The charitable lead trust has always been a powerful vehicle to balance philanthropic and estate planning objectives. The recent convergence of two factors that are critically important in the planning dynamic for charitable lead annuity trusts (CLATs) create a planning environment that is so favorable for CLATs, it is no exaggeration to suggest that the current period may be the golden age of CLATs, presenting a very interesting planning opportunity for wealthy families. But that opportunity is temporary, since the convergence of these factors is unlikely to continue for very long. Continue reading “Is this the Golden Age of CLATs?”
Fans of college athletics may have heard something about tax legislation barreling through Congress this month, and didn’t pay much attention since it sounded like boring stuff that only meant something to big tech companies stashing their billions overseas. But buried in the 500 pages of the legislation that has now passed both chambers is a year-end tax planning opportunity for sports fans. Or, more precisely, a tax break that has been available to sports fans for over thirty years will be eliminated starting in 2018. Continue reading “Year-End Tax Planning for College Football Fans”
The Uniform Prudent Management of Institutional Funds Act (UPMIFA or the Act) was adopted in 2006 by the National Conference of Commissioners on Uniform State Laws, as the successor to the Uniform Management of Institutional Funds Act (UMIFA), and has (on 1/1/2017) been enacted in every state except Pennsylvania. UPMIFA provides guidance and authority to charitable organizations concerning the management and investment of charitable funds and for endowment spending.
A prior post focused on UPMIFA rules for endowments held by charitable organizations, including standards for determining the annual spending from those funds, while this post will address UPMIFA rules for the delegation of management and investment functions.
The Uniform Prudent Management of Institutional Funds Act (“UPMIFA” or “the Act”) was adopted in 2006 by the National Conference of Commissioners on Uniform State Laws, as the successor to the Uniform Management of Institutional Funds Act (UMIFA), and has (at 1/1/2017) been enacted in every state except Pennsylvania. UPMIFA provides guidance and authority to charitable organizations concerning the management and investment of charitable funds and for endowment spending.
UPMIFA contains rules and standards for their application across three broad areas of importance to charitable organizations, members of their fiduciary boards, and their advisers, if those organizations hold restricted funds including endowment. This post focuses on endowment, and future posts will address UPMIFA rules for the delegation of management and investment functions, and for the release or modification of restrictions contained in gift instruments. Continue reading “Understanding UPMIFA: Important Endowment Concepts”
Under Internal Revenue Code § 664, a qualified charitable remainder unitrust each year during its term distributes to a non-charitable beneficiary a fixed percentage (5% or greater) of the value of trust assets, determined annually (the unitrust amount). Assets remaining in the CRUT at the end of its term are distributed to charity. Section 664(d) provides that a qualified CRUT may limit distributions to the non-charitable beneficiary to the lesser of the unitrust amount or trust income under fiduciary accounting principles (a net-income CRUT, or NICRUT), and may pay the non-charitable beneficiary any trust income in excess of the unitrust amount to the extent that aggregate distributions in prior years were less than the aggregate unitrust amounts as a result of the net-income limitation (a net-income with make-up CRUT, or NIMCRUT). Continue reading “Valuation Rule for Early Termination of Net-Income Charitable Remainder Unitrusts”
Without a lot of fanfare, the California State Legislature recently passed a bill that seeks to provide some clarity for charities as to how they are supposed to invest their assets.
Assembly Bill 792 (“AB 792”) was passed by the California State Legislature in June, 2015, signed by Governor Brown in July, 2015, and will become effective on January 1st of next year. According to its author, it will assist California nonprofit public benefit and California religious corporations in making better investment decisions by clarifying California law regarding the investment of their assets. The hope is that this, in turn, will provide these entities with improved investment returns. Continue reading “California Clarifies Investment Standards for Public Benefit and Religious Corporations”
On December 19th, President Obama signed H.R. 5771, known as the “Tax Increase Prevention Act of 2014.” Among other things, this legislation extends the favorable charitable IRA rollover rule to gifts made in 2014. Continue reading “President Approves One-Year Extension of Charitable IRA Rollover”
The California State Legislature recently passed Assembly Bill 2077 (“AB 2077”). AB 2077, which was signed by Governor Brown, is designed to make it more difficult for charities that have not complied with their registration and reporting obligations to operate in California. Continue reading “California Enacts Bill to Combat Noncompliant Charities”
The IRS has issued a preliminary draft of a dramatically shorter application for tax exemption of charitable organizations. If this draft is eventually approved by the IRS and made available for public use, it would greatly simplify the process for gaining IRS recognition of tax exempt status for many charitable organizations. Continue reading “IRS Proposes (Very) Short-Form Application for Charitable Tax Exemption”