The VHS understands the importance of the advisory relationship to the many acts of philanthropy that have helped make this commonwealth and nation what they are today. Since our founding in 1831, many generous people have made our work possible, very often relying on counsel from trusted attorneys, accountants, and other advisors.
Below are some resources intended to facilitate your professional work (especially where it may impact VHS). Please contact Pam Seay, VP for advancement, at email@example.com with any suggestions for ways VHS could make this site even more helpful.
As a professional advisor, you bring professional learning and integrity to your work on behalf of your clients. Please use these tools as you help your clients with their charitable plans, and feel free to contact us for more information or assistance.
Below is a brief discussion of certain matters that may be useful to you in a client relationship that concerns the VHS.
Part One: Gifts of Personal Property Qualified Appraisals
Much of VHS’s unique and priceless collection came to us as gifts from people concerned for the preservation of the past. The VHS desires that all donors of these books, paintings, furniture and other personal items receive whatever tax benefits they may be entitled to enjoy.
A tax deduction for gifts of property (including many financial assets as well as personal property) depends in critical part upon the gift’s accurate and timely substantiation. The IRS’s requirements in this regard are exacting. Mistakes can invalidate the deduction altogether.
To substantiate an income tax deduction for gifts of property greater than $5,000, taxpayers must provide either a qualified appraisal itself, or a summary of the appraisal, along with the tax return claiming the deduction.
A qualified appraisal is defined in Income Tax Regulation Sec. 1.170A-13(c)(3) and Notice 2006-96, 2006-46 I.R.B. 902 (available at www.irs.gov/irb/2006-46_IRB/ar13.html). IRS publication 561 states the requirements for a valid qualified appraisal, and also indicates when the taxpayer must include the appraisal itself or only the appraisal summary. This publication is available from the IRS website: http://www.irs.gov/publications/p561/ar02.html#d0e1653
Monetary contributions incident to gifts of personal property
Understanding the great expense of maintaining many property items as part of the VHS’s collection, friends of the VHS often accompany their gift of collections with a monetary gift for the care of these items.
The VHS does not usually require these monetary gifts, but such monetary gifts usually constitute charitable gifts for tax purposes, according to federal court rulings. See Hernandez v. Comm’r, 490 U.S. 680 (1989).
Part Two: Charitable Lead Trusts
Today’s low average federal midterm rate (AFMR) often makes your clients’ property worth more inside a charitable lead trust than outside one.
Most practitioners know that today’s low AMFRs lead to extremely low trust valuations, making it possible (by helping VHS) to pass property to heirs at little or no estate tax.
Lead trusts can have a major positive impact on future generations of your family.
Seldom has it been so easy to zero-out trust property for tax purposes.
At 1.6% AFMR (the highest rate seen for the past year)
CLAT payout rate
Trust term to Zero-out Remainder
A number of lead trusts have made truly significant contributions to the growth and success of the VHS over the years.
It may make your role teaching your clients about lead trusts a little easier to start things off with some very basic information, such as that found on our site.