A lady—let’s call her Debbie—recently shared with me an estate and charitable planning decision she had made. She had an IRA and a life insurance policy—both typically pass outside of probate according to beneficiary designations. In this instance, she had elected to give, upon her death, the IRA to her daughter and the life insurance benefit to her favorite charity. The insurance policy and IRA were nearly equal in value.

This is exactly what Debbie should NOT do. Here’s why.

First, when IRA assets are left to another person (instead of a tax exempt, public charity like the library foundation), that person will pay income tax on those assets at their own income tax rates. In our scenario, Debbie’s daughter would get the IRA assets, but would pay state and federal income taxes on all distributions from the IRA. The charity would have received the entire IRA—and paid no tax.

Second, in our scenario, the life insurance proceeds were left to charity. Now life insurance often makes a perfectly good gift, but not in this case when Debbie is trying to make a gift to her daughter as well. The better decision would have been to leave the life insurance proceeds to the daughter. She would have received the entire proceeds free of income tax.

So, our scenario is easily fixed. The better plan—if Debbie wants to maximize the gifts and minimize the taxes—she should leave the IRA to charity and the life insurance proceeds to her daughter.

On January 22, 2010, President Obama signed HR 4462 allowing charitable contributions for Haiti earthquake victim relief to be deductible on 2009 federal income tax returns.

All contributions made for Haiti victim relief from January 12, 2010 through the end of February 2010 are treated as if made on December 31, 2009 for tax purposes.

The bill did not restrict the type of recipient organizations; however, if contributing via check a best practice would be to add “Haiti Victim Relief” in the memo field of the check and retain a copy for your records. For text / cellular donations, the bill specifically provides that a phone bill identifying the name of the recipient organization, the date of the contribution and the amount of the gift as satisfies the recordkeeping and deduction substantiation requirements of the Internal Revenue Code.

The full text of the bill which became Public Law 111-126 can be found HERE

Everyone agrees we would never have completed the project without your help. You were great to work with.

Keep in touch.
Ginny & Staff & City Employees
Hyrum City

Very excited to receive these photos of a finished project! Special thanks to Ginny Tremayne, Librarian & Director for sending. The library’s new home looks great!!

Side main entrance w/ outdoor children’s story theater

Children’s area w/public phase original art element

Local history museum

Walkout lower level

Check out this Chronicle of Philanthropy article.

We can help!