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July 2023
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Leave a Lasting Legacy
The Power of Charitable Donations and Estate Planning
Traditionally, estate planning has always been from the parent’s perspective, following the line of thinking that “I’ll just leave all my assets to my kids.” But this view of estate planning isn’t for everyone; it excludes people who don’t have children, or who are passionate about diversifying their beneficiaries to provide for more than just their kids. That is why our approach to estate planning has evolved to accommodate all lifestyles. We counsel our clients on their available estate planning options, which often includes making charitable bequests after they are gone. Providing for charity serves several intentions; it is a vehicle to continue supporting charitable causes an individual is passionate about during their lifetime, and it shares the importance of leaving a philanthropic legacy while establishing a benevolent way to reduce estate tax liability — something more important now than ever. The federal government is going to significantly reduce the estate tax exemption in 2026. Right now, each U.S. person has $12.92 million they can transfer to beneficiaries, cumulative during their lifetime and at their death, without incurring an estate tax. However, effective Jan. 1, 2026, the government will cut that number by nearly half, to $5 million indexed for inflation, between $6 million and $7 million. We will not know the official amount until the fall of 2025, but this massive reduction leaves many wondering, “How do we reduce the value of our estate and minimize estate tax liability?”
For some, the solution is leaving part of their estate to charity. Making a charitable donation at the time of death reduces estate tax liability, meaning your family may minimize or even eliminate estate taxes. For example, let’s say your estate is worth $8 million, and the exemption is $6 million at the time of your passing. You can donate $2 million, and that deduction keeps your estate under the exemption threshold, allowing your family to avoid the estate tax. Plus, why not choose where your taxable estate goes? You have the opportunity to direct your estate to support causes you care about, rather than paying more estate taxes to the IRS. Another great way a charitable donation can benefit your estate, family, and legacy is through your retirement plan. This is because, under the SECURE Act, most individual beneficiaries of retirement accounts must withdraw the entire account balance within ten years of the owner’s passing. This withdrawal window can be a significant issue for children receiving these accounts in their 40s or 50s, which are likely the highest earning years of their lives. Withdrawals from inherited retirement accounts count as taxable income, which can cause your beneficiaries to pay more in income taxes, particularly if the distribution bumps them into a higher income tax bracket. So, people who wish to be charitable (and perhaps want to avoid spiking their child’s income tax liability) can designate charities as beneficiaries of an IRA or other retirement account. In turn, charities will not pay taxes on the donation since they are not subject to income taxes. Then, individual beneficiaries can inherit your other assets without an income tax hit to them. At the same time, your estate will reduce its estate tax liability. Win-win! Donating to charity at your death is not just to reduce possible estate tax liability. Being philanthropic helps those in need. If you have a charitable cause you have supported during your life, leaving a charity a gift after you pass is a wonderful way to leave a legacy and continue supporting the cause even after you are gone. If you are interested in looking into ways to share your assets with others in a meaningful way or want to learn how leaving part of your estate to charity can reduce estate tax liability, we can help. There are several methods to leave assets to charity, including through a trust, retirement accounts, and donor-advised funds. Call to schedule an appointment with an attorney and we will find the best strategy to meet your goals and leave the world a better place.
