Believe it or not, National Estate Planning Awareness Week is a very real thing and we’re celebrating October 21-27! Let’s kick it off with a brief history on the Week and estate planning in general.
Background on National Estate Planning Awareness Week
In general, it’s in the best interest of society when the transfer of wealth and property is as seamless and as close to the decedent’s intent as possible. That’s where estate planning comes in and why it’s so essential.
For as long as people have had property, that property has been distributed or passed along in some manner or another. In early cultures property was considered to be owned collectively by a family or tribe and when a leader of the group perished the assets were divided in accordance with family/tribal customs.
Estate planning was apparent in ancient Rome under the Code of Justinian which recognized oral and written wills that were approved by a public official. In the Anglo-Saxon period of England, royalty had to approve land transfers. That changed in the 12th century when property would automatically pass to the eldest son. Under English law, the Statute of Wills was established in the 16th century which allowed a landowner to pass along their land as they wished, whether that was to the eldest or not.
Current state intestacy laws are a modern iteration of British common law in which property inheritance passed to the spouse and children in pre-defined percentages.
Unfortunately, women were often excluded entirely from estate planning; assets were only distributed amongst male heirs at law and women were disinherited. At certain points throughout history, women (such as a wife or daughter) could be provided for through a trust upon the death of the husband/father, but often that trust was dissolved if/when the woman married/remarried. Thankfully policy and society progressed, and now women and men have an equal right to inheritance and ability to convey assets.
To that point, the individual American citizen of today has the freedom to plan for the distribution of property as wished without approval needed or mandate defining who can and cannot be a beneficiary.
Estate Planning in the United States
In U.S. history, estate planning has been intricately linked with estate taxes because estate planning techniques are tools to reduce or even eliminate the Federal estate tax. To understand that in full you could go all the way back to the Stamp Act of 1797, where a tax was passed to fund the Navy in an “undeclared war with France.” The estate tax was subsequently abolished and then reinstated with corresponding wars including the Civil War and Spanish American War.
The estate tax, more or less as we think of it today, was instituted in association with World War I in 1916. To bypass this, people would gift parts of their estates to their families to which the lawmakers responded to by passing a gift tax in 1924. It was briefly repealed and then re-enacted in 1932 and remained that way until 1976 when the gift and estate tax were consolidated.
In modern political history, the estate tax has seen a few major changes; it was entirely revoked in the 2010 calendar year after 2001 legislation phased out the tax. However, that didn’t last long. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 meant a return of the estate tax but raised the exclusion to $5 million for 2011 and 2012. Then came the American Taxpayer Relief Act of 2012 which kept the $5 million inflation-adjusted exclusion figure, but increased the maximum rate of the tax to 40 percent from 35 percent. In 2018, the exclusion rate sits at $11.18 million per individual. This means an individual can leave $11.18 million to heirs and pay no federal estate or gift tax. Married couples get an exclusion for each spouse, so a couple can leave up to $22.36 to their heirs and IRS won’t collect estate tax on it.
All of this history is to say that estate planning, in some form or another, has been an important aspect of societies in the world for a long time. Regardless of the size of your estate, and just like the ancient Romans or Americans of the early 1900s, you want to pass along your assets to the people you care about and want to provide for. Claim your right to distribute your property in accordance with your wishes by ensuring you have an up-to-date, quality estate plan. The best way to get started is with my free (and no obligation) Estate Plan Questionnaire. It’s a great tool for organizing all the important information you and your estate planner need to know when creating your custom estate plan.
Just like it’s a smart idea to have a personal “rainy day” fund just in case of an emergency home repair, surgery, or other unexpected large costs, the same goes for a nonprofit organization. Even nonprofits with solid income streams can be hit with unanticipated events, income, and unbudgeted expenses. In these situations, it’s vital to have that financial cushion in the form of operating reserves so the organization doesn’t suffer long-term, negative consequences from temporary dilemmas. Concurrently, it’s essential to have the board adopt and adhere to a policy outlining the details of the reserve.
A common scenario where operating reserves may be prompted can be when a source of a reliable income is withdrawn or reduced without expectation.
Every organization’s policy is going to look different, but there are a few general areas that should be addressed.
Purpose– Why is it important for the organization to build and maintain reserves?
Definitions- How are the types of reserves, calculation of targeted amounts, and intended use defined?
How the reserve is funded– An operating reserve is only as valuable as its reliability. The policy should set out a practical plan for replenishment to the targeted amounts. Often, a worthy reserve goal is about three to six months of expenses. At the very least, on the low end, reserves should cover one full round of payroll.
When the reserve can be used– The plan should layout when the reserves can be tapped when unexpected shortfalls hit. The reserves should not be used to address foundational finance issues. In a “last straw” scenario, operating reserves can be used to close down the organization.
Classify the operating reserve as unrestricted– Unlike restricted funds that are marked for specific programs and projects, the operating reserve should be set as unrestricted so that the board and management can employ as they choose when the crisis calls for it.
