AFHU_News_Vol.21_9.13.18 Spreads (1)

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AMERICAN FRIENDS OF THE HEBREW UNIVERSITY
AFHU NEWS VOL. 21 PAGE 19
The Advantages of Planned
Giving Under New Tax Laws
By Neal Myerberg
Principal, Myerberg Philanthropic Advisors
There are many reasons to be philanthropic and
support the nonprofit missions that we believe in,
such as American Friends of the Hebrew University
(AFHU). Charitable giving can be personally fulfilling
when contributions pave the way for research
achievements or the success of talented, hard-working
students. Planned gifts such as Charitable Gift
Annuities (CGA) enable individuals to create legacies
that will benefit the Hebrew University community in
future years, essentially “paying it forward” and helping
new generations while receiving a high fixed-rate,
lifetime income.
Recent changes to tax laws are providing donors
with added financial incentives to make outright gifts
and planned gifts. Signed into law on December 22,
2017, the Tax Cuts and Jobs Act (TCJA) that amended
the Internal Revenue Code of 1986 presents opportunities
for income tax savings when planning includes
charitable giving.
Reduced income tax rates
For many individuals and couples, tax rates will
be lower in 2018. That alone would suggest that the
new tax law offers savings when compared to the law
applicable in 2017.
Reduced itemized deductions & the charitable
deduction
However, moving into more favorable tax brackets
may depend upon the amount of itemized deductions
that taxpayers may make use of in determining
taxable income. With state and local taxes (SALT)
and mortgage interest deductions capped, it may be
that increasing one’s deductions for various types
of charitable giving will have even greater economic
value than charitable gifts have provided in recent
years.
Increase in the standard deduction
Will raising the amount of the standard deduction
for individuals and joint filers affect philanthropy?
Many individuals who have traditionally made annual
charitable gifts did not itemize deductions. Their
contributions, as with those who itemize, were motivated
by their desire to support organizations carrying
out important charitable missions that were dear
to them. Add to that the fact that moving above the
standard deduction amount may be good tax planning,
taxpayers may give more, not less, to charities
in 2018 to reduce Adjusted Gross Income (AGI) and
pay less income tax while contributing to the good
that charities provide to society.
Increase in the AGI limits for deducting cash contributions
An additional benefit under the new law is the
increase from 50% to 60% in the percentage of
AGI one can deduct for cash gifts to charities in the
year made. In 2018 this can be significant for some
taxpayers. The five-year carryover remains in the law
to the extent that the full amount of contributions in
a particular year cannot be fully deducted.
What types of charitable gifts might individuals
use in 2018?
Outright gifts remain the easiest way to support
charities and are deducted at full value in the year
made. However, the more tax-efficient way to make
outright gifts (unrestricted or designated) is to use
appreciated property (e.g., marketable securities) to
make contributions. In the case of appreciated stocks
(long-term capital gain property), the transfer directly
to charity generates not only a full value charitable
deduction but also full avoidance of any tax on the
long-term capital gain.
For those who want to generate lifetime
income from their gifts and obtain
an income tax charitable deduction,
consider high fixed lifetime rate charitable
gift annuities (CGA) or fixed rate charitable
remainder trusts (CRT). A contribution
of investment real estate that has
exhausted its tax benefits and has a low
adjusted basis might prove economically
beneficial when either donated outright or
when used to fund a CRT. In some cases,
funding a CGA with real estate may also
prove beneficial from both income and tax
perspectives.
As 2018 continues to unfold, we will
review planning trends resulting from the
new tax law and provide updates.
Charitable giving can provide tax
benefits and lifetime income, contribute
to sound estate planning, and furnish
additional financial advantages. Equally
important, philanthropic investments
support the Hebrew University of Jerusalem,
enabling the university to conduct
pioneering research and meet global challenges
in future years.
For further information, please visit:
afhu.org/plannedgiving
IT PAYS
TO
PAY IT
FORWARD
By creating a secure American Friends of the Hebrew
University Gift Annuity, not only do you get great rates,
you also water the seeds of innovation.
AFHU HEBREW UNIVERSITY GIFT ANNUITY RETURNS
AGE 65 70 75 80 85 90
RATE 6.0% 6.5% 7.1% 8.0% 9.5% 11.3%
Rates are based on single life. Cash contributions produce
annuity payments that are substantially tax-free.
For more information on the Hebrew University of Jerusalem and
AFHU Hebrew University Gift Annuities, please call AFHU National
Director of Development, Monica Loebl.
CALL OR EMAIL NOW.
Receive excellent returns, and
secure a brighter future for all.
T: 212.607.8502
E: mloebl@afhu.org
WWW.AFHU.ORG