In last week’s end of the year budget bill, Congress made permanent the qualified charitable rollover distribution. This lets individuals who are 70 1/2 or older donate up to $100,000 a year directly from their IRA to qualified charities. By doing so, donors can reduce their taxable income (because the money coming out of the IRA won’t count as taxable income to them) and charities can benefit from income-tax free gifts (because qualified charities don’t have to pay income tax on the IRA withdrawals). The charitable rollover counts towards the donor’s required minimum distribution.
In addition to the time-tested check writing method, here are three other ways that you can give that are less obvious and quite beneficial.
- Consider opening up a Donor Advised Fund. You can open up a Donor Advised Fund in 2015 and get a charitable deduction for that gift by year’s end. But, you can make recommendations on how those funds should be spent in 2016 or after. Donor Advised Funds are a great strategy when you need the charitable deduction right away, but haven’t had time to research the charities that you want to support. You can open up Donor Advised Funds at large financial institutions like Schwab and Fidelity and Vanguard and also at community foundations like our very own Silicon Valley Community Foundation.
I’m thrilled to announce the release of my first in a series of e-books on estate planning that are designed to provide you with practical answers to real-life questions. This one is on Estate Planning for Digital Assets, and you can download it for free from my website.
This e-book is for anyone who has digital assets (email, photos, a blog, a Facebook page, Google Docs , and so on) and wants to learn about the best way to provide, or deny, access to these assets as part of a comprehensive estate plan.
It turns out that the traditional model of estate planning, which is to appoint someone to act for you after death, just doesn’t translate well to the digital realm, where terms of service contracts and federal law require an individual to provide consent before anyone else can access their digital assets.
In October, California became one of five states to permit medical aid in dying with the passage of the End of Life Option Act. The bill is modeled after one passed in Oregon in 1997.
Governor Brown signed the bill, with a signing statement that said, in part, “I do not know what I would do if I were dying in prolonged and excruciating pain. I am certain, however, that it would be a comfort to be able to consider the options afforded by this bill. And I wouldn’t deny that right to others.”
The bill allows doctors to prescribe lethal drugs to terminally ill patients who are expected to live six months or less. A patient must make two oral requests, at least 15 days apart, and one written request, signed in front of two witnesses. The signer must have the capacity to understand what they are requesting, the request must be voluntary, and a physician has to discuss feasible alternatives that would also be available to the patient.
In addition, a patient must self-administer the drug (in other words, no one else can administer the drug) and no one can request such drugs on another’s behalf (in other words, no one can act for a patient to make such a request through a power of attorney, an advance health care directive, or as a conservator, health care agent, surrogate, or any other legally recognized health care decisionmaker.) A patient can rescind such a request at any time.
The bill provides a form for the request for lethal drugs that reads in part:
|REQUEST FOR AN AID-IN-DYING DRUG TO END MY LIFE IN A HUMANE AND DIGNIFIED MANNER I, ………………………………………………, am an adult of sound mind and a resident of the State of California.|
|I am suffering from ……………., which my attending physician has determined is in its terminal phase and which has been medically confirmed.|
|I have been fully informed of my diagnosis and prognosis, the nature of the aid-in-dying drug to be prescribed and potential associated risks, the expected result, and the feasible alternatives or additional treatment options, including comfort care, hospice care, palliative care, and pain control.|
|I request that my attending physician prescribe an aid-in-dying drug that will end my life in a humane and dignified manner if I choose to take it, and I authorize my attending physician to contact any pharmacist about my request.
The Bill takes effect 90 days after the Legislature adjourns its special session on health care, which will be sometime in 2016. To read more about the End of Life Option Act, here’s a good summary from the LA Times.
Transfer on Death Deeds are an inexpensive way to transfer real property without having to go through the time and expense of probate or establishing a revocable living trust. Such deeds have been available in many other states, but efforts to permit them in California have failed for nearly ten years.
