Planned Giving news

February 2009

President Obama to Keep Estate Tax
President Obama plans to prevent repeal of the estate tax in 2010, reports The Wall Street Journal. The tax was to be eliminated next year under a law Congress passed in 2001. Fund raisers follow the estate tax closely, according to The Chronicle, because many donors make large charitable bequests in part to avoid estate taxes. Repeal of the tax could remove that incentive to give. The Obama plan would call for the estate tax to be frozen at its current levels, which exempts estates of $3.5-million - $7 million for couples - from any taxation. Estates above that amount would be taxed at 45 percent. (from The Chronicle of Philanthropy)

2008 Tax Law Changes
The IRS has issued a fact sheet with highlights of 2008 Tax Law Changes: Tax Breaks Renewed, Recovery Rebate Credit, Homeowner Relief. There is a lot of material (about three-and-a-half pages worth). The Fact Sheet also links to other pages on the IRS website. (1/13/09 IRS)

Ten Things the IRS Wants You to Know About Identity Theft
1. If you receive a letter or notice from the IRS which leads you to believe someone may have fraudulently used your Social Security Number, respond immediately to the name and address or phone number printed on the IRS notice.
2. If you receive a letter from the IRS that indicates more than one tax return was filed for you, this may be a sign that your SSN was used fraudulently.
3. Another sign that you may be the target of identity theft is an IRS letter indicating you received wages from an employer unknown to you.
4. The IRS has a department which deals specifically with identity theft issues. The IRS Identity Protection Specialized Unit is available if you have been in contact with the IRS about an identity theft issue and have not achieved a resolution.
5. You can contact the IRS Identity Protection Specialized Unit by calling the Identity Theft Hotline at 800-908-4490 Monday through Friday from 8:00 am to 8:00 pm local time (Alaska and Hawaii follow Pacific Standard Time).
6. The IRS Identity Protection Specialized Unit is also available if you believe your identity may be at risk of being stolen due to a lost or stolen purse or wallet or due to questionable activity on your credit card or your credit report.
7. The IRS never initiates communication with taxpayers about their tax account through emails. If you receive an e-mail or find a Web site you think is pretending to be the IRS, forward the e-mail or Web site URL to the IRS at phishing@irs.gov.
8. The IRS has many resources available to help inform taxpayers about identity theft on the IRS Web site at IRS.gov. There you can access information on how to report scams and bogus IRS Web sites. You can also visit the IRS Identity Theft Resource Page, which you can find by typing Identity Theft Resource Page in the search box on the IRS.gov home page.
9. The Federal Trade Commission is also available to assist taxpayers with identity theft issues. You can reach them at 877-ID-THEFT (877-438-4338).
10. Visit OnGuardOnline.gov for protection tips from the federal government and the technology industry.

Reverse Mortages - Be Alert to Abusive Practices
Have you noticed the increasing number of advertisements expounding the merits of reverse mortgages? Smiling celebrities advise seniors their lives could improve immensely if they simply harvested the available equity in their homes. Take an expensive trip, remodel your home, or just have fun with the extra money. They can make it sound pretty appealing.

As the name implies, a reverse mortgage is the opposite of a traditional mortgage. With a traditional mortgage, you borrow a sum of money to purchase a home, then pay off the debt over time. With a reverse mortgage, you receive loan proceeds as a lump-sum payout, an annuity, a line of credit, or a combination of all three but make no payments as long as you reside in the property. The loan, with any accrued interest, comes due when you move out or pass away. To qualify for a reverse mortgage you need to be 62 or older, own your residence, and generally have significant equity in your home. As the promotion and pool of potential customers for reverse mortgages continues to grow, so do reports of abuse regarding aggressive and even predatory sales practices. A few things to analyze if you're thinking about a reverse mortgage include the following:

Ask yourself if a reverse mortgage makes sense. Evaluate alternatives. Conventional solutions such as a home-equity loan might be a better answer.
Reverse mortgages can be expensive. Upfront fees are significant. If you stay in your home just a few years, the effective interest rate can be very high.
Beware of bundled sales pitches. Commission driven salesmen can push life insurance or various annuity products along with a reverse mortgage. You could end up with products you don't need.

If you are considering a reverse mortgage, call an independent investment advisor, estate planning professional or CPA to review your unique situation and available alternatives. (1/7/09 The Willits News)

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