beginning. It’s important to take further steps to create a solid estate plan.
- Draft a Durable Power of Attorney.
Without a power of attorney, the fate of your assets could be left up to a court. This document can give your agent the power to make legal and financial decisions on your behalf.
- If you have minor children, designate a guardian and a backup guardian.
If you have children or are considering having children in the future, picking a guardian is a very important piece of your estate plan. Without a chosen designation, your children could end up living with a family you would not have selected, or in an extreme case, become wards of the state.
Read the full article here. If you’re ready to make some changes to your estate plan, call Rhodes Law Firm today!
Jan
Your Complete Guide to the Different Types of Charitable Trusts Available
Mass Media 0 comments Blog, News
How do you give to charity?
Do you sign up for direct debits, or give cash when asked? Maybe you open up your checkbook a few times a year to give generously to causes close to your heart.
If you give to charity on a regular basis, you might be surprised to learn that your giving could be more effective. A change in the delivery of your donation could send your contributions soaring. You might even continue earning money from your assets and save on taxes at the same time.
Charitable trusts aren’t just for multi-millionaires and billionaires. Planned giving vehicles give anyone with a philanthropic heart, opportunities to make a real difference.
Think your donations wouldn’t be better served by a charitable trust? Think again. Keep reading to see if one of these different types of charitable trusts can maximize your donation.
Charitable Remainder Trust (CRT)
A charitable remainder trust (CRT) provides a mechanism for donors to leave more money to charity and spend less on estate taxes.
CRTs are particularly popular among those who would otherwise face a high capital gains tax bill for a highly appreciated asset.
A CRT allows you to place the asset in the trust. Over the life of the trust, you continue to receive income from it either through annuity payments or percentage payments.
When the trust reaches the end of the term, the asset belongs to the charity named when you set up the vehicle.
In sum, the benefits of a CRT include:
- Continued income from an asset
- Lower estate taxes
- Significantly reduced or eliminated capital gains taxes
- Final donation to charity at the end of the trust
Overall, the tax incentives are the biggest attraction of a CRT, so you’ll want to enlist the help of a tax attorney to set it up.
Charitable Lead Trust (CLT)
Charitable lead trusts (CLTs) allows a person or family to donate assets into the trust before sending the funds on to one or more organizations listed by the donor. Think of them as the opposite of a charitable remainder trust (CRT).
In most cases, a CLT serves as a vehicle to provide donations but to also leave tax-free gifts to the family of the donor. When money goes unallocated at the end of a specified period, the CLT passes on the remaining gift to the donor’s family. Families do not need to pay taxes on the funds, and they do not qualify for annual gift exclusion rates.
Unlike other vehicles, you can’t write donations to the trust off from your taxes unless you own the trust and are the donor. If you meet these requirements, you qualify for one deduction to use only in the year of the creation of the CLT.
Be sure to ask your tax attorney about deductions if they are your primary motivation.
The benefits of a CLT include:
- A reliable stream of income for a charity
- Left-over assets remain tax-free
- Removal of limits on annual gift exclusion
Overall, the most significant benefit of a CLT is reducing the estate taxes dramatically.
Private Foundation
Private foundations are the most recognizable vehicle for charitable donations. A private foundation offers the most control over the assets donated and the most flexibility in the assets donated. It can also exist in perpetuity rather than coming to an end after a set term or the death of the donor.
Private foundations work well for those who wish to direct their wealth and hold specific ideas about where and how the asset should be disbursed. A private trust can offer activities like:
- Grants
- Scholarships
- Direct charitable activities
- International grants and donations
- Charitable programs
Donors find that private foundations provide the most flexibility and opportunity, but they also cost the most to run.
The benefits of setting up a private foundation compared to a CLT or CRT include:
- Consistency
- Double capital gains tax benefits
- Sheltered income
- Expanded giving opportunities
- Direct philanthropy
However, there are also disadvantages to this vehicle. These include:
- Regulatory requirements
- Recordkeeping requirements
- Excise tax
- Ongoing legal and accounting fees
- Lower deductibility
- Less favorability on some capital gains
Still, if you amassed significant wealth early in life and intend to leave a legacy that outlives you, there’s almost no better means than a private foundation.
Pooled Income Trust
A pooled income trust is for those who intend to leave behind an estate but one that’s of lower net worth.
In a pooled income trust, you’ll create a “pool” with several donors and donations to generate a single large trust. Named charities then invest the money and pay out to the donors according to the amount each contributed to the trust.
