Give Wisely to Maximize Your Charitable Impact

Give Wisely to Maximize Your Charitable Impact

  • 08.13.19
  • Estate & Giving
  • Newsletter

Contribute to the causes you care about with strategies that match your intentions.

Two new studies conducted at the University of Chicago and Northwestern University found that giving to others makes us happier than giving to ourselves. To help you share this joy, here are some ideas for end-of-the-year giving, although there’s no need to wait. Generosity doesn’t have a deadline.

Write a check or donate items

You choose the recipient and how much to give. You may also receive tax benefits. 

Volunteer

Donate your time to get an insider’s view of an organization, its people and practices.

Qualified charitable distribution

Traditional IRA owners over age 70 1/2 can donate required minimum distributions directly to qualified charitable organizations. The money is excluded from adjusted gross income, potentially reducing taxes.

Donate appreciated securities

Receive an immediate tax deduction and avoid capital gains tax on the appreciated portion of their value. Gifts also have the potential to reduce estate taxes.

Use life insurance

  • Transfer ownership to a loved one or charitable organization. Pay gift tax on a percentage of the policy’s value at the time of transfer, but when it’s ultimately distributed, the payout won’t be taxed as part of your estate.
  • Give existing property to your organization of choice and then use any tax savings to fund a life insurance policy with that same organization as beneficiary.

Donor advised funds (DAFs)

Create a de facto family foundation with no legal expenses or administrative and tax reporting requirements. Establish one with as little as $10,000 in cash, marketable securities or mutual fund shares. Make subsequent contributions in amounts of $500 or more. Deduct contributions immediately, and make distributions when you’re ready. The account can be invested and grow tax-free for as long as you want.

Special 529 plan provision

Through “accelerated gifting” – a larger, upfront investment – you can contribute up to five years’ worth of gifts at one time per beneficiary*. Like any gift, individuals can give up to $15,000 per beneficiary; a couple can give $30,000.

Here’s how it works:

Bunching 529 contributions

* If the donor doesn’t survive the five-year period, a prorated amount reverts back to the donor’s taxable estate.

Another option

Consider naming a charity as the beneficiary of your qualified retirement account assets. Because these assets are potentially subject to both income taxes and future estate taxes, you could significantly reduce future tax obligations by gifting “double-tax” assets to charity

Charitable gift annuity

Donate cash or assets and, in return, the charity pays a fixed annual sum to designated recipients or you. Any remainder reverts to the charity.

Next steps

  • Make a list of the people and/or organizations you’d like to benefit.
  • Decide how you’d like to plan your giving – immediate vs. future.
  • Meet with your financial and tax advisors to discuss the best way to accomplish your goals.

Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. While familiar with the tax provisions of the issues presented herein, Raymond James financial advisors are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.

TAG CLOUD