Estate Tax Savings – Donating Personal Papers and Effects

IfillSimmons College in Boston recently announced that it will name one of its new colleges after Gwen Ifill, the Peabody Award winning journalist and PBS NewsHour co-host who died last year.  Ifill’s impressive journalistic career started soon after she graduated from Simmons College in 1977.  The Gwen Ifill College of Media, Arts, and Humanities will formally launch in the Fall of 2018.  Simmons also announced that some of Ifill’s personal papers and effects (including some of the signature blazers she wore when moderating debates) were donated to the College, and will be on display.

After prominent individuals die, their personal papers, archives and effects are often donated to an educational or other charitable institution.  The reasons are two-fold.

First, the donation allows the items to be publicly accessible.  They can be studied and the contributions of the prominent individual can be celebrated and remembered.  It can preserve his or her legacy.  Second, the donor may be eligible for a charitable contribution tax deduction which may result in estate or income tax savings.

Here is how the tax deduction may work.  If a prominent individual irrevocably pledges during his or her lifetime to donate papers or other tangible items to an educational or charitable organization, the Executor of his or her estate may deduct the value of the papers and items on the individual’s estate tax return which is filed after his or her death.  If the individual did not make a pledge during his or her lifetime, but the Executor, heirs or beneficiaries decide to donate, he, she or it may be eligible for an income tax deduction.  In either case, tax savings may result.  I do not know whether Ifill pledged to donate to Simmons before her death or whether her heirs decided to donate since then.

The tax reporting of the donation may be complicated.  In all cases, to be eligible for a tax deduction, the taxpayer must report the value of the donated items on an estate or income tax return.  But valuing personal papers and items can be challenging.  An appraiser must value the items, but the IRS may question the reported appraised value, or the deduction.

There may be non-tax complications too.  The donor may wish to impose restrictions on the institution’s use of the items – for example, the manner in which they are displayed, the timing of their release, or other contingencies on use.  Imposing restrictions on the use of the items can reduce their value to the institution, and can also be difficult to negotiate and enforce.

Those wishing to donate personal papers, archives, and tangible items after the death of a prominent individual should seek professional advice.

Image of Gwen Ifill from Wikipedia Commons.

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