Additionally, keep in mind that an operating reserves policy should be written to correspond with any other financial-specific policies, like an investment policy.
Want to discuss your nonprofit’s policy needs? Don’t hesitate to contact me at 515-371-6077 or gordon@gordonfischerlawfirm.com. I’m based in Cedar Rapids, Iowa but will travel to meet with nonprofit pros all across the state.
There are six main documents that should be part of almost everyone’s estate plan. One of these is called “Disposition of Final Remains.” This document is where you tell your loved ones exactly how you want your body to be treated after you pass away.
It’s best to approach the subject of final disposition of remains with thoughtfulness, consideration, and, yes, indeed, even a little levity. Discussing your passing can feel morbid or even downright creepy. However, taking the time to think through your final services (whatever it is you want) is a wonderful gift to your family. It ensures that clear instructions are passed on, and alleviates, perhaps even eliminates, the avalanche of headaches that inevitably accompanies such planning.
Your estate plan’s disposition of remains directs your family and friends as to how you want your remains handled after you have passed away. This includes your funeral, service, and maybe a place of internment. If you want a party complete with a piñata you can detail that in the disposition of remains. Choices for what to do with your physical remains can include earth burial, above-earth burial, or cremation . . . or you could always go with something unique to you, like being made into a diamond. Some of my clients have insisted that there be only the shortest and simplest of memorial services. Others have wanted a marching band and fireworks shooting their ashes into the sky. (Yes, that is a thing). It’s completely up to you.
What is incredibly important is that you leave clear instructions of your desires, whatever they may be. That way, your loved ones won’t have to guess as to what you would have wanted, during a time that is already stressful, turbulent, and full of grief. Again, leaving behind a fully thought out “disposition of final remains” is a wonderful gift to your loves ones.
https://www.gordonfischerlawfirm.com/wp-content/uploads/2017/03/Black-Balloons-20pc-10-Inch-Thick-2-2-g-Birthday-font-b-Ballons-b-font-Decorations.jpg800800Gordon Fischerhttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngGordon Fischer2019-10-15 05:47:042020-05-18 11:28:43Choose your Final Resting Place & Maybe Plan a Party
National Estate Planning Awareness Week & a Brief History Lesson
Estates & Estate Planning, Events, Taxes & Finance, Wills, Trusts & EstatesBelieve it or not, National Estate Planning Awareness Week is a very real thing and we’re celebrating October 21-27! Let’s kick it off with a brief history on the Week and estate planning in general.
Background on National Estate Planning Awareness Week
National Estate Planning Awareness Week was an effort spearheaded by the National Association of Estate Planners & Councils (NAEPC) and Rep. Mike Thompson (D-CA) (with 49 other Representatives on board). In September 2008, Congress passed H. Res. 1499 which designated the third week in October as a week for assisting the public in understanding the importance and benefits of estate planning, as well as how to assemble a qualified team of experts to assist in the process.
In general, it’s in the best interest of society when the transfer of wealth and property is as seamless and as close to the decedent’s intent as possible. That’s where estate planning comes in and why it’s so essential.
Sure, you won’t see decorations for sale for National Estate Planning Awareness Week…but you can still celebrate by discussing your estate planning needs and goals with a qualified, experienced estate planning attorney. This goes for your first (much needed) estate plan, but also revisions on existing estate plans. (Remember, estate plans never expire!)
Time Warp: A Brief History of Estate Planning
For as long as people have had property, that property has been distributed or passed along in some manner or another. In early cultures property was considered to be owned collectively by a family or tribe and when a leader of the group perished the assets were divided in accordance with family/tribal customs.
Estate planning was apparent in ancient Rome under the Code of Justinian which recognized oral and written wills that were approved by a public official. In the Anglo-Saxon period of England, royalty had to approve land transfers. That changed in the 12th century when property would automatically pass to the eldest son. Under English law, the Statute of Wills was established in the 16th century which allowed a landowner to pass along their land as they wished, whether that was to the eldest or not.
Current state intestacy laws are a modern iteration of British common law in which property inheritance passed to the spouse and children in pre-defined percentages.
Unfortunately, women were often excluded entirely from estate planning; assets were only distributed amongst male heirs at law and women were disinherited. At certain points throughout history, women (such as a wife or daughter) could be provided for through a trust upon the death of the husband/father, but often that trust was dissolved if/when the woman married/remarried. Thankfully policy and society progressed, and now women and men have an equal right to inheritance and ability to convey assets.
To that point, the individual American citizen of today has the freedom to plan for the distribution of property as wished without approval needed or mandate defining who can and cannot be a beneficiary.
Estate Planning in the United States
In U.S. history, estate planning has been intricately linked with estate taxes because estate planning techniques are tools to reduce or even eliminate the Federal estate tax. To understand that in full you could go all the way back to the Stamp Act of 1797, where a tax was passed to fund the Navy in an “undeclared war with France.” The estate tax was subsequently abolished and then reinstated with corresponding wars including the Civil War and Spanish American War.
