Tax Strategies for Charitable Giving

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Tuesday September 13, 2022.

It takes much thought and planning to decide where to contribute your hard-earned money. A wise charitable giving plan takes into account your giving style, timing, and content. 

Your giving strategy and the timing of your donations can optimize their impact on your favorite charity while lowering your tax burden. The following two strategies can help reduce your tax burden. 

It’s Not Just Cash

Direct charitable giving may be more advantageous than selling non-cash assets like a mutual fund or stock shares and donating the after-tax proceeds. If you’ve had the assets for more than a year, you’ll receive two important advantages. In most cases, you’ll be able to deduct the full fair market value from your taxes — neither you nor the charity will owe any taxes on the gain. As a result, you will be able to donate up to 20% more to the charity than you would have given if you had sold the asset and donated the after-tax revenues.

You can also acquire more of the same stock after donating any that has dramatically increased in value, thereby “resetting” the cost basis to a more significant sum.

While stock awards can generate a sizable income, they can also have unanticipated tax repercussions after they are exercised or vested. As a clever strategy to lower your tax exposure, think about using vested shares from prior years or other long-term appreciated assets for charitable giving.

Consider a QCD

A qualified charitable distribution, or QCD, is another tactic that can lower your taxable income. These are contributions paid to your preferred charity straight from your IRA. The gift amount isn’t considered as a charitable deduction, but it doesn’t count as taxable income either. It essentially reduces your taxable income by the amount donated to charity, even if you weren’t otherwise itemizing deductions.

If your required minimum distribution (RMD) for the year has not yet been satisfied, QCDs can count toward it. Reducing your taxable income can also be beneficial when figuring out how much Medicare premiums will cost you. Make sure to speak with your accountant first because there are a few rigorous criteria you must follow in order to take advantage of this method.

What Can and Cannot Be Included in a Living Will

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Wednesday August 10th, 2022.

Living wills and other advance directives are legally binding documents that outline your preferences for medical treatment if you become incapacitated. 

Advanced directives are not only for those in their advanced years. All people should create these documents since unexpected end-of-life circumstances might occur at any age.

By making arrangements in advance, you can receive the medical treatment you desire and prevent needless suffering. The document also frees up caregivers from the pressure of making decisions during trying or grievous times. 

What Can Go In a Living Will

Be specific about your wishes for medical procedures while drafting your living will. Take into account your options for each of the following:

Cardiopulmonary Resuscitation (CPR): using a defibrillator or someone performing chest compressions to restart your heart.

Life Support: maintaining your life through artificial nutrition, hydration, medicine administration, and ventilator support.

Mechanical Ventilation: a device that takes over breathing by supplying the lungs with air.

Artificial Nutritional Feeding: a tube that extends into the stomach and delivers nutrients.

Dialysis: a process where blood is cleansed by passing through a machine.

Intravenous: injections of medication, antibiotics, or antivirals using a tube or needle into the veins.

End-of-Life/Palliative Care: Healthcare professionals can manage your pain to make you comfortable while respecting your preferences for medical treatment, such as avoiding intrusive procedures.

Organ Donation: You must be briefly put on life support if you choose to donate your organs. You will need to obtain an exemption for the organ transplant operation if you decide not to be put on life support.

What You Can’t Include in Your Living Will

You need a few things in conjunction with your living will, but they are not included as part of it. 

Do Not Resuscitate (DNR): Although you might have said in your living will whether you wish to be revived, a DNR is a particular directive that a doctor must write and sign. 

Orders for Life-Sustaining Treatment (OLST):  An OLST is primarily used for those who have been told they have a severe or fatal illness, are elderly, or both.

Health Care Proxy: A Health Care Proxy or other Medical Power of Attorney document must be used to designate the person you want to act as your Health Care Proxy (also known as a Power of Attorney for Health Care and a Health Care Representative) to make decisions on your behalf if you become incapacitated. 

The Dangers of DIY Estate Plans

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Tuesday July 12th, 2022.

DIY projects are popular, but is DIY estate planning a good idea? 

