PlannedGiving.com - Planned Giving

Scott Janney

What has Congress done?  (Or how could they just sit by and do nothing?)  I hear different versions of this question from a wide variety of people.

One article on a planned giving website starts with, “It’s an extraordinarily uncertain time …”  One boilerplate publication sent by nonprofits ends with, “… the estate tax litigation over 2010 law may last for the next decade.”  Some people in our profession may be trying to fan the flames of hysteria.  Do you want to be one of them?  Does hysteria encourage anybody to put together a good estate plan?

Here’s the short version of what happened, in plain English: 

A law was passed in 2001 that gradually decreased the federal estate tax through 2009.  That law stipulated that if no future laws were passed — and professionals in the field all expected that Congress would pass a new law in those intervening 9 years — the federal estate tax would go away in 2010, and return to much higher levels in 2011.

This fall I attended several meetings with local planned giving committees and a national conference where we discussed what we would do when new estate tax legislation was passed.  Very few people thought that there would be such gridlock that nothing would be passed.  But that gridlock prevailed, and on January 1, no new law had been passed, and the federal estate tax was “accidentally” repealed.

Because of this, at the moment there is no federal estate tax.  Therefore people with large estates who die between January 1, 2010 and the date of any new estate tax law might (or might not) be able to leave estates that are not subject to federal estate tax.  Congress might pass a new law to tax people who die during the rest of the year, might try to make the law retroactive on people who died earlier in the year, might not pass any estate tax law this year, or might not pass any estate tax law next year.  Anybody’s guess is just that – a guess.

So . . . what should you be telling your donors?

• Our charity has an important mission.  You have supported us during your lifetime with generous gifts.  Please consider supporting us through your gifts from your will and/or trust.
• The federal estate tax did not change for anyone with an estate of less than $3.5 million, or for couples with good planning and total estates worth less than $7 million.  So if your estate is smaller than that, there’s no excuse to wait until Congress fixes the wild gyrations in tax rates.  (If Congress does nothing, the estate tax will apply to any estate of more than $1,000,000 starting January 1, 2011.)
• The repeal of the federal estate tax only impacts large estates left by people who die while it is repealed.  If Congress passes a law that is retroactive, the repeal may not help any estates.  But whether or not you die in that window, you need a good will.

This is not a time for charities to give donors a new excuse to sit on their hands by declaring that things are “extraordinarily uncertain.” Wise leaders and responsible charities will let their donors know that it is vitally important to have an up-to-date will and estate plan this year, just like it has always been important. Let’s motivate our donors to do the right thing. Let’s refrain from trying to scare them, which might only cause them to wait for Congress to act. (A note to VirtualGiving.Com clients: all of your planned giving websites have been appropriately updated with 8 points that encourage donors to consider a gift to the specific organization.)

People choose to support your charity because they love what you do or because they are grateful for the services you provide.

[Also by Scott Janney: All Annuitants Are Women and They Lie About Their Age]