Charitable Gifts from IRAs. We are revisiting this subject, discussed in a prior Newsletter. You may recall that in August, 2006 Congress enacted special provisions to permit IRA accounts to be used for direct charitable contributions in the Calendar Years 2006 and 2007.

Who Benefits? Many people can take advantage of this special limited time opportunity to benefit their favorite charity by directing transfers to the charity from their IRA account. Remember that this opportunity is limited to tax payers over age 70 ½. The biggest advantage of this direct charitable IRA transfer is that it counts toward Required Minimum Distributions ("RMD"). As all taxpayers in this category know, RMD are fully taxable, increasing your taxable income and possible Alternative Minimum Tax ("AMT").

Direct Transfers. The only hitch is that the charitable contribution has to be made directly by the IRA sponsor. All sponsors should be fully geared up to implement these charitable gifts with direction from the qualified donor.

Who Should Examine this Opportunity? This opportunity is definitely worth exploring by anyone over age 70 1/2 who may find himself or herself in any of the following situations:

1.  Charitable Intent. In order to do this you must have a charity you wish to benefit.
2.  No RMD for 2007. Check this out if you haven’t already taken your RMD for 2007, because the charitable gift will count.
3.  Standard Deduction. Taxpayers who use the Standard Deduction should check out this opportunity for saving income tax by using this means of satisfying charitable gifts.
4.  Tax on Social Security. Many taxpayers are paying taxes on Social Security which may be triggered by RMDs.
5.  Loss of Deductions. If your taxable income is high enough, you may be losing itemized deductions because RMDs inflate your taxable income.

Michigan Income Tax. Remember that you don’t get charitable deductions on Michigan Income Tax, therefore you could save Michigan Income Tax on your RMD or larger withdrawal by doing a charitable transfer.

Bottom Line. Check this opportunity out with your income tax advisor if you meet the age requirement and have not yet taken your RMD for 2007. Congress is not likely to get around to extending this benefit (but of course I might just be surprised on this point). On the other hand, if the benefit is extended, be sure to keep it is mind for 2008. You can satisfy charitable gifts and save money at the same time by taking advantage of this opportunity.

If you have other estate planning needs involving charitable giving, or various types of charitable trusts, please contact Jim Modrall III or any of the attorneys listed below. Donald A. Brandt, Joseph C. Fisher, Thomas R. Alward, Edgar Roy, III, Matthew D. Vermetten, Thomas A. Pezzetti, Jr., John M. Grogan, Susan Jill Rice, Gary D. Popovits, Lawrence K. Kustra, H. Douglas Shepherd, Karin Church and Laura E. Garneau at (231) 941-9660