So many things in life come with built-in expiration dates. Some, such eggs, milk, and cheese, are clearly stamped, while other common items (everything from spices, fire extinguishers, lipstick, to hard liquor) lose their quality or effectiveness over time, but don’t have a clear “best used by” date on them.
So, how about an estate plan? If your running shoes can expire, how about important legal documents? This is a common and certainly valid question.
You will never receive a notice in the mail that your carefully crafted estate plan is set to expire in 30 days if you don’t submit another signed form or check payment. However, I highly recommend revisiting your estate plan annually to make certain life changes over the past year are appropriately reflected. For example, having a child, getting married or divorced, moving to another state, changes in financial circumstances, and other major life events necessitate revisiting your estate plan. After all, estate planning documents can be changed up until the moment you pass away.
Since these legal documents do not expire, there’s no better time than now to get started on your estate plan. The best place to start? Download my Estate Plan Questionnaire; it’s free and provided at no obligation!
Since 1968, every Section 501(c)(3) organization is classified by the IRS as either a private foundation or a public charity. This classification is crucial for at least two reasons to anyone considering forming a nonprofit or anyone considering making a significant donation to a nonprofit.
First, private foundations are subject to much stricter regulations than public charities. Second, public charities receive more favorable tax treatment than private foundations. Let’s explore each classification a little deeper.
Public Charities
Public charities must attract broad donor support. Some organizations—churches, schools, and hospitals for instance—are by their very nature considered “publicly supported.” Other organizations must pass mathematical public support tests to qualify as a public charity. These tests require charities to obtain funding from numerous sources, rather than one singular source, or a small group of related funders.
When a charity passes one of the public support tests, it is demonstrating to the IRS that the general public (non-insiders) evaluated the charity’s performance and found it worthy of financial support. As a result, such charities are treated as having a sort of stamp of approval of the general public, lessening the need for the stricter IRS scrutiny applied to private foundations.
Private foundations are subject to a more strict regulatory scheme than public charities. There are penalties for self-dealing transactions, failure to distribute sufficient income for charitable purposes, holding concentrated interests in business enterprises, and making risky investments. The IRS recognizes two types of private foundations: private non-operating foundations and private operating foundations. The main difference between the two? How each distributes its income:
Private nonoperating foundations grant money to other charitable organizations.
Private operating foundations distribute funds to their own programs that exist for charitable purposes.
In general, private foundations can accept donations, but many do not and instead have endowments, as well as invest their principle funding. The income from the investments is then distributed for charitable activities/operations.
Deduction limits
Contributions made to public charities and private foundations may be deducted from the donor’s federal income tax. The amount of the deduction is subject to certain limits under federal tax law.
Gifts to public charities receive more favorable tax treatment than gifts to private foundations—this includes donor limits. For example, a charitable cash donation to a public charity would be deductible at up to 50 percent of the taxpayer’s adjusted gross income (AGI), but the same gift to a private foundation is deductible at a rate of only 30 percent of AGI.
A word on the word “foundation”
Don’t assume that an organization with “foundation” in its title/name is indeed a private foundation and not a public charity. Of course, it could be, but many types of nonprofit organizations have adopted “foundation” as part of their name to help project a mission and/or identity. (Examples include Friends of Animal Center Foundation and the Iowa City Public Library Friends Foundation.) If you’re entirely unsure if a nonprofit you’re considering donating to is a private foundation or public charity, simply ask one of the nonprofit’s executives or appropriate contact.
If you’re wanting to make a complex gift or include nonprofits as beneficiaries in your estate plan it’s wise to work with an attorney experienced in those areas. Of course, I would be happy to help.
Have any questions? Want to discuss your charitable donation or formation of your dream nonprofit? Contact me by email or phone (515-371-6077) .
https://www.gordonfischerlawfirm.com/wp-content/uploads/2015/05/josh-boot-177342.jpg38405760Gordon Fischerhttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngGordon Fischer2018-10-27 05:50:142020-05-18 11:28:50What's the Difference Between Public Charity & Private Foundation
Here’s an example of a presentation I gave in a workshop open to the public, entitled “Basics of Estate Planning.” This presentation on clauses to include in an executive’s contract was focused toward a different audience—nonprofit employers. And just in case those samples weren’t enough, here’s a presentation I gave to my fellow estate planners on effectively including digital assets in plans. Of course, I modify my content so it’s applicable to the event, organization, and audience.
So, if you’re in need of a speaker on any topic related to my core services, don’t hesitate to shoot me an email at gordon@gordonfischerlawfirm.com or give me a call at 515-371-6077 to discuss your upcoming event and potential speaking topics.
https://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/gordon-fischer-speaking.jpg685960Gordon Fischerhttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngGordon Fischer2018-10-24 10:57:262020-05-18 11:28:50Need a Speaker? Drop Me a Line!
Do Estate Plans Have an Expiration Date?
Estates & Estate Planning, Wills, Trusts & EstatesSo many things in life come with built-in expiration dates. Some, such eggs, milk, and cheese, are clearly stamped, while other common items (everything from spices, fire extinguishers, lipstick, to hard liquor) lose their quality or effectiveness over time, but don’t have a clear “best used by” date on them.
