Heard on the Web: Tax Cut Deal Could Benefit Charities

Heard on the Web: Tax Cut Deal Could Benefit Charities

News story posted in Planning on 11 February 2011| 1 comments
audience: National Publication | last updated: 18 May 2011


Writing for The New York Times, Jan M. Rosen reports that leading philanthropic advisors are seeing the newly enacted tax laws helping charities and those who support them.
"ALTHOUGH many critics have denounced the tax deal reached in December by Congressional leaders and the Obama administration as tax cuts for the rich, personal wealth advisers who specialize in philanthropy also foresee benefits for charities." [more (free registration required)]

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I think Bob Sharpe must have been misquoted. The example of a widow using a CLT to pass assets tax-free to grandchildren is probably inaccurate. If a CLAT is used (which is hinted at by the 6% payout for 20 years cited in the text), the GST exemption that is allocated to the gift may or may not cover the gift tax liability, since that liability is not determined until the actual transfer of assets to the grandchildren. The usual choice for a generation-skipping CLT is the CLUT format, but then it's impossible to avoid all transfer taxes. My guess is Bob explained how a CLAT for children would work so spectacularly in today's low interest rate environment (especially through the end of this month using December's 1.8% discount rate) and the author wanted to jazz up the example by making the remainder beneficiaries into grandchildren instead. But, I could be wrong! I don't give tax or legal advice!

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