Planning an estate can be a complex and confusing business. In this part of our web site, you’ll find news on tax updates, estate planning tips and changes in the law that affect planned giving.
There have been discussions in Washington, D.C., for several years regarding a change to the laws that govern IRAs and whether you should be able to distribute all or a portion of your IRA to a charity without having to pay a penalty and be responsible for income tax on the growth in your account. This year we are closer than ever before to the enactment of this law, but we aren't there quite yet.
Earlier this year the Senate passed a version of this legislation that would allow you to establish a planned gift, charitable remainder trust, charitable gift annuity, or similar instrument beginning at age 59-1/2. You would also have the ability to make an outright transfer from your IRA to a charity at age 70-1/2. The House version of this bill requires that you wait until age 70-1/2 to either establish a planned gift or make an outright transfer to an organization like Elmhurst College. It is anticipated that Congress will remain in session until November, so there is time for the conference committee to meet and work through their differences and enact the charitable rollover by late this fall.
While there is no guarantee that this new law will benefit the College, we have had conversations with several individuals who are interested in making charitable gifts with IRAs, either if the law changes or by designating the College as a beneficiary of their IRA. We are excited about the potential this will provide if it becomes law. For more information, please contact the Office of Development at (630) 617-3781, fax (630) 617-3772, or go to our Planned Giving web site .
While this may not pertain to very many of our readers, we have learned that it is possible for you to designate the College or any other not-for-profit organization to receive your monthly Social Security distribution. If you are in a position to live comfortably without Social Security, you could provide the College with monthly income that we could put to very good use. The calculations involved regarding the tax deductibility of these gifts is rather involved, so please contact the Office of Development at (630) 617-3781, fax (630) 617-3772, or go to our Planned Giving web site.
Total Return Trusts
One of our Planned Giving Committee members provided the College with a copy of an article that discussed a new law, the Total Return Trust Act, that was signed into effect by former Illinois Governor George Ryan. In brief, this law allows a trustee, beneficiary, or a court petitioned by either party to convert certain trusts into so-called "total return trusts." This allows an income beneficiary to receive an annual fixed unitrust distribution rather than the actual dividends and interest produced by the trust's principal. This act is intended to eliminate the tension between income beneficiaries and remainder beneficiaries. If you are the beneficiary of a trust and have had concerns about how it has been invested, you may want to contact the trustee to inquire about altering the structure of the trust to take advantage of this relatively new law.