If you are giving while you are living, then you are knowing where it is going.
Are you planning to leave part of your estate to a favorite charity (or two or more) at your death? I mean what turtle finds itself atop a fence post and believes it got there on its own?
Have you ever thought about making that postmortem gift now, instead of then? If no, then there are some valuable benefits associated with your generosity to mull over.
For starters, you get to see the fruits of your contributions in the hands of the charity or charities. Not only is this its own reward, but depending on how those funds are then deployed, you may increase, decrease or eliminate any future contributions.
Now, here are two financial stewardship reasons to give while you live: income tax deductions and estate tax savings.
These and other benefits were discussed in a recent PR Newswire article titled “Benefits of lifetime charitable gifts can outweigh bequests.”
For instance, individuals who give cash to public charity typically are entitled to an income tax deduction of up to 50% of their adjusted gross income (AGI) ... or up to 30 percent of their AGI for donations of other "appreciated" assets (e.g., publicly trade stock) held for at least one year. What if you cannot use the entire deduction all at once?
These deductions can be carried forward for up to five years. Truly a gift that keeps on giving.
Naturally, there are more than a few factors to evaluate when structuring a giving plan. And each donor needs to weigh the pros and cons tax-wise (and otherwise) when it comes to selecting from various assets to donate, as well as the manner and timing of the giving.
As the original article notes, there are other ways to give besides writing a check. Are you familiar with planned giving techniques such as donor-advised funds, private foundations, or charitable remainder trusts.
[Sidebar: Gretchen and I use our donor-advised fund for all of our charitable giving. It affords us anonymity (i.e., the fund is not associated with our family name) when distributions are made and is excellent for record keeping at tax time. The fund was easy to establish and is a cinch to operate.]
These techniques can give you additional benefits, not the least of which are convenience, control, and anonymity. In addition, savvy donors may leverage multiple giving vehicles to maximize the effect of their charitable giving.
While cash and securities are commonly gifted, you can make a significant contribution with real estate, business interests and even tangible personal property (e.g., your Picasso or Bentley). However, these types of donations may be a little more complicated. Independent valuations are essential.
The timing of your gift or charitable donation should be considered, too. Depending on your financial and tax situation you may elect a single year or a multi-year gifting program.
As you can see, there are a lot of considerations to consider.
An experienced estate planning attorney will help you evaluate and then implement an inter vivos gifting plan that is most beneficial for you and those whom you seek to benefit.
*Inter vivos is Latin and means "between the living". In the context of gifting it refers to lifetime transfer as opposed to "testamentary" transfers which occur after death. Actually, I just thought it would be fun to slip a little Latin lingo into this post.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: PR Newswire (March 12, 2015) “Benefits of lifetime charitable gifts can outweigh bequests”