The JCF PROFESSIONALS PARTNERSHIPThe Jewish Community Foundation is an ally with professional advisors in assisting their clients to make the best philanthropic choices.
New flexible tax rules reduce cost of donation for estatesHelp your clients with Smart Philanthropy
Financial advisors, estate planners and accountants need to know: New tax rules for donations from estates provide greater flexibility and an opportunity for reducing the cost of giving for clients.
When advising clients on the best ways to manage their philanthropy, financial advisors, estate planners and accountants have many tools at their disposal. Deciding the best approach for a particular situation can be challenging, particularly when these decisions lock clients into something long term. New rules introduced in 2016 provide advisors and their clients with greater flexibility when looking for the most tax advantageous way to give.
Prior to 2016 if an individual wanted to leave part of his estate to charity and receive a tax benefit for doing so, he would have to specify in his will the charity and the amount to be donated. If this was done the individual could use the donation receipt to reduce his tax on his final tax return for the year of death or for the previous taxation year. The amount of the donation receipt would be equal to the fair market value, at the date of death, of the property donated.
Beginning in 2016 there is significantly more flexibility with respect to the tax treatment of gifts made by an estate out of property acquired by the estate as a consequence of a death. If an estate is, or was, a Graduated Rate Estate (“GRE”) a donation made within 60 months of an individual’s death may be claimed by the deceased in the year of death or the previous year or, by the estate in the year the donation is made, any previous year of the estate or in the 5 years following the year the gift was made. The amount of the donation receipt will equal the fair market value of the property on the date of the donation.
An estate is a GRE if it is a testamentary trust that arose on and as a consequence of death and no more than 36 months have passed since the individual died. The individual’s Social Insurance Number must be indicated and the estate must designate itself as the only GRE of the deceased in the tax return for the first taxation year of the estate that ends after the date of death.
These new regulations provide more flexibility and are an opportunity for financial advisors and accountants to help their clients give in a tax smart way – reducing the cost of giving and increasing their clients’ philanthropic impact.
The Jewish Community Foundation is your ally and expert resource when advising clients about their philanthropy. See how we work with professionals to support and strengthen their client relationships.