Bigger Estates - Fewer Estate Taxes

According to a new report from the IRS, the number of Americans who left large fortunes increased, but the overall amount of estate taxes declined.

A major factor was the decline in the estate tax rate, and increases to the exclusion rate that were passed as part of President Bush's tax overhaul in 2001. Estate taxes only apply to estates greater than $1 million, up from $675,000, and double for married couples.

The number of estates reporting income over $20 million increased nearly 8-percent, form 469 to 505, and the average value these estates was $62 million. Overall the estate tax generated 20.7 billion in 2003, a decline of more than 12% from estates of $1 million or more than in 2001, despite a 1.4 percent increase in total value of such states.

While the maximum estate tax rate is 49% (for 2003), and will decline, 1% each year following (48% in 2004, 47% in 2005, 46% in 2006, and 45% 2007-2009), the average estate tax paid by estates of $1 million-$2.5 million feel to 11.2% from 15.2. For the ultra wealthy, their average estate tax rate was dropped to 16.5% from 18.4%.

Wealth Managers - Is Yours Certifiable?

The Wall Street Journal reports today that the growth, and increased competition in the high-net-worth marketplace has spawned a number of programs to train and certify advisors in the field of wealth managment.

According to the article the programs seem to fall into two camps: "certificate courses that run for a matter of hours or days, and graduate programs that last a semester or two." The article opines that "While many of the courses offer rigorous training, others are little more than marketing ploys, making the task of finding qualified advisers even more confusing," or as one industry expert said "It's a little bit of a Wild West out there."

Among the new programs being established include New York University, The Wharton School of the University of Pennsylvania, joining programs started by The College for Financial Planning, Investment Management Consultants Association, and the American Academy of Financial Management.

Stupid Tax Tricks

Forbes.com has a posted an insightful article on donor managed investment accounts (requires registration). This new charitable giving vehicle has received some press lately -- recently profiled in the Wall Street Journal -- but it has a number of shortcomings, and its long-term viability is uncertain. We have also provided a side-by-side comparison between donor managed investment accounts, donor advised funds, and private foundations. E-mail me to request your copy.

Where We Have Been, Where We Are Going

It has been a year since we updated our Weblog, and that is for many and varied reasons. This is not for a lack of commitment. We have gone through a number of changes, and in the future, you should see regular posts online.

In addition, we will be integrating our Weblog onto our host website - National Philanthropic Trust (www.nptrust.org). We are rebuilding that entire site form the ground up, incorporating a new brand, and adding a number of features that will provide philanthropists and their advisors a host of tools, information and resources. As all things on the web, these will be rolled out over the next several months, but we are making progress.

For those who have expected more updates, we thank you for your patience. For those of you new to our site, welcome! We encourage and look forward to your comments, ideas and suggestions for what we can do to improve the content of our site. Contributors are our best sources.

Interesting Fact: Wal-Mart Equals Philanthropy
For those of you looking to add an interesting statistic in your keynote address or cocktail party conversation, some stats I read in a recent New York Times article about Wal-Mart, the largest retailer in the world, combined with my sources in the nonprofit sector are quite intriguing.

Wal-Mart (1)
1.4 million employees
$245 billion in sales
$10-14/hour - the average wages and benefits of a full-time worker

Philanthropy
1.4 million nonprofit organizations (2)
$241 billion in total giving (3)
$16.54/hour- the average value of volunteer time (4)

Sources:
1. New York Times, Wal-Mart, Driving Workers and Supermarkets Crazy, October 19, 2003
2. Internal Revenue Service, Exempt Organizations Business Master File (2003)
The Urban Institute, National Center for Charitable Statistics, http://nccsdataweb.urban.org/
3. Giving USA 2003, AAFRC Trust for Philanthropy
4. Independent Sector