By Eric S. Kane, Esq.
Rosh Hashanah has come and gone again, and with it we recently celebrated the birth of a new Hebrew year: 5771. As Jews, we have thus far approached 5771 in much the same way as 5770. We still take the time to look back at the mistakes of the past, to ask forgiveness from those we have wronged, and to make resolutions for a better life. Much of our strength to begin anew stems from our generosity. For more than 5000 years, Jews have practiced the mitzvah of tzedakah, also known as charitable deeds. We continue to support our synagogue and our local Jewish community while always remembering our loved ones in Israel and praying for a safer, stronger future there.
Here in the United States, however, the current economic and political climate presents new challenges. Whereas the new Jewish year of 5771 has changed little for us as Jews, the new secular year of 2011 brings with it new tax laws that require us as Americans to consider pursuing new opportunities for charitable giving.
As 2011 approaches, so does the expiration of the historic Bush tax cuts. As the law currently stands (as of the date of submission of this article), the applicable estate exclusion amount that an individual may pass at death free from estate tax is set to return on January 1, 2011 at $1,000,000 and the maximum federal estate tax rate reverts to 55 percent. In addition, the maximum gift tax rate will be increased from 35 percent to 55 percent. The generation skipping transfer tax (GST) tax, which acts in conjunction with the estate tax, will also return with a $1,000,000 exemption. Furthermore, 2011 is set to bring with it numerous changes to the income tax code.
So what does all of this mean to you? Unless Congress enacts new legislation you will be faced with paying a greater amount of taxes to “Uncle Sam”. Fortunately, incorporating charitable giving into your basic estate plan presents opportunities to reduce the amount of estate taxes payable upon death. The most common form of charitable giving is to create lifetime gifts for your chosen charitable organization or to name a charitable organization as a beneficiary in your Last Will and Testament or Revocable Living Trust Agreement.
A popular alternative, however, involves the use of charitable split interest trusts, which can benefit you, your heirs, our synagogue or the charitable organization of your choice. Split interest charitable trusts can take the form of either a charitable lead trust or a charitable remainder trust. A charitable lead trust makes payments to the charity for an initial term. At the end of the term, the remaining principle is distributed to the individual beneficiaries, often your children or grandchildren. Because the gift to individuals is deferred, you are able to leverage your estate gift or generation skipping tax exemption to the fullest. A charitable remainder trust, on the other hand, first makes payments to the individual beneficiaries for a specific term or lifetime and distributes the remaining principle to the charity of your choice upon the end of the term or death of the beneficiary.
If set up properly, these trusts can reduce your estate taxes, reduce or eliminate any capital gains taxes, and for lifetime trusts allow you to claim income tax deductions while still benefiting our synagogue or other charitable organizations. As the new secular year approaches, now is the perfect time to consider how the use of charitable split interest trusts help you to fulfill your future hopes for your community and provide tzedakah for a lifetime and beyond.
Eric S. Kane, Esq. is a licensed Florida attorney whose office is located in Aventura. Mr. Kane practices in the areas of estate planning, probate, trust administration, and guardianship Law. Mr. Kane received his J.D. and L.LM. from the University of Miami School of Law. Mr. Kane can be reached at 305-937-7280.
The information contained in this article is intended to be illustrative only, and is not intended for use by any specific individual. This article should not be relied on for legal advice and you are advised to consult an attorney for advice on your particular situation.
Download Planned Giving Brochure
for suzanne
Here in the United States, however, the current economic and political climate presents new challenges. Whereas the new Jewish year of 5771 has changed little for us as Jews, the new secular year of 2011 brings with it new tax laws that require us as Americans to consider pursuing new opportunities for charitable giving.
As 2011 approaches, so does the expiration of the historic Bush tax cuts. As the law currently stands (as of the date of submission of this article), the applicable estate exclusion amount that an individual may pass at death free from estate tax is set to return on January 1, 2011 at $1,000,000 and the maximum federal estate tax rate reverts to 55 percent. In addition, the maximum gift tax rate will be increased from 35 percent to 55 percent. The generation skipping transfer tax (GST) tax, which acts in conjunction with the estate tax, will also return with a $1,000,000 exemption. Furthermore, 2011 is set to bring with it numerous changes to the income tax code.
So what does all of this mean to you? Unless Congress enacts new legislation you will be faced with paying a greater amount of taxes to “Uncle Sam”. Fortunately, incorporating charitable giving into your basic estate plan presents opportunities to reduce the amount of estate taxes payable upon death. The most common form of charitable giving is to create lifetime gifts for your chosen charitable organization or to name a charitable organization as a beneficiary in your Last Will and Testament or Revocable Living Trust Agreement.
A popular alternative, however, involves the use of charitable split interest trusts, which can benefit you, your heirs, our synagogue or the charitable organization of your choice. Split interest charitable trusts can take the form of either a charitable lead trust or a charitable remainder trust. A charitable lead trust makes payments to the charity for an initial term. At the end of the term, the remaining principle is distributed to the individual beneficiaries, often your children or grandchildren. Because the gift to individuals is deferred, you are able to leverage your estate gift or generation skipping tax exemption to the fullest. A charitable remainder trust, on the other hand, first makes payments to the individual beneficiaries for a specific term or lifetime and distributes the remaining principle to the charity of your choice upon the end of the term or death of the beneficiary.
If set up properly, these trusts can reduce your estate taxes, reduce or eliminate any capital gains taxes, and for lifetime trusts allow you to claim income tax deductions while still benefiting our synagogue or other charitable organizations. As the new secular year approaches, now is the perfect time to consider how the use of charitable split interest trusts help you to fulfill your future hopes for your community and provide tzedakah for a lifetime and beyond.
Eric S. Kane, Esq. is a licensed Florida attorney whose office is located in Aventura. Mr. Kane practices in the areas of estate planning, probate, trust administration, and guardianship Law. Mr. Kane received his J.D. and L.LM. from the University of Miami School of Law. Mr. Kane can be reached at 305-937-7280.
The information contained in this article is intended to be illustrative only, and is not intended for use by any specific individual. This article should not be relied on for legal advice and you are advised to consult an attorney for advice on your particular situation.
Download Planned Giving Brochure
for suzanne
