Potential changes in federal tax laws this year and the ongoing coronavirus pandemic are producing a rise in wills and estate planning nationwide. Bobby Highsmith, a certified wills, trusts and estates attorney in Key West, cites both reasons as to why people are increasingly working with attorneys like him to put their plans in place.
“The pandemic has made us look at our own mortality,” says Bobby, “and people want to get their affairs in order. In addition, new powers at the federal level could change tax laws this year and people are preparing for potentially more tax-driven charitable giving.”
Born and raised in Key West, Bobby has been involved in estate planning for many years. He says he has seen a lifetime of gifts and bequests and it is second nature for him to live in a generous community. “Estate planning provides clarity and certainty,” says Bobby. “A plan allows people to know their assets will go to the people they want in the manner they want and is protection for beneficiaries.”
Focusing on one’s mortality through estate planning is not a topic everyone feels comfortable with, however. Bobby says anyone with family and loved ones should do them a favor and put together a sound plan to leave a thoughtful legacy. “One of the biggest issues is to review the plan every four to five years,” says Bobby. “Laws change, new concepts and tools are created, and people’s life circumstances change. It’s always good to review and make sure everything is in order.”
One resource Bobby recommends is working through the Community Foundation for charitable giving. “CFFK is fantastic to work with because of its flexibility,” says Bobby. “One of my guiding principles is to keep it as flexible as possible and giving through the Community Foundation gives you that opportunity.”
For example, Bobby worked with a client who left money to a nonprofit that is no longer in existence. Setting up a donor advised fund or other tool through the Community Foundation would have provided funds to that organization or a successor. The gift would have been protected and preserved for perpetuity.
Bobby was one of the early champions of CFFK when it was founded 25 years ago. He served as its board chair in 2003 and rejoined the board for a term in 2014.
Another benefit of working with CFFK, according to Bobby, is that donors can give to more than one organization or fields of interest through CFFK. “Working with CFFK has all the benefits of a private foundation,” says Bobby. “Donors can do what they want to do through CFFK, benefit from their advice, and have a synergistic benefit to the community.”
Contact your Community Foundation for assistance at firstname.lastname@example.org or 305-292-1502.
Robert Highsmith, Esq., is a certified wills, trusts and estates attorney, and partner in the firm of Highsmith & Van Loon, P.A., in Key West. He also serves as a board member for District 1 for Monroe County Schools.
Unlocking the Power of Real Estate: Donations, Bargain Sales a Great Option
Whether a nonprofit’s mission calls for office space, warehouse facilities, or activities area, most charities need a physical location to serve their constituents. Unfortunately, nonprofits are frequently left out when they search for competitively-priced commercial property to house their operations.
The good news is commercial property can be donated outright to a nonprofit. This generosity has occurred in the Keys, although the donors sometimes wish to remain anonymous. Buildings are occasionally left to nonprofits in wills and estates by the building owners, too.
There’s also the charitable bargain sale, a giving vehicle that allows a donor to facilitate the transfer of much-needed real estate to a favorite charity at a price the charity can afford, while at the same time earning the donor a tax deduction.
The bargain sale results in the real estate owner serving in both the role of a seller for the cash portion of the sale to a charity, and also in the role of a donor for the donated portion of the property.
As is the case with many types of charitable gifts, establishing fair market value of the subject real estate is critical and requires a qualified appraisal that complies with IRS regulations. Establishing the fair market value in turn determines the charitable donation portion, which is the difference between the fair market value and the lower cash amount paid by the charity to the donor/seller.
A post-pandemic world may create new opportunities for your clients to consider bargain sales of property to charities.
Tax Tips: Qualified Appraisals, 2020 Tax Changes
Ahead of the this year’s now May 15 tax filing deadline for individuals, here are a few favorite tips from accountants and other professional advisors:
Beyond Tax Deductions: Selecting a Vehicle to Support a Family’s Philanthropy
For many donors, the importance of a multi-generational family philanthropy plan is high on the radar, especially in the wake of 2020’s events highlighting the importance of rallying around important social and community priorities.
How do you know when a client’s family is a strong candidate for more formal philanthropic planning, beyond simply budgeting for annual gifts to charity? Watch for these candidates among your client base:
A comprehensive philanthropy plan often starts with establishing a structure, typically in the form of a donor-advised fund or a private foundation. The donor-advised fund option has become increasingly popular because of its favorable tax treatment, simplicity of administration, and flexibility. Families can work together to determine and execute a philanthropic vision, mission, and grants from the family’s charitable structures. When a family establishes a donor-advised fund at the community foundation, for example, the community foundation’s professional staff can support the family in areas of expertise well beyond the administrative duties that are built into donor-advised fund services provided through the community foundation.
The team at CFFK is your partner to serve your clients’ philanthropic endeavors.