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Volume 9-3
March, 2009
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THE PERFECT STORM FOR CHARITABLE LEAD TRUSTS
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For clients with large taxable estates who are looking for creative techniques for reducing or eliminating estate taxes, consider a Charitable Lead Trust (CLT) designed to produce a transfer tax deduction equal to the amount transferred. A Charitable Lead Trust structured in this manner "zeros out" the transfer tax. In addition, a properly structured CLT will "zero out" the transfer tax cost regardless of the amount transferred to the trust.
A key element in structuring a "zeroed out" CLT is the Applicable Federal Rate (AFR). This rate is published monthly by the IRS (also updated monthly on our IRS Discount Rates page). The AFR for March 2009 is 2.4% (the AFR for February was 2.0% and for January it was 2.4%). When a calculation is for the purpose of computing a charitable deduction, then the donor is allowed to use the AFR for the current month or either of the two preceding months. This means that February's low rate is available for CLTs that are funded by April 30, 2009.
When the AFR is low, the payout rate and trust term required to "zero out" the transfer tax can be lower. What does this mean? Now is a GREAT time for Charitable Lead Trust planning...
CLICK HERE to continue reading this article, including tables illustrating payout rate/trust term combinations that produce "zeroed out" CLATs. Also, check out the Case Strategy below.
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CUTS IN TRAINING PROGRAMS CREATE NEED: Renaissance Offers a Variety of Solutions
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In December, the Wall Street Journal published an article addressing the decline in training programs that financial firms offer their advisors. In today’s economic environment, it’s no wonder. But you still need the resources to answer questions and provide knowledge for your clients, Renaissance is here to help.
Renaissance has been a respected educator in the field of charitable tools for over 20 years. Through our Charitable Planning Workshop and a variety of other outlets – speaking engagements at broker dealer conferences, trade associations, webinars, teleconferences, and wholesaler training – we have trained thousands of financial professionals.
To get more information about having one of our charitable planning experts speak at your event, contact Vicki Reed at 1.317.843.5249 or via e-mail at reedv@reninc.com.
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ADMINISTRATION CORNER:
Tax Season and Annual Report Update
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The delay in the IRS' release of Form 5227 and the extension allowed for mailing of the 1099s created more than a blip in our completion of tax returns. All returns have been completed and mailed for trusts for which we have received complete financial information. This represents 80% of our portfolio. We are continuing to complete returns within 24 hours of receiving the necessary information. Letters outlining the needed information have been sent to trustees with copies to the advisors. Additional reminders will be mailed the week of March 23, 2009.
Due to technical difficulties with equipment, we are sending the summary annual report separately from the tax returns. We expect to have issues resolved and the annual reports mailed by March 31, 2009.
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ZERO ESTATE TAX PLANNING USING A CLAT: Arthurton Case Strategy
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The Arthurtons take advantage of economic and legislative conditions by creating a trust that will pass their wealth on to their heirs and charities close to their heart...and avoid paying estate taxes on the transaction. Read their story here.
There are plenty more Case Strategies illustrating powerful charitable planning techniques on this page at our website: CharitableTrust.com.
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TOUGH CLIMB AHEAD FOR STOCKS: "...this, too, shall pass..."
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A recent article in the Wall Street Journal points out that while the stock market may have a long climb back to steady growth, there is still optimism to be found. Historically, even when confidence in investments is low, the market tends to grow steadily over time.
As the article states: "and this, too, shall pass away."
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