Do-it-yourself estate planning has become increasingly popular in recent years — especially since a global pandemic has people worrying about the future in new ways. DIY planning seems like an excellent way to save money. People often think grabbing forms from the internet will be sufficient. However, there are some reasons why this is one area where doing it yourself may not be the best option. 

Does It Meet Your State’s Requirements?

Each state’s estate planning laws are unique, and the rules that apply from year to year can change significantly. Unfortunately, there is no real way to verify if a DIY estate plan you download from the internet complies with your state’s laws, even if it promises to do so. 

Most websites that provide do-it-yourself estate planning disclaim any liability for any paperwork that doesn’t function appropriately after settling your estate. On the other hand, an estate planning law company assumes full responsibility for the documents they design and will be on hand to help if any problems occur. They are available to testify in support of your objectives should it be required. They can review the notes they took during your discussions with your beneficiaries after your death.

It’s More Than Just a Will

Most people mistakenly believe that having a will is all that is necessary to establish an estate plan. Even if you create a DIY will that is legal and complies with state regulations, it’s unlikely that it will be sufficient to meet your estate planning needs. Wills are only one component of a comprehensive estate plan.

Besides, wills are usually not a one-and-done situation.

Wills require updating. You must update your will to reflect any changes resulting from having children, getting married or divorced, or acquiring a sizable sum of money. It will be much simpler for you to make these modifications if a professional is accessible to assist you.

Get the Help You Need

In the end, assurance that your legacy is safeguarded motivates most people to make an estate plan with an expert instead of relying on internet research and DIY forms.

Mistakes Parents Make When Naming Guardians

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Thursday June 9th 2022.

When putting together your will, one thing that must decide if you are a parent is what happens to your children should the worst happen to you and your partner. Your estate is one thing, but the well-being of your children is quite another! Should you become incapacitated, pass away, or otherwise unable to provide for your minor children, your will should include the names of suitable legal guardians you have chosen to care for them.

While it is a difficult thing to consider for any parent, the importance of the task makes it one of the more significant life decisions. Before naming a guardian, consider these mistakes many parents make.

Naming a Couple 

Some parents name a couple to raise their children if a guardian becomes necessary. However, what if you don’t want both members of the couple to raise your children? It is important to specify your wishes for your children’s guardianship should the couple be broken up or one of them passed away. 

Failing to Prepare for Short Term Needs

It is good to appoint short-term guardians to look after your child until your long-term guardian can take custody. An interim guardian, such as a nanny or trusted neighbor, can temporarily assume guardianship of your child and offer immediate care in the event of an emergency. If the police are contacted, and you don’t have temporary guardians, your child may be taken from your house and placed in protective custody.

Documenting Too Few Details

Everyone has different views on how children should be raised. Do you have a school in mind for your children? What about a particular diet? Religious beliefs? Your appointed guardian should respect your wishes as a parent, but they can’t respect them if they don’t know what they are.

Not Appointing a Financial Guardian

Often, parents forget to designate someone to manage the money they are leaving behind for the children. If you’re leaving money behind — which you should be, even if all you have is a life insurance policy — you should put it in trust for your children and appoint a trusted person to handle your children’s finances until they come of age.

What Happens to a Mortgage After the Owner Dies?

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Monday May 8th, 2022.

Though you’re probably preoccupied with a million other things after a loved one has died, you’ll have to address one crucial topic: “What happens to the house?”

A will or probate is often used to determine who gets a home when a homeowner passes away. But what about a house with a loan on it? Are your relatives liable for your mortgage debts if you pass away? What happens to the surviving family members who are still living in the house?

The word mortgage is derived from a French term that means “death pledge” — meaning a mortgage does not simply vanish when the lien holder passes away. The lender still needs to be paid, or they will likely foreclose on the home. If the property has outstanding home equity loans or lines of credit, the same rules apply. A mortgage is a lien that lasts until the loan is paid off, even if the borrower passes away.

Who Assumes The Payment?

If a mortgage has a co-borrower or co-signer, the solution is straightforward: the other party can keep making payments on the loan.