The estate tax, more or less as we think of it today, was instituted in association with World War I in 1916. To bypass this, people would gift parts of their estates to their families to which the lawmakers responded to by passing a gift tax in 1924. It was briefly repealed and then re-enacted in 1932 and remained that way until 1976 when the gift and estate tax were consolidated.
In modern political history, the estate tax has seen a few major changes; it was entirely revoked in the 2010 calendar year after 2001 legislation phased out the tax. However, that didn’t last long. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 meant a return of the estate tax but raised the exclusion to $5 million for 2011 and 2012. Then came the American Taxpayer Relief Act of 2012 which kept the $5 million inflation-adjusted exclusion figure, but increased the maximum rate of the tax to 40 percent from 35 percent. In 2018, the exclusion rate sits at $11.18 million per individual. This means an individual can leave $11.18 million to heirs and pay no federal estate or gift tax. Married couples get an exclusion for each spouse, so a couple can leave up to $22.36 to their heirs and IRS won’t collect estate tax on it.
Final Footnote
All of this history is to say that estate planning, in some form or another, has been an important aspect of societies in the world for a long time. Regardless of the size of your estate, and just like the ancient Romans or Americans of the early 1900s, you want to pass along your assets to the people you care about and want to provide for. Claim your right to distribute your property in accordance with your wishes by ensuring you have an up-to-date, quality estate plan. The best way to get started is with my free (and no obligation) Estate Plan Questionnaire. It’s a great tool for organizing all the important information you and your estate planner need to know when creating your custom estate plan.
This is the first of a week’s worth of articles all dedicated to the topic of estate planning as a part of National Estate Planning Awareness Week. Want to discuss your estate plan or talk about the history of the estate tax? Don’t hesitate to contact me.
Operating Reserves Policy: Why Your Nonprofit Needs One
NonprofitsJust like it’s a smart idea to have a personal “rainy day” fund just in case of an emergency home repair, surgery, or other unexpected large costs, the same goes for a nonprofit organization. Even nonprofits with solid income streams can be hit with unanticipated events, income, and unbudgeted expenses. In these situations, it’s vital to have that financial cushion in the form of operating reserves so the organization doesn’t suffer long-term, negative consequences from temporary dilemmas. Concurrently, it’s essential to have the board adopt and adhere to a policy outlining the details of the reserve.
A common scenario where operating reserves may be prompted can be when a source of a reliable income is withdrawn or reduced without expectation.
Important Elements of an Operating Reserve Policy
Every organization’s policy is going to look different, but there are a few general areas that should be addressed.
That’s Not All
Because each nonprofit is unique, each nonprofit is going to need policies and procedures tailored to their specific operations. That said, generally, there are at least 10 policies most nonprofits need to be prepared to address on the annual information filing, Form 990. Check out my free guide to nonprofit policies and procedures.
Additionally, keep in mind that an operating reserves policy should be written to correspond with any other financial-specific policies, like an investment policy.
Want to discuss your nonprofit’s policy needs? Don’t hesitate to contact me at 515-371-6077 or gordon@gordonfischerlawfirm.com. I’m based in Cedar Rapids, Iowa but will travel to meet with nonprofit pros all across the state.
Choose your Final Resting Place & Maybe Plan a Party
Estates & Estate PlanningThere are six main documents that should be part of almost everyone’s estate plan. One of these is called “Disposition of Final Remains.” This document is where you tell your loved ones exactly how you want your body to be treated after you pass away.
It’s best to approach the subject of final disposition of remains with thoughtfulness, consideration, and, yes, indeed, even a little levity. Discussing your passing can feel morbid or even downright creepy. However, taking the time to think through your final services (whatever it is you want) is a wonderful gift to your family. It ensures that clear instructions are passed on, and alleviates, perhaps even eliminates, the avalanche of headaches that inevitably accompanies such planning.
Your estate plan’s disposition of remains directs your family and friends as to how you want your remains handled after you have passed away. This includes your funeral, service, and maybe a place of internment. If you want a party complete with a piñata you can detail that in the disposition of remains. Choices for what to do with your physical remains can include earth burial, above-earth burial, or cremation . . . or you could always go with something unique to you, like being made into a diamond. Some of my clients have insisted that there be only the shortest and simplest of memorial services. Others have wanted a marching band and fireworks shooting their ashes into the sky. (Yes, that is a thing). It’s completely up to you.
What is incredibly important is that you leave clear instructions of your desires, whatever they may be. That way, your loved ones won’t have to guess as to what you would have wanted, during a time that is already stressful, turbulent, and full of grief. Again, leaving behind a fully thought out “disposition of final remains” is a wonderful gift to your loves ones.
Have questions? Need more information?
A great place to start is the free Estate Plan Questionnaire. Feel free to reach out at any time; you can contact me by email at Gordon@gordonfischerlawfirm.com or give me a call at 515-371-6077.