Our family continues a tradition during Thanksgiving weekend that was started when our kids were young. We all write Santa “wishlists”. We told the girls that they could put whatever they wanted on the list and Santa might choose one thing on the list to bring as a present on Christmas Eve. In our family Santa was dwarfed by the other “visitors” of the season during the 12 days of Christmas....angels, shepherds, wise men and others. Our kids had simple wishes on their Santa lists - cute fuzzy socks, books, new art pens and other small toys. We didn’t watch television so the kids did not have constant ads to “help” them want lots of stuff.
These days, our adult family lists can include a lot crazy things. One year someone wrote down World Peace, and he got a bowl of Whirled Peas. Another year someone wrote down "help in the garden" and she got a bag full of dirt (and some help). Sometimes we all have trouble thinking of things to put on our list because, well, we already have enough.
The fun of Christmas is the magic of finding just the right gift for someone and seeing their face light up. Or seeing surprises lurking inside beautiful packages. It is a real talent to find just the right gift for someone. It also takes gracious acceptance of gifts we did not expect or particularly want. Every so often, we hit the sweet spot and remember the giving moment or person for years to come, even if the item becomes tarnished with age. The best gifts include three elements: involvement; shared memories; and, attention to what is important to the receiver.
Since this is the giving season, we've started December with some ideas to help spur your thinking about giving with Legacy Planning in mind. Some are simple treasures passed on with a flair; others are designed to build into your children the joy of giving to others; and some are just practical tips on gifting that can help your estate grow or further a beloved cause.
1) Alternative gift giving is a great way to involve the whole family. Many churches and synagogues sponsor gift events. Here is a simple way to have fun, teach kids about responsible giving and build in some magic into giving. Each person in the family researches a charity. They can wrap a “gift”, make a power point presentation, make a small ornament, draw a picture, or sing a song to explain why they want to help this organization. Then the family chooses a charity from those presented. Based upon their budgeted amount of giving for the year, they might decide to give some to each charity or only one. The rule is both time and money needs to be devoted to the charity. Next year, the member who suggested the charity can give a short report on it and whether they think it is worth supporting again This one little addition to holiday giving can teach your children a lot about giving. A good resource to use in researching charities is http://www.charitynavigator.org/ This site evaluates charities' stewardship of their resources. It does not evaluate religious organizations that are exempt from filing the Form 990 (like the Salvation Army or your local church), but there is a wealth of information on many good causes.
2) Begin to gather some special mementos; small knick knacks; jewelry or small items you no longer need, but that hold a special memory to you and possibly others. Think of who in your family or circle of friends might like the item to remember you with. Write a short story, note or other simple memory to explain the item. Wrap it up; tie it with a bow; label the item and then put it in a special memory box. Be sure to put your memory box somewhere that can be found later and write it down in your estate planning documents. You can either give these as a birthday gift or just keep adding gifts to the box as you think of it. This could be your final surprise gift to others.
3) Gifts can help you avoid paying some types of taxes. Gifts to charities are income tax deductions in the year you make the gift. This is established social policy to insure that our society continues to retain the social benefits of services provided by non-profit organizations. Gifts to friends or family members in 2011 and 2012 can be up to $13,000 per person ($26,000 if you are married) or unlimited if for education, without incurring a gift tax. Gifts to family and friends do not reduce your taxes, but exceeding the annual gift limits will reduce your total excludable amount which could lead to your estate paying more in taxes. This year the total lifetime gift amount was raised by congress to $5,000,000.
4) Non-cash gifts to charities are also a good way to promote re-use and provide a way to move personal assets on to organizations that can use the resources which you can no longer use. If this amounts to more than $500 in any year, your tax professional will want to see a completed IRS form 8853 which lists items, values and has the signature from the charitable organization.
5) Larger gifts can be used as part of an overall estate planning strategy to lower estate taxes and increase the size of the estate you leave behind. Ask your attorney whether you might benefit from a Crummy Trust, a Charitable Lead or Charitable Remainder Trust. These can be useful tools to insure income for yourself while providing a gift to a worthy cause after you pass away. Your attorney can help you determine if these types of techniques would help your estate pay less in estate taxes and leave a legacy to a beloved cause. Hint: remember to consider naming a professional fiduciary for complex trust arrangements to reduce the risk of IRS reclaiming gifted assets into your carefully constructed charitable trust and gift trusts.
Enjoy the season!!
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