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Charitable giving could blossom after tax law changes

On Behalf of | Mar 28, 2018 | Firm News, Trusts |

Many have worried that changes to tax law that took place as part of the Tax Cuts and Jobs Act of 2017 could potentially reduce the amount of charitable giving that takes place as part of will bequests and the estate planning process. Especially for people without living children or with a high net worth, using one’s estate to provide philanthropic legacies can be a meaningful gift that reflects an individual’s social priorities. However, over the years, the exemption of charitable bequests from estate and inheritance taxes has helped to inspire wealthy donors to make gifts to charity.

Until 2017, a single person had an estate tax exemption of $5.49 million at the federal level before taxes would kick in for beneficiaries. This amount has doubled after the passage of the tax bill; now, each person has an exemption from federal estate taxes of $11.18 million. This means that over 99.8 percent of Americans’ estates will never need to concern themselves with federal estate taxes, and 65 percent of people live in states with no inheritance tax.

However, there is no indication that the lack of a specific tax benefit for including charitable gifts as part of the will planning process will reduce overall philanthropic donations as part of estates. In fact, given that children and other beneficiaries will now face fewer costs due to estate taxes, sustained or increased gifts to charity could result.

Whether one’s estate is large or small, the estate planning process can be an important occasion to plan for the future and ensure that one’s assets and family members are protected. An estate planning lawyer can provide advice and guidance on a range of options to handle one’s assets, including wills, trusts and non-probate items like life insurance policies. An attorney can draw up the necessary documents and ensure that existing plans reflect current best practices.

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