If the deceased has a surviving spouse, federal law permits them to take over the mortgage instead of paying the full total back to the lender. They will need to show financial ability and creditworthiness, however.

If the deceased leaves the title to someone else, this person only acquires the title to the property, not the mortgage. The inheritor has no personal obligation to make loan payments until the assuming process is completed because the person’s credit isn’t tied to the loan installments. They aren’t legally obligated to repay the loan.

If none of these scenarios apply and no one takes over the mortgage, the mortgage servicer will begin the foreclosure process.

Have the Conversation

Numerous things go into end-of-life preparations. It’s crucial to think about how your choices today will impact your loved ones once you’re gone.

Consider any other debts you may leave for your family after you die, in addition to your mortgage. Although discussing your mortality isn’t often the most uplifting issue, doing so now may provide you and your loved ones with some peace of mind in the future.

Estate Planning for a Second Marriage or Blended Family

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Thursday April 7th, 2022.

The estate planning process may appear convoluted when it comes to blended families, but it does not make it any less critical. You can avoid probate court and legal complications down the line by creating a planning strategy. 

Start by talking to your spouse about your estate plans. Then, when you and your partner are ready, an attorney can assist you in putting the necessary documentation in place.

Get Started Before You Remarry

You certainly want to celebrate if you’re ready to remarry, but it’s also vital to focus on less exciting concerns like updating your estate plan. You may have made a simple will during your first marriage, but it will almost certainly be more difficult the second time–especially if you have children from your first marriage or own more assets. Starting the planning process before the nuptials will benefit all parties involved.

Update Your Beneficiaries

One benefit of altering the beneficiary’s name is that the money will go directly to the intended recipient without going through probate — the legal process of settling an estate. If that’s your intention, go through all of your bank accounts — checking, savings, and retirement — to make sure your spouse is named as the beneficiary. Check the beneficiaries of life insurance policies as well because these payouts are also exempt from probate. You can name your children as secondary beneficiaries, ensuring that they receive the assets if both of you die.

“The most common mistake we see is that people never change their wills or their beneficiary designations,” saysMark Bass, a financial planner with Pennington, Bass & Associates in Lubbock, Texas. Failing to do so can mean that your previous spouse is entitled to insurance benefits or retirement payouts, leaving your new partner in financial straights.

Consult an Estate Planning Attorney

You should discuss things with an attorney even if you don’t have a lot of assets, especially if you have children. At the very least, your will needs to be updated. Other estate planning instruments, such as a durable power of attorney and a health care proxy, may also need to be updated or created. 

A prenuptial agreement may be appropriate if you have considerable assets. Additionally, the attorney can assist you in determining whether a trust is required to protect your children’s interests.

The Law Office of Wickersham and Bowers provides top-notch legal representation to clients in Daytona Beach and southern Florida. Our areas of legal practice include family lawpersonal injuryeminent domain, and estate planning and probate. Our firm has over 60 years of addressing our clients’ legal issues. Please feel free to contact us by filling out our online form or calling us at (386) 252-3000.

Understanding Gift Tax

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Monday March 7th, 2022.

A gift tax is a federal tax levied on someone who gives something of value to someone else without obtaining anything of equal or greater worth in return. Gifts can be anything of great value, such as sums of money, vehicles, or real estate, and the tax can be applied even if the donor never intended it to be a gift in the first place.

The Internal Revenue Service, or IRS, sets the limits on how much you can give before having to file a return and being taxed. Amounts in excess of the annual thresholds must be reported and count toward a lifetime gift tax exemption. When this significant provision is depleted, the gift tax is due.

Does the Person Receiving the Gift Pay Taxes?

In the vast majority of cases, the person being gifted does not owe taxes. At the federal level, assets you receive as gifts or inheritance are usually not taxable income. However, if the assets generate income in the future (for example, interest, dividends, or rent), that income will almost certainly be taxable. The specifics can be found in IRS Publication 525. 

Inheritance taxes are also imposed in some states.

How Can I Avoid Paying Gift Tax?

The yearly exclusion ($16,000 in 2022) and the lifetime exclusion ($12.06 million in 2022) keep the IRS out of most people’s pocketbooks.

