New Death Tax Floor Could Curb Charitable Giving

Many charities have a significant portion of their gifts come from planning giving. One form of that is when elderly wealthy individuals or families plan how much of their income to give to charity to provide funding to a cause they admire while minimizing their estate taxes. But the new estate tax changes in place for the next two years signed into law by President Obama earlier this month threaten such planned giving. Deborah L. Jacobs explains in a Forbes column:

Previously, charities could point to the estate planning benefits of both lifetime gifts and charitable bequests. There's an income tax deduction associated with gifts during life--adjusted gross income can be reduced up to 50% for cash gifts to public charities and by up to 30% for donations of appreciated assets, such as stock held longer than 12 months. But charities could also make another argument: If you're not comfortable making a large gift now, remember your favorite cause or alma mater money in your will and you will be leaving less for Uncle Sam.

Why does this matter so much now? She continues:

Had the Bush tax cuts been allowed to expire at the end of this year, the estate tax exemption amount would have returned to just $1 million, giving many affluent folks a tax reason to make both lifetime charitable gifts and charitable bequests. Now, with married couples able to pass up to $10 million tax-free, most people do not need to be concerned about pruning their net worth through lifetime gifts, whether to charity or to family.

Read the full story at Forbes.