On this day of thanks, we wanted to remind you about the various opportunities for giving. Many of our clients have a philanthropic intent but just do not know exactly how to, when to, and how much to give. Maggie Green wrote about incorporating philanthropic education into your estate plan even after you pass away. But there is also a lot that can be done during your lifetime.
Volunteering
Donating your time is a great way to give back when donating financial assets is not an option for you. Most charitable organizations are seeking additional help constantly and would gladly accept any time someone can contribute. When figuring out which organization you want to volunteer at you should determine what you are interested in and passionate about. If you are not interested and passionate about the mission of the organization, you will not enjoy spending your time there helping make a difference.
For those that can give financial assets, here are a few things to remember.
Gifts With Non-Tax Consequences
Three gifts that can always be made without amount restrictions and gift tax consequences are the following:
- Gifts made to charitable organizations;
- Payments made directly to an educational institution; and
- Payments made directly to a medical institution.
Annual Gift Exclusion
As a reminder, in 2013, individuals can give up to $14,000.00 to as many individuals as he or she prefers. There are no tax consequences – neither on the federal nor MN state level – to these gifts. This annual gift exclusion will remain at $14,000.00 for 2014. For amounts given over the annual gift exclusion tax is not necessarily owed but the gift should be reported on a gift tax return and will be applied against the person’s lifetime gift exclusion.
Minnesota Lifetime Gift Exclusion
As Maggie wrote back in June, Minnesota has reenacted a gift tax for gifts made after July 1, 2013. Minnesota residents have a lifetime gift exclusion of $1 million. This means an individual can give a total of $1 million away to others and not incur MN gift tax consequences (this excludes gifts to spouses as an individual can gift an unlimited amount to his or her spouse without any tax consequences).
Federal Lifetime Gift Exclusion
In 2013, individuals can gift $5.25 million to any other individuals and not incur federal gift tax (again, this excludes gifts to spouses as an individual can gift an unlimited amount to his or her spouse without any tax consequences). This limit will increase to $5.34 million in 2014 to account for the cost of living adjustment.
If you have questions about incorporating gifting into your estate plan, consult with one of your professional advisors – financial, legal or tax advisors.
