giftplan

Congress recently enacted the most sweeping tax legislation in almost two decades. How do these changes impact you now? What will they mean to your future financial security?

The changes represent good news for both you and Samford University. Changes in income, estate and gift taxes mean most Americans will have increased freedom to spend for current living, save for future security and support causes more in keeping with their own priorities.

For instance, income tax rates are due to decline steadily until 2006. Simultaneously, gifts to Samford continue to provide income tax charitable deductions to individuals who qualify. In fact, 2001 might be a good time to plan a gift to Samford and receive maximum income tax benefits. Likewise, greater discretionary income over the next few years due to decreasing income tax rates could mean more money for individuals as well as support of Samford.

"The primary reason for charitable giving has always been the desire to help make this world a better place, whether you are helping individuals or institutions, to give something back," said J. Wray Pearce, CPA, senior partner of Pearce, Bevill, Leesbury & Moore of Birmingham and chairman of the Samford Planned Giving Advisory Board. "The tax benefits play a secondary role, and that will remain true under the new law."

There are more benefits that should help both individuals and charitable institutions.

Both parents and grandparents will benefit from several new provisions for saving for higher education expense. Child-care credits are increased, and limited relief from the so-called “marriage penalty” will be phased in. After providing broad-based relief for lower-income Americans, the new law will gradually restore full benefits of exemptions and deductions for all taxpayers, regardless of income level.

One of the more controversial changes is the gradual elimination of the estate tax and then immediate reinstatement in 2011. Do the new rules mean we can forego estate planning? Absolutely not. Periodic estate planning checkups, which have always been wise, remain vitally important.

"Life-income charitable gifts should still be considered in an estate plan," said Dale Splawn, CPA, of Mackle, Splawn, Tindall & McDonald of Birmingham and a Samford trustee. "They provide a way to convert appreciated assets to an income stream in a tax-efficient manner."

Half of Americans currently subject to estate taxes will no longer have that burden once the new law begins to phase in January 1, 2002. About 98 percent of Americans will not pay estate tax. That should be good for Samford and every other charitable institution. A recent survey showed that the more estates were taxed, the less was left to charitable institutions in terms of percentage. Now, the tax burden will be less, so that more money may be left to family and causes such as Samford University.

Finally, Congress made it easier for retirement-plan beneficiaries. Retirement plans continue to be
"tax-cursed assets," subject to combined taxes at death of 50 percent or more. However, it is now easier to leave these benefits to Samford and other assets to family, thereby engaging in tax-wise financial planning.

The secret to taking advantage of this increased giving freedom is education. The Office of Gift and Estate Planning at Samford can be a helpful information resource. Contact the office at (205) 726-2366, toll-free at 1-877-782-5867 or by E-mail to giftplan@samford.edu.

Ask about the office's new free E-mail service, which provides informative professional updates on such issues as tax laws, Social Security, Medicare and financial markets, along with stories and articles about how charitable estate planning may help you reach your goals.

Visit Samford's GiftLegacy Web site at www.samford.edu by choosing "Alumni & Giving" and "Giving to Samford." Samford will host a national satellite teleconference, "Maximum Tax Savings in the Tax Reform Act of 2001," on October 11, 2001.