Starting in January of 2016, and lasting until January 1, 2021 (unless extended), Revocable Transfer on Death deeds will now be legal in California. Just as you can designate a bank account or brokerage account as a “payable on death account,” a Revocable Transfer on Death Deed lets you name beneficiaries for real property. Upon your death, your beneficiaries become the property owners by filing an Affidavit, a death certificate, and notice of change of ownership. That’s it. No probate and no trust administration necessary.
Google now allows users to determine what happens to their photos, emails, and documents when their account goes inactive. Users can set when their account should be considered inactive, what happens to the data at that point, and who should be notified by using Google’s Interactive Account Manager.
For those who don’t set this up in advance (most people is my guess), Google also has a process for working with immediate family members or estate representatives to close online accounts after a user dies and, in some cases, to obtain data from a deceased user’s account. Google, here, has to balance users’ privacy concerns with the legitimate interests family members have in deleting accounts after someone’s died and to retreive photo, text, and other digital assets belonging to their loved ones.
I think that their process, which requires that a family submit documents, and allows decisions to be made on a case-by-case basis, is a great first step in formalizing the way in which digital assets are protected after death.
Recently, a client of mine asked me how to set up a trust to hold gifts to their children that those children wouldn’t be able to use for about twenty more years. This can be done by use of what’s called a “Crummey” Trust (named after the attorney who invented the technique).
This kind of trust is usually funded with annual gifts. Currently, you are allowed to give $14,000 per year to any one person without having to report the gift on a gift tax return or use any of your lifetime exclusion from the gift and estate tax (currently $5.43 million per person). A Crummey Trust allows you to make such annual gifts, but keep those gifts in trust for years. The gift counts as being made in the year of the gift, even though the beneficiary has no control over the money until the trust ends. Other people, like grandparents, can also make contributions to this kind of trust.
Why would you want to do this? The first reason is control: if your children are currently minors (let’s say, middle schoolers), you probably don’t want to just put $14,000 into their bank accounts each year, unless you are extremely relaxed about the choices they’d likely make with that kind of annual bonanza (or want to support GameStop). You’d much rather put that money into a trust that’s managed for your children until they grow up to an age where they’re likely to use the money more wisely. Since you are setting up the trust, you can have control over what the trust’s assets can be used for, too — maybe it’s just for the purchase of a house, or maybe just to pay for graduate school, or a wedding.
I recently read a Huffington post article about the need for women to plan their estates as if they were single. And that got me thinking about how, despite our best efforts to plan, life just has a way of constantly changing. Children grow up, we get old, and even families slip away, or change over time.
I work with families to craft estate plans all of the time, and it’s hard enough to get them to focus on the inevitability of death. Let alone the possibility that one of them is likely to survive the other, and live alone in old age. But from now on, I will try and do a better job to get that idea on the table, too.
Statistics tell us that it’s likely to be the woman who survives. According to a U.S. Census report, 80% of women will survive their husbands. And it’s pretty common knowledge that close to half of marriages ultimately fail.
This June, there are two big cases in the wings: one on gay marriage and one on Obamacare. If the Supreme Court legalizes same-sex marriage on a state-wide basis, married gay couples will gain all of the legal rights afforded hetereosexual couples, including the right to receive Social Security and Veteran’s benefits. These two agencies look to state determinations of marital status, so gay couples in states that don’t yet allow gay marriage are generally ineligible for these (and other state-specific) benefits.
From an estate planning perspective (mine) the case has a few other possible implications, summarized here, but covered in more depth by the New York Times:
I am very excited to announce that my first book, The Family’s Guide to Wills and Estate Planning, has gotten a new cover, a new title, and a new life as an e-book available for free at my website to anyone who would like it. For the last ten years, it’s been available for sale from Nolo and Amazon, and now I can offer it to my clients and their friends at no cost, thanks to my book designer, digital type, and the internet.
This book is an introduction to all the basic concepts that anyone considering an estate plan needs to know. Unlike books written for the super wealthy, The Family’s Guide to Wills and Estate Planning is easy to read and focuses on the actual problems of people like you. Here’s a guide to estate planning that won’t intimidate you or make you feel guilty, but will help you plan confidently for your family’s future.
You can download it for free on the site. Please do!