So, how about an estate plan? If your running shoes can expire, how about important legal documents? This is a common and certainly valid question.
As bill-paying Americans, it seems par-for-the-course that like everything else, we need to routinely file paperwork, with payment(s), to keep coverage in place. Fortunately, estate planning documents do not expire. Once valid, such legal documents are effective for, well, for as long as you want. This includes all documents that could (and probably should) be in your estate plan, such as a will, health care power of attorney, financial power of attorney, instructions for disposition of personal property, and instructions for final disposition of remains.
You will never receive a notice in the mail that your carefully crafted estate plan is set to expire in 30 days if you don’t submit another signed form or check payment. However, I highly recommend revisiting your estate plan annually to make certain life changes over the past year are appropriately reflected. For example, having a child, getting married or divorced, moving to another state, changes in financial circumstances, and other major life events necessitate revisiting your estate plan. After all, estate planning documents can be changed up until the moment you pass away.
Since these legal documents do not expire, there’s no better time than now to get started on your estate plan. The best place to start? Download my Estate Plan Questionnaire; it’s free and provided at no obligation!
I would love to discuss your estate plan with you. Reach out at any time by email, gordon@gordonfischerlawfirm.com, or cell phone, 515-371-6077.
What’s the Difference Between Public Charity & Private Foundation
Charitable Giving, Nonprofits, Taxes & FinanceSince 1968, every Section 501(c)(3) organization is classified by the IRS as either a private foundation or a public charity. This classification is crucial for at least two reasons to anyone considering forming a nonprofit or anyone considering making a significant donation to a nonprofit.
First, private foundations are subject to much stricter regulations than public charities. Second, public charities receive more favorable tax treatment than private foundations. Let’s explore each classification a little deeper.
Public Charities
Public charities must attract broad donor support. Some organizations—churches, schools, and hospitals for instance—are by their very nature considered “publicly supported.” Other organizations must pass mathematical public support tests to qualify as a public charity. These tests require charities to obtain funding from numerous sources, rather than one singular source, or a small group of related funders.
When a charity passes one of the public support tests, it is demonstrating to the IRS that the general public (non-insiders) evaluated the charity’s performance and found it worthy of financial support. As a result, such charities are treated as having a sort of stamp of approval of the general public, lessening the need for the stricter IRS scrutiny applied to private foundations.
Private Foundations
Private foundations are funded by an individual, a family, a company, or a small group. Two prominent examples would include the Ford Foundation and Bill & Melinda Gates Foundation.
Private foundations are subject to a more strict regulatory scheme than public charities. There are penalties for self-dealing transactions, failure to distribute sufficient income for charitable purposes, holding concentrated interests in business enterprises, and making risky investments. The IRS recognizes two types of private foundations: private non-operating foundations and private operating foundations. The main difference between the two? How each distributes its income:
In general, private foundations can accept donations, but many do not and instead have endowments, as well as invest their principle funding. The income from the investments is then distributed for charitable activities/operations.
Deduction limits
Contributions made to public charities and private foundations may be deducted from the donor’s federal income tax. The amount of the deduction is subject to certain limits under federal tax law.
Gifts to public charities receive more favorable tax treatment than gifts to private foundations—this includes donor limits. For example, a charitable cash donation to a public charity would be deductible at up to 50 percent of the taxpayer’s adjusted gross income (AGI), but the same gift to a private foundation is deductible at a rate of only 30 percent of AGI.
A word on the word “foundation”
Don’t assume that an organization with “foundation” in its title/name is indeed a private foundation and not a public charity. Of course, it could be, but many types of nonprofit organizations have adopted “foundation” as part of their name to help project a mission and/or identity. (Examples include Friends of Animal Center Foundation and the Iowa City Public Library Friends Foundation.) If you’re entirely unsure if a nonprofit you’re considering donating to is a private foundation or public charity, simply ask one of the nonprofit’s executives or appropriate contact.
If you’re wanting to make a complex gift or include nonprofits as beneficiaries in your estate plan it’s wise to work with an attorney experienced in those areas. Of course, I would be happy to help.
Have any questions? Want to discuss your charitable donation or formation of your dream nonprofit? Contact me by email or phone (515-371-6077) .
Need a Speaker? Drop Me a Line!
Events, From Gordon's Desk...One aspect of running my own firm that I love is getting out and teaching groups of people. Just like mission, my presentations center on maximizing charitable giving. Be it through estate planning education, nonprofit board training, or sharing tools and resources for professional advisors, I’m always open to speaking at different organizations and events across the state of Iowa.
Here’s an example of a presentation I gave in a workshop open to the public, entitled “Basics of Estate Planning.” This presentation on clauses to include in an executive’s contract was focused toward a different audience—nonprofit employers. And just in case those samples weren’t enough, here’s a presentation I gave to my fellow estate planners on effectively including digital assets in plans. Of course, I modify my content so it’s applicable to the event, organization, and audience.
So, if you’re in need of a speaker on any topic related to my core services, don’t hesitate to shoot me an email at gordon@gordonfischerlawfirm.com or give me a call at 515-371-6077 to discuss your upcoming event and potential speaking topics.