Most pooled income trusts accept only liquid assets including stocks, mutual funds, and cash. Rarely do trusts of this type take assets like life insurance, fine art, real estate, or restricted securities. However, enough hunting may bear some fruit.
The benefits of a pooled trust include:
- Immediate income-tax deductions
- Limitation of federal estate taxes
- Avoiding probate on the remaining balance of the estate.
These trusts also exist for those who want to extend their retirement income while remaining at home. These pooled trusts pay for necessary monthly bills, and the balance remains with the nonprofit running the trust (or to Medicaid) after the donor passes away.
Finding the Right Types of Charitable Trusts
Charitable giving can benefit your community, country, and even the world – and it can benefit you.
Before cutting a big check or drawing up a will, consider beginning your philanthropic journey today. With different types of charitable trusts available, you’re bound to find one that meets your unique financial situation, your family’s needs and your desire to give back.
Do you want to include charitable planning in your estate planning? Get in touch with charitable giving experts today.
Dec
Estate planning is not just for retirees and the elderly – it is important for people of all ages. This is especially the case if you are married, have children, buy a house, or get an inheritance.
Making sure there is a plan in place for your children and your estate in the case of unforeseen circumstances provides the ultimate peace of mind.
This article explains the importance of creating a will and estate plan if you have young children. If you and your spouse die while your children are still minors, there are two fundamental approaches to solve the issue of the estate.
Firstly, with a will, you can leave your estates to your children in a custodianship. The custodian can be allowed to remain in charge of the children’s inheritance until they turn a certain, responsible age of your choosing.
Secondly, your wills can leave your estates to your children in something called a testamentary trust. With this, you can name a trustee to manage the trust and disburse the inheritance under conditions which you specify.
Another thing to consider is appointing a guardian and an alternative guardian for your minor children. This person will act as a surrogate parent, in that they will be in charge of setting the children’s residence, overseeing healthcare and education, and managing their funds that they may acquire while still minors.
Don’t wait another day – let us at Rhodes Law Firm help you make a plan for your estate today.
Nov
Avoid Common Estate Planning Mistakes
All too often, people make the mistake of not planning their estate properly and when they pass, their family is left to sort out the puzzle. This can frequently result in drawn-out, expensive court processes or even family feuds.
This article by Larry Light highlights three common estate planning mistakes and provides valuable information on how to avoid making them.
According to light, these three snares commonly trip up an estate plan:
• Lack of information
• Beneficiary designations done wrong
• Outdated plans
Consider all of the assets you will accumulate in your lifetime – bank accounts, fund holdings, etc. all are protected by user names, passwords, and security questions. The most important thing you can do is create a master roster that contains all of your user names, passwords, and accounts.
When bequeathing your assets, use common sense. According to the article, if you list someone in your will as the heir to your mutual funds, you must also file the person as the heir with the mutual funds company. “Your will won’t override what the designation is on your retirement account: Different people may be in the will and on the account,” writes Light.
Make sure to keep your will up to date, especially if you experience any major life changes such as divorce.
If you’re ready to start planning your estate, or if you have questions regarding estate planning, give Rhodes Law Firm a call today!
Nov
A special needs trust means that you can have valuable peace of mind that your child will be taken care of after you’re gone. It’s not an easy thing to think about, we know, but it is vital.
We would like to reassure you that setting this up now is a proactive, positive step. It is undeniably an emotional task to undertake, but you may find that it actually eases your concerns about your child’s future.
Setting up a special needs trust is a wonderful way to look after the wellbeing and happiness of your child in the future. Don’t be like the 6 out of 10 Americans who lack a will or estate planning. Read on for how to set up a special needs trust that can support your loved one in the future.
What is a Special Needs Trust?
A special needs trust (or supplemental trust) is a specific type of estate planning. It gives your child with special needs adequate financial provision for the rest of their life. It is particularly important for children who claim government aid or may do so in the future.
The Supplemental Security Income (SSI) and access to Medicaid are needs-based support. If someone owns or has access to assets of $2000 or more, they would become ineligible to receive that support. So if your child were to inherit your property or money upon your death, he or she could lose eligibility.
If you set funds aside with a special needs trust, they can keep their needs-based government support. This means they can maintain access to healthcare via Medicaid — often a significant concern.
Plus they can use the trust money for any extras that they need. This might include:
- Dental or vision care,
- Equipment such as wheelchairs, computers, cellphones
- Additional care or therapies
- Vacations
- Furniture and furnishings
- Recreational and fun activities
The goal of the trust is to enhance the life of the beneficiary, so that will guide how they use the money.
