GIVING
Proper Planning can save dollars - and do good charitable things
BY JOHN _W. SHEPPARD Retired Estate Planning Attorney, Trustee of the Southwest Florida Community Foundation

In 2001, Congress enacted a law that progressively reduced the Federal Estate Tax so it would be abolished completely in 2010 - only to have it rise again like a phoenix in 2011 (to 2001 levels). The Estate Tax Abolition Law is like a tax chameleon, changing colors and tax rates from year to year. Looking at the Federal Estate tax laws in 2007, it is very likely that there will be some "tampering" with the present law.

While reducing the federal tax, the 2001 Law in 2005 eliminated the state allowed credit. Consequently, many states are picking up the slack with new state death taxes to replace what they had received in the past from the federal government (Florida is prohibited from doing so by its Constitution). Confusion reigns in the interim in the tax planning world, with the tax load varying each year depending on which year we "graduate."

With all that is going on in the world today, the current Congress, and the huge federal deficits that are being run up, there must be additional sources of revenue. There isn't an easier way to raise tax revenue than taxing us after we are dead and gone. We can't complain then! But if we plan properly, we can not only save money lost to taxes, but do good things.

Consider the fact that the will of Howard Hughes was in litigation for more than 30 years, and paid millions in taxes - partly because of poor planning. Consider the case of Joe Robbie, the former owner of the Miami Dolphins. Reports were that his estate had to sell the Dolphins to raise money to pay estate taxes. Reason? Inadequate planning!

Conversely, consider the estate of Jacqueline Kennedy Onassis. Reports were that through proper planning, the use of charitable remainder trusts and other charitable devices, that less than two percent of her estate went to pay taxes while the size of her estate was such that the tax rate - left to the IRS' own devices, would have taxed a large part of her estate at 55 percent. Why the difference? Proper and wise tax planning, using charitable devices of giving so that the tax load was nearly eliminated; Jacqueline Onassis was still able to provide for her family and worthwhile charitable causes.

Not that many of us have the "bread" to leave that Howard Hughes, Joe Robbie or Jacqueline Kennedy Onassis had. But for some of us, what it will boil down to, is whether we prefer to do good things (of our own choosing) after we are gone, with what we have left, or let the government spend a large portion of it on who knows what.

Some of the choices you have in giving to recognized charitable organizations are outright lifetime gifts, gifts of amounts or percentages of your assets through your will or trust at death, charitable gift annuities, charitable remainder trusts and gifts of insurance, just to name a few.

Rather than turning over a portion of your lifelong hard earned assets to Uncle Sam, wouldn't you prefer that you select causes or organizations that you are passionate about? ¦

For more information on the many ways of tax expedient charitable giving, please call the Southwest Florida Community Foundation at 274-5900, or you financial or tax advisor.