The University of Toledo

Insights on Estate Planning: Q&A with Leaders in the Field

There are multiple considerations in estate planning: providing for loved ones, lifetime needs and plans, personal legacy and goals, and accomplishing each of these within the complexity of legal and tax rules.

Recently, David Rectenwald, a partner in the firm of Shumaker, Loop, & Kendrick, and Frank D. Jacobs, a partner with Eastman & Smith, offered some insights and timely comments about the process.

UTF: What are the pitfalls and challenges of  the 2010 repeal of estate tax? 
DR: The current environment is unprecedented. It poses two major problems. First, clients need to make sure their current estate planning documents work. For example, trusts that provide for a charity or a spouse, based upon the estate tax exemption amount, do not work because no exemption exists. The effect, while unintended, is to leave nothing! Second, estate planning in this environment of uncertainty is incredibly risky. Clients who want to take advantage of lower gift tax rates or the lack of a generation skipping transfer tax must realize they may be stung if retroactive legislation is passed.
 
UTF: As active community members and legal advisors, you have a unique perspective on “philanthropy at work.” How is philanthropy impacting UT and Toledo?
FJ: Private charitable giving is a powerful force in the Toledo area. Funding of nonprofits by the government and by corporations has shrunk. In my experience, people in the Toledo area are generous with their philanthropy. That includes The University of Toledo, one of the bright spots in the Toledo metropolitan area in terms of affecting education and job attraction. UT is relatively unique among U.S. universities in having the variety of educational offerings not only at the undergraduate level, but also at the graduate and professional level.

UTF: When your clients discuss their intent, generally what motivates them to include charities in their estate plans or to make major gifts during their lifetimes? 
DR: Every donor’s motivation is unique. However, the most common motivations include: (a) the desire to memorialize or honor a loved one, (b) fond memories and good experiences with the charity, and (c) a sense of duty to give back to the community or to show gratitude for being so fortunate in life.

UTF: The IRA Rollover benefited charities and donors. Will Congress extend the IRA Rollover provisions?
FJ: An extender is likely to be passed. This is an ideal strategy for a donor over 70-1/2 to transfer up to $100,000, satisfy their minimum distribution requirements and fulfill the charitable intentions in a very cost-effective way. There is no taxable income or charitable deduction; donors benefit even if they don’t itemize or reside in a state like Ohio, without a state income tax charitable deduction. Everyone is a winner.

UTF: How can I ensure a charity will be a good steward of my gift? 
FJ: For substantial gifts, I’d advise a written donation agreement between the donor and the charity, like the UT Foundation’s fund agreement. This describes the purpose and use of the gift and the donor’s intent. It can provide for periodic accounting and reporting to the donor. It is important for donors to remain engaged with their favorite charities and stay apprised of current activities. Some charities are more efficient than others. Many charities have websites where information on the charities, their operating efficiency, and the various programs and funds are available.
 
Note: The preceding is provided for information purposes only, and not intended as legal advice.