—Kimberly Barrot www.FalkBarrot.com
Published by Newsletter Pro • www.newsletterpro.com
AN ESTATE PLANNING MUST Why Everyone Needs Advance Directives
When discussing estate planning, we often think about wills and the disbursement of our belongings after we pass. Yet, there’s plenty to organize, protect, and ensure when we are still alive. One aspect of estate planning we often overlook are advance health care directives, including living wills. Advance directives are a wide category of written instructions covering your health care wishes, and a living will is considered a type of advance directive. If you find yourself severely ill or injured, advance directives help you express your health care preferences if you cannot communicate. What is a living will? While a living will is within the advance directive category, it specifically determines your wishes if you become terminally ill. Not everyone has the same wishes when it comes to end-of-life care, so your living will communicates what medical procedures you would or would not want to undergo if you were either terminally ill or in a coma. Some individuals may only want their life prolonged for a certain amount of time for personal or religious reasons, or not at all. A living will helps the medical staff and family follow those wishes. Different Types of Advance Directives Since it’s a broad category, not all advance directives are limited to terminal illnesses. Various forms of advance directives aim to help
loved ones from having to make stressful medical decisions that may or may not be wanted by the patient. Some forms of advance directives include:
• Medical Power of Attorney: A document that names someone who can make health care decisions for you if you can’t communicate • Medical Orders: Orders created by a medical professional with their patient’s wishes that are shared with other medical professionals. For example, it could detail a do-not- resuscitate (DNR) order. • Psychiatric or Mental Health Directive: A document created by a person with mental illness that details their health care wishes before a possible mental health crisis, when they may not be able to make decisions When it comes to advance directives, every adult should consider establishing their wishes as soon as they can. No one knows what the future holds, and it’s best to arrange your health care wishes before it’s too late.
To Buy or Not to Buy a House
Market Aside, Are You Ready?
Assess your finances. Potential homebuyers should be aware of the roadblocks before making any significant decisions. You’ll need to be entirely sure that your funds are ready to take the hit of both a down payment and a mortgage. Consider your credit, savings, and debt when determining your monetary readiness. These three financial aspects decide whether you’ll qualify for a mortgage. For example, those with credit scores lower than 600 will have slimmer chances and higher prices. Meanwhile, your debts can also hinder your ability to qualify for a mortgage if they’re disproportionate to your income. As for your savings, you will need enough money for the down payment, moving costs, as well as possible expenses associated with owning a home. Everything your previous landlord took care of will now be your responsibility. Even new homes have surprise repairs that will come out of your pocket.
You’re probably hearing conflicting advice when it comes to home buying. While some say a recession is inevitable, others highlight the lowest selling prices in years. However, you should consider the current market conditions as context rather than deciding factors when buying a home. Whether or not the time is right to buy a home depends on your personal and financial circumstances. Real estate market aside, the more important question is this: Are you ready to buy a house right now?
If you feel financially comfortable to undergo the hurdles ahead (with a stellar credit score to match), you should be ready to start looking for a home! Consider some reasons to hold off on buying. While there are plenty of reasons why you should buy a home, there are also countless reasons why now might not be the right time for you. Look at your personal and financial situation and ask yourself: • Is your job secure? Have there been recent layoffs in your company? • Are you feeling pressured by family or friends? • Do your finances need some TLC? • Are you ready to put down your roots? These are just a few issues that can cause a disaster in the home-buying process. You will need to assess your situation and be honest about why you need to buy a home and if you’re financially prepared.
650-463-1550
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TAKE A BREAK
LEARN LIFE LESSONS WITH MR. BACHMANN The Journey of a German Classroom The documentary “Mr. Bachmann and His Class” shows how a small-town German teacher helps his diverse students feel at home. This heartfelt documentary even won several awards, including the Silver Bear, at the Berlin International Film Festival because of its simple, uplifting message. In the film, the rural town of Stadtallendorf has a history of employing migrant workers dating back to World War II. Despite having many immigrants in the city, Stadtallendorf has a history of excluding non-German residents. This divide is an issue that weighs heavily on students. In a classroom of 12–13-year-old students from different countries, Dieter Bachmann uses his authentic positivity to help each student become confident about their own potential. In one scene, after returning graded assignments to his students, he reassures those who scored lower by saying, “These grades do not reflect who you are.” This isn’t to say that Mr. Bachmann was easy on his class. In one pivotal moment, the teacher reprimands a student for acting unkind to a classmate. When the student provides a halfhearted excuse, Bachmann replies, “I don’t really believe that, but I’ll treat it as though it were sincere.” The student can clearly feel the teacher’s disappointment despite no obvious scolding or berating. Mr. Bachmann guides his students with a genuine heart and a steady hand. The affectionate film immerses the viewers in Bachmann’s classroom to witness the evolution of the students. Whether watching those who decide to spend their lunch hour with him in his classroom and others who share their most vulnerable feelings, viewers realize that all of these students needed an educator who showed sympathy and kindness. “Mr. Bachmann and His Class” follows the magnetic bunch until retirement. While there are plenty of films about heroic teachers, this gentle documentary reveals more about how all it takes is genuine interest and effort to change students’ lives.
