Harlan Lunsford wrote:

- quote -

The difference is that in that case there is no obligation
(either legal or moral) on any person to *make* a
contribution to the charity. Now the "moral" deal may need
a bit of explaining <grin> , but the issue the courts have
worked with in those cases have been that there is a
preexisting agreement, while perhaps not legally enforcable,
to take the action. That is the "moral" obligation that we
get worried about--a transaction structure to "skirt" the
legal obligation but which everyone has agreed will take
place.

--
Ed Zollars, CPA
Phoenix, Arizona

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- quote -

Why would these type of contributions not be tax deductible.
Nobody is requiring the people to make contributions
instead of sending flowers, they are just suggesting it.
(And its not only down south, we did that for my husbands
funeral since I'm allergic and couldn't have a bunch of
flowers in the house)

Beth

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Harlan Lunsford wrote:
- quote -

But how legally binding could such a restriction on a cash
request be?

--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247
EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

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Harlan Lunsford wrote:

- quote -

My first reading was that "newspaper obituary people are
requested ... to ... donate in the deceased name to ...
charity", leading to to ask who "newspaper obituary people"
ARE.

After careful consideration, though, I don't think this
voids the deduction for the contribution. The contributions
are still voluntary....

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MTW wrote:
- quote -

Reminds me of a custom down South where in the newspaper
obituary people are requested not to send flowers, but
donate in the deceased name to such and such a charity. That
sounds like such a condition under which the contribution
would not be tax deductible.

ChEAr$,
Harlan Lunsford

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MTW wrote:
- quote -

You're absolutely right. Generally when testamentary gifts
are given with strings attached, the strings are
unenforceable. If it has to be given back if not given to
charity, it's no gift at all.

Stu

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"salmoneous" <salmoneous[at]aol.com> wrote:

- quote -

You are correct about the tax consequences on an estate
small enough to not pay estate tax. The potential problems
are not tax-related. One problem is that the beneficiary is
under no legal obligation to give it to charity. He/she
could choose to just keep it. You have no way of stopping
that and the charities would have no recourse if they chose
to keep the money. Secondly, (only a problem if you care
about who gets the credit) the gift will be styled as a gift
by your beneficiary not a gift by you.

Brian Bivona

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salmoneous[at]aol.com (salmoneous) writes:

- quote -

It won't really matter to you; you'll be dead.

Yes, a person who inherited tax-free from you would get a
deduction for charitable contributions made with that (or
any other) money. There is no assurance to you, of course,
that this will happen.

Another option, if you have traditional IRAs or 401(k)'s, is
to name the charities as beneficiaries of those plans. This
would be better than having the money go through a
beneficiary, who would have increased AGI from the
distribution even if he gave the whole amount to charity.

Phil Marti
Topeka, KS

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salmoneous wrote:

- quote -

But if you leave the estate to them what will force them to
make your desired contribution.

--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247
EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

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salmoneous wrote:

- quote -

From a purely tax standpoint I suspect the recipient would
be "better off" if they received the inheritance and then
paid the funds over to charity than if the funds went
directly to charity *IF* (and its' a big if) none of the
assets have "IRD" associated with them. Now while defining
IRD (income in respect of a decedent) isn't real easy, the
biggest things that have IRD are:

1. Retirement accounts (401(k)s, IRAs, etc.)
2. Annuities
3. U.S. Savings Bonds (if interest is accrued and not
elected to be reported on decedent's final return)
4. Installment sale obligations

Plus some others we'll ignore. If those assets exist, they
would trigger a tax at either the estate or heir level that
would be recognized and *then* the amount would pass to
charity. Due to limits on charitable deductions (50% of
AGI) and other issues (clearing the standard deduction, for
instance, if that's a problem) some or all of the charitable
deduction might be lost, while the entire balance could be
taxable as income.

Second, it would only work if the recipient weren't
*required* to make the charitable contribution, either
legally or perhaps even "morally" (the "implied agreement"
theory). Otherwise the IRS could argue that this truly
isn't a charitable contribution on the part of the
recipient. While the implied agreement might seem a
stretch, the courts have looked to "moral obligations" in
determining that a transfer wasn't truly a gift in some
contexts. So the more clearly it is communicated to the
recipient that he/she is "expected" to send the money on to
Charity X, the bigger the risk that the deduction might be
challenged. And if you try and put any "teeth" into that
request by giving a penalty for not doing it or an incentive
to do it, the more likely it is that it will be ignored by
the IRS.

So that opens up the third problem--it's very possible the
recipient would simply pocket the funds and not give it to
the charity <grin> .

--
Ed Zollars, CPA
Phoenix, Arizona

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salmoneous wrote:

- quote -

If you leave the money to someone ON THE CONDITION that they
contribute it, they would (in my opinion) simply be
functioning as your "agent" and therefore not entitled to
any deduction. If you want someone to get a deduction, give
the money to charity while you are still alive and/or
consider some form of charitable remainder trust.

MTW

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My wife and I are setting up a very simple "estate plan."
Should we both die, we'd like to leave a portion to
charities we support. The estate would be small enough to
avoid any estate taxes.

Does it make sense to leave money directly to a charity?
Would we be better off tax-wise leaving the money to
somebody and have that person give the money to charity? My
simple understanding is that they would receive the money
tax free, and would get a deduction for the donation.

Am I missing anything?

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