If you stay below those, you’ll be able to be generous while remaining untaxed. If you go above that, you’ll have to fill out a gift tax form when filing your taxes.

Taxable Gifts

Are you curious about the gift tax and what constitutes a gift? Money and property, including the use of property, are examples of gifts. Remember, gifts are given without expecting to receive something in return of equal worth. 

In addition to simply giving someone something of value, these instances may also qualify as gift-giving: 

  • You sell something at a lower price than it is worth
  • You give someone a no-interest or low-interest loan


There are a few exceptions to the gift tax laws. These contributions are exempt from the annual limit:

  • Expenses for tuition or medical treatment paid directly to an institution
  • Gifts for your spouse
  • Donations to a political party
  • Donations to charity

Steps to Take After a Spouse’s Death

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Thursday February 10th, 2022.

A period of unspeakable sadness follows the death of a spouse, but unfortunately, many legal and financial requirements cannot be postponed.

Taking on a to-do list while grieving is probably the last thing on your mind, so enlisting the assistance and counsel of a trustworthy family member, friend, or attorney to help you sort things out and provide emotional support is a smart option.

You may also want to seek the assistance of your financial, legal, and tax professionals. They can often assist you with many of the responsibilities, allowing you to concentrate on your loss. 

Here are five things that will need to be done shortly after the death of a spouse:

Request Certified Copies of the Death Certificate

Certified copies of your spouse’s death certificate will be required to claim benefits or transfer accounts into your name. Request at least a dozen or more copies from the funeral home. To prove you were married to the deceased, you may also be required to provide verified marriage certificates.

Gather Financial Records

Begin gathering financial documents, such as bank records, bills, credit card statements, tax returns, insurance policies, and any outstanding mortgages or loans, as well as retirement accounts. It could take time if your spouse doesn’t have a well-organized filing system. Remember, you may need to contact the corporations directly and give documentation of your spouse’s death in order to access their accounts.

Change Titles on Accounts

Accounts only in your spouse’s name should be closed, and the account holder’s information should be changed on all joint bank, investment, and credit accounts. You can request the necessary forms from your financial institutions.

Revise Beneficiary Designations

If you inherit a retirement account, such as an IRA, you can choose to roll it over to an IRA in your own name. You will want to speak with an attorney and a tax specialist to determine the best method for receiving your deceased spouse’s retirement account. You should also update beneficiary designations on such accounts.

Discuss Next Steps

A financial advisor can assist you in updating your financial strategy in light of the new situation. You can also talk about short-term adjustments, such as a budget, as well as long-term changes, such as your retirement plan and investment possibilities.

Who Will Take Care of My Children and Their Inheritance if the Worst Happens?

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Monday January 10th, 2022.

When you’re young, healthy, and beginning a family, you may not think about estate planning, but your child needs you to make decisions now that will ensure a secure future for him or her, even if the worst happens.

There are a few critical estate planning actions that every parent should take to ensure that their child is secure, no matter what the future holds.

Make a Will

Making a will is crucial for parents, but did you know that each parent should have their own legal will? Even if generating only one document may be more efficient, a joint will doesn’t make much sense.

A shared will ties the survivor to the original terms, leaving little room for the surviving parent to make revisions if circumstances drastically altered.

Name a Guardian

Your will should name your spouse or partner as the guardian of your children, and their will should name you. Having it written down prevents someone from stepping forward and challenging your children’s custody.

If both of you die or the surviving partner is unable to care for the children, you will need to have an alternate guardian. The most difficult task for parents is deciding on a guardian. It’s difficult to envision anybody else raising your children, yet it’s one of the most crucial things you can do to assure their future happiness.

Set Up a Trust

A child trust fund allows you to decide what your children will receive and when they will receive it. A trust fund is a place where you can keep the assets you want for the beneficiaries you pick.

The trustee is legally accountable for the child trust fund’s management and must fulfill your desires precisely as stated in your will.

For example, you might wish to give your child a lump sum of money on their 18th birthday or want them to inherit one of your most valuable things after you die.