Inspired by Delish.com GRILLED STEAK SALAD WITH PEACHES
Ingredients
• 1 lb skirt steak, fat trimmed • 1/4 cup balsamic vinegar • 1 clove garlic, minced • 1 tbsp light brown sugar • 1 tbsp vegetable oil • Kosher salt
• Black pepper • 1/4 cup extra-virgin olive oil
• 1 large lemon, juiced • 6 cups baby arugula
• 2 ripe peaches, thinly sliced • 1/3 cup crumbled blue cheese or feta
Directions 1. In a large resealable plastic bag or baking dish, combine steak, vinegar, garlic, and brown sugar. Marinate 20 minutes at room temperature. 2. Remove steak from marinade, coat with vegetable oil, and season generously with salt and pepper. 3. On a grill or pan set to high heat, cook steak until desired doneness. Rest 5–10 minutes, then thinly slice against the grain. 4. In a small bowl, whisk olive oil and lemon juice to make dressing. Season with salt and pepper. 5. In a large serving bowl, add arugula, peaches, blue cheese or feta, and steak. Drizzle with dressing and gently toss.
TAKE A BREAK
Barbecue Concert
Fishing Fourth Independence Larkspur
Park Pool Shade Stargazing Travel Vacation
www.FalkBarrot.com
Published by Newsletter Pro • www.newsletterpro.com
650-463-1550 www.FalkBarrot.com 865 Laurel Street, Ste. 4 San Carlos, CA 94070
INSIDE THIS ISSUE
Maximize Your Family’s Inheritance and Make a Difference
1
The Difference Between Living Wills and Advance Directives
2
Should You Buy a House Right Now?
3
Grilled Steak Salad With Peaches
An Inspirational Documentary Inspires Hope
A Comedian’s Heartwarming Will
4
How He Ensured His Wife’s Happiness Comedian Jack Benny Made a Romantic Request
The idea of creating a will can seem grim for many. We don’t want to ponder our passing and the effect it will have on our loved ones. Our distaste for estate planning is evident, too — only 33% of U.S. adults have a will. Yet, what if we saw estate planning as an opportunity to send a final affectionate message after our departure? That’s exactly what Jack Benny, an iconic radio and television comedian, did for his wife after he passed away. Both starred in the quintessential radio program “The Jack Benny Program” from 1932 to 1965, and the couple was known for their comical disputes and banter. However, his wife, Mary Livingstone, would later confirm that her kind husband was far different from the penny-pinching naysayer he played in his show. For decades, the duo became a must-listen act on countless home radios. Sadly, Benny passed away in 1974 at the age of 80. While his wife was mourning the loss of her husband, she was shocked to discover one final romantic gesture from Benny. Livingstone shared the loving gift with the world in a magazine article dedicated to his life and legacy.
“Every day since Jack has gone, the florist has delivered one long- stemmed red rose to my home,” Mary Livingstone wrote. “I learned Jack actually had included a provision for the flowers in his will. One red rose to be delivered to me every day for the rest of my life.”
Rain or shine, Livingstone was delivered a red rose sent from her late husband until her death nine years later. The loving husband and famous entertainer proves that wills don’t have to be daunting documents; they can be one last way to leave a kind gesture behind. You could also shock your family by leaving your estate to your favorite furry friend! Whatever route you take, a will is sure to maintain your spirit and estate.
650-463-1550
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