David Bonner

“Love the trees until their leaves fall off, then encourage them to try again next year.” ― Chad Sugg

The change in seasons reminds us that 2018 is quickly drawing to a close. Accordingly, now is a good time to talk to clients about tax efficient gifting strategies.

The Tax Cuts and Jobs Act, enacted late last year, creates a new wrinkle in year-end tax planning. With the standard deduction nearly doubled, many more taxpayers will take the standard deduction rather than itemize on their 2018 tax return.

How does this impact the charitable giving of clients of more typical income who have deductions (including charitable gifts) that are well below the new standard deduction? Our experience has been that many, if not most of our generous donors, are continuing to give at their customary level regardless of the tax implications. Of course, giving more generously to charitable causes can be encouraged when done in a tax efficient manner. Here are three techniques that may be of benefit to your clients.

Bunching (Or Stacking) Donations
    • Make anticipated 2019 donations now. Some taxpayers may benefit from adding anticipated 2019 donations to their 2018 donations if these charitable contributions, in addition to other deductions, allow them to exceed the standard deduction amount ($12,000 for single taxpayers, and $24,000 for couples filing jointly). We have heard from advisors and donors who intend to take turns itemizing their deductions one year, and then claiming the standard deduction in alternating years.
    • A Donor Advised Fund is a terrific planning vehicle which can accept donations this year (thus generating an immediate deduction), while preserving the ability for the donor to recommend distributions from the Donor Advised Fund to charities in future years.
Gifts of Long-Term Appreciated Real Property or Stock
    • Gifts of appreciated long-term appreciated assets may help avoid capital gains tax regardless of whether the donor itemizes or chooses the standard deduction.
IRA Charitable Rollover
    • The IRA Charitable Rollover permits those who are 70½ or older to directly transfer up to $100,000 from their IRA account to charity. The donated amount counts towards the minimum required distribution, and the distribution is not recognized as income for tax purposes.

The Gift Planning Services team would be delighted to discuss these and other ideas with you. Please give us a call!

Missionary Department Highlight

Discover the Missionary Department’s Fundraising Priorities

In record numbers, young men and young women from around the world are feeling the desire to serve. Not all have the financial resources, however, to fully fund a full-time mission. Generous donors provide needed funding so that all who want to serve a full-time mission may do so. To learn more about this Church fundraising priority, and how donors can further this great work, visit the Missionary Page at LDSP.org!

Protecting Digital Assets After Death

Deciding how to manage digital assets may just be the trickiest estate-planning task. E-mail, bank, utility, social media and other accounts likely outlive the user. And even if heirs and trustees have all the required passwords, they may find they have no clear authority to access or manage online accounts of the deceased. Access to and transfer of digital assets at a client’s disability or death often lie at the intersection of probate, contract, and intellectual property law. Probate law may argue in favor of transferring these assets, but contract and intellectual property law argue against access and transfer. Let’s face it, a confusing and sometimes contradictory snarl of laws and online user agreements can leave an estate in a mess.

So, what can be done?

First, take inventory of all online accounts, including online bill-payment, credit card, bank and brokerage accounts, shopping sites such as e-bay and Amazon, frequent flier accounts, photo-sharing sites, app data, blogging sites, social network, e-mail, tax preparation, insurance, PayPal, Venmo and other digital assets like bitcoin accounts.

Second, check the provider’s terms of use/terms of service and available online tools. Providers differ on how they handle the accounts of deceased users, but some are starting to help users plan their digital afterlife. If the provider has a plan in place, it is best to comply with these procedures. For instance, Google has created an “Inactive Account Manager” tool as a way for users to share parts of their account data or notify someone if they’ve been inactive for a certain period of time (i.e. passed away or disabled). Facebook has in place a “legacy contact,” someone who can look after an account if it is memorialized.

Third, if the provider does not have tools to transfer digital assets, add language to a will or trust. While this is largely untested in the courts, adding language that specifies the decedent’s wishes can give the executor or trustee the legal tools they need to enforce those wishes. Always check local state laws as several states are beginning to enact laws about digital assets. Making certain an estate plan is consistent with state law is very important. Also, state laws may have an effect on the terms and conditions of service providers.

Finally, make certain the executor, trustee, or individual with power of attorney has access to the digital information. For each account, provide log-in and password information as well as answers to “secret questions.” Also ensure that individuals have physical access to the information (home personal computer, external hard drives, passwords, cloud-based storage, tablets and smartphones, and not only the code to get into the phone, but the password for the phone operating system).

Despite the devilish details, it’s essential to include online accounts in the estate-planning process. The failure to plan may prevent loved ones from recovering family photos or videos. It could leave an estate vulnerable to post-mortem identity theft. And what’s more, digital assets may have significant financial value to an estate. In one instance a domain name sold for $60,000. By engaging in some simple estate planning, digital assets can be protected and planned for as one would plan for other valuable tangible or intangible assets. After all, digital assets are today’s shoeboxes of photos, letters and other mementos.

Spotlight on F. McKay Johnson

Working with LDS Philanthropies has been a highlight of my entire career. Starting with Jim Olson in 1983, the professionals and staff have been wonderful friends and colleagues. They always come through on technical questions, research, and assistance with drafting and implementing – no matter how challenging or complex the case may be. It’s exhilarating to see good tax laws facilitate and enhance both the business deal and the greater good.

Recently I very much enjoyed collaborating with David Bonner on an arrangement that transforms itemized charitable contribution deductions into “above the line” deductions.

That is, the new tax law eliminates or vastly reduces your tax savings for itemized charitable contribution deductions. But, if you have the right kind of charitable remainder unitrust, you can get it to make some, or all, of the charitable contributions you were inclined to make. (Read more)

PG Calc Webinar Invitation

LDS Philanthropies broadcasts monthly webinars from PG Calc. These webinars may qualify for continuing education credit. We extend the invitations for any interested GPC members to join us. We hold these at 11:00 a.m. and are often followed by a Q&A session with members of the Gift Planning Services team. We are located at 1450 N. University Avenue in Provo. Here are the upcoming webinars:

  • Dec 20 - How to Inspire Your Donors Through Marketing
  • Jan 31 - What, Me Worry? When to Say No (or Yes) to a Gift
  • Feb 28 - Advanced Gift Annuities
  • Mar 28 - The Do’s and (a few) Don’ts of Gifts from IRAs
  • Apr 25 - Why Donor Advised Funds and Supporting Organizations are a Gift Planner’s Friend
  • May 23 - Understanding Your Gift Annuity Program

Gift Planning Council Conference is Back!

Please save the date for the return of the Gift Planning Council Conference next November. The dates are November 14th and 15th and the conference will once again be held at the Church Office Building in downtown Salt Lake City. Please plan to join us for an uplifting and educational time together!