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New Tax Legislation and Year-End Gifts to Wake Forest

by Betsy Chapman

The Wake Forest Office of Planned Giving has compiled information about the new tax legislation that may be of interest to Wake Forest parents or grandparents.   

For those who wish to make a year-end gift to Wake Forest, the legislation offers a great opportunity:  a donor age 70 ½ and older may make a gift directly from his or her IRA to a charitable organization in 2010 and 2011.  If the donor makes a gift by January 31st of 2011, he can count the gift as his required minimum distribution for 2010 and can make another gift from his IRA sometime during 2011 as his required minimum distribution for tax year 2011. 

Other points that may be of interest from the new legislation:

  1. Current individual income tax brackets are extended into 2011 and 2012.   This reduces some uncertainty and allows for tax and charitable planning. 
  2. Uncertainty that has  been looming about the federal estate tax as been temporarily cleared.  Through 2012, the new estate tax exemption amount will be $5 million per person ($10 million per couple) with a federal estate tax rate of 35%.  The exemption amount is set to be indexed for inflation after 2012. 
  3. Gift tax and generation-skipping transfer tax rates are also set at 35% through 2012.  Many grandparents will be happy to know that the generation-skipping transfer tax exemption is $5 million with a 0% rate for the remainder of 2010.
  4. The transfer tax system has been simplified.  The gift tax and estate tax have been reunified, meaning that you now have $5 million to give away either during your lifetime or at death.  Anything above this will result in a 35% tax. 
  5. Married couples have an easier time using all of their exemptions.  Previously, extra steps were needed for a married couple to truly utilize all of their estate tax exemption amounts.  Now, couples have $5 million individually or $10 million as a couple that is “portable” meaning that if one spouse does not utilize his full exemption during life or at death, he can pass it along to his surviving spouse. 

These details only remain in place for a maximum of two years and in some cases, not even that long.  So, it does provide some relief in the meantime but keep in mind that these are not permanent fixes. 

If you have any questions, please contact the Office of Gift Planning at 336.758.4013 or visit the Office of Planned Giving website

Contact

To contact the Office of Family Engagement or Family Communications, please visit our contact page.

 

For mental health assistance: 336-758-CARE (2273) is a service that ensures someone will always be available (i.e., 24/7 M-F, weekends and university holidays) to provide caring and thoughtful consultation services for Wake Forest students in need of mental health assistance or support. You can also visit we.wfu.edu for resources.