However, they cannot use the trust money for housing or food because that would also make them ineligible for the government programs.
How To Set Up a Special Needs Trust?
Setting up a special needs trust can be a complicated matter, so it is worth seeking professional advice. Specific wording is required to comply with ever-changing government regulations in this area.
If written incorrectly, your provisions could make your child ineligible for other vital financial aid that he or she needs (or might need in the future). So it is important to have this done by a qualified and experienced attorney.
Choosing Your Trustee(s)
A vital part of the process of creating a special needs trust is deciding who should be a trustee. This is the person (or people) who will administer the trust on behalf of your child. It is not the same as someone being the guardian of your child; it relates solely to the administration of the trust.
They play a key role in terms of the financial decisions that affect your child. So you want to choose someone whose judgment you trust. Your trustee’s role is to spend money to enhance your child’s life, whilst also making the trust funds last as long as they can.
It’s important that the trustees keep up to date on SSI and Medicaid law changes, to maintain eligibility. They also need to maintain records and file taxes on behalf of the trust and may need to invest trust funds as well.
Whilst you probably want a family member or friend who your child knows to be a trustee, it’s also worth considering a co-trustee from your law firm. That way you can be confident that your child’s eligibility for government aid is maintained and all legal aspects are taken care of.
Helping the Trustee to Help Your Child
The trustee(s) will work with your child’s guardian in your absence to make the best decisions for your child. You can set up the trust to come into effect after you pass, or you can set it up to operate now. In that case, you would be the current trustee and would name your successor trustee(s) to manage it when you’re gone.
Often people write a letter on behalf of the beneficiary of the trust (your child) to help future trustees understand their needs and preferences. This is especially important if your child is unable to communicate this clearly themselves.
This letter would include their personal, educational and medical history, their living situation, social life, religious beliefs and any other factors that you want the trustee to know. Understanding these factors will help the trustee to make decisions in your child’s best interests.
Interesting Financial Aspects
The trustee cannot give money directly to your child from the trust, but they can purchase items on behalf of your child using trust funds. So if your child needs new hearing aids, the trustee can buy these for them using money from the trust.
Another interesting fact about special needs trusts that you may not know is that anyone can contribute. Trusts are usually set up by parents for children, but actually, other family members or friends can contribute. Indeed, anybody may contribute.
Anything Else I Need to Know?
There are many interesting aspects to this area of the law, making it imperative to get proper advice. For example, did you know that when your child turns 18, you lose the natural right to be their guardian?
That means you wouldn’t be able to make healthcare or life decisions on their behalf after they turn 18!
You can avoid this startling situation by getting guardianship in place via the probate court. A qualified attorney such as ourselves can help you with this – ideally at least 6 months before your child’s 18th birthday.
We would be delighted to speak with you about getting your child safely set up for the future with a special needs trust. Please contact us at (706) 724-0405 for a confidential discussion.
Alternatively, we have several excellent workshops available online that you might find helpful. We invite you to watch them here.
Oct
Around the Web: How Miles & Points Can Help You Be With Loved Ones During Emergencies
Ashley Drummond 0 comments Blog
When you’re grieving the unexpected loss of a loved one, expensive last-minute airfare costs
should be the last thing on your mind. But for many, this can mean having to decide between
financial strain and being near loved ones during a difficult time.
Million Mile Secrets has put together some useful tips and guidelines so you can be better
prepared should a difficult situation arise. These tips, such as taking advantage of bereavement
fares from certain airlines, accruing miles and points with credit cards, and booking last-minute
deals, can save you time and money during a difficult time.
Unfortunately, most major airlines no longer offer bereavement fares. Delta and Alaska Airlines
are the only two airlines that offer discounted ticket prices – usually around 10% – for those
who are traveling due to the loss of an immediate family member. To get this rate, you must
call the airline to book your flight. Each airline has its own limitations as to who is considered an
immediate family member, so make sure to check their website for a list before you reserve
your trip.
Another great way to save yourself money and unnecessary stress is by taking advantage of
your credit card travel rewards. These are points or miles that can accrue each time you use
your credit card, which you can cash in for plane tickets, rental cars, hotel stays, and more.
Having some rewards saved up can help get you on a flight without you having to dip into your
hard-earned savings. There are a lot of credit cards and reward options out there, so it’s best to
do some research to decide which one best suites your needs.
Read the full travel guide here.