Getting Back to Giving Back
Email This Article Nathaniel RitchisonApril 12th, 2010
As tax season comes to a close, millions of Americans are looking for a way to lower their tax bill. One way to lower your taxes while supporting your favorite cause is to make a charitable gift. With the struggles in the economy still fresh on our minds, charitable fund-raising over the last few years has fallen on hard times. However, as we emerge from The Great Recession we are noticing that our clients’ increasing confidence in the economy is giving way to a renewed interest in charitable giving. Here are some great ways to get back to giving back.
Spread, Don’t Cancel
Maybe you were planning on making a large cash donation this year to your favorite charity, say for $5,000, but now doesn’t seem the right time to commit that amount of money. Why not spread that donation over the next five years in $1,000 increments.
Donate Items, Not Just Money
By donating items such as artwork, collectibles, appreciated stock or real estate, you are able to realize an immediate income tax deduction, while allowing the charity to hold assets that can be sold at a later date allowing them to appreciate.
Update Your Bequests
Since assets in estates have shrunk over the last few years, some people with existing estate plans are reconsidering the amount they want to commit to their favorite charities. By making changes to your bequests, you can specify the maximum amount you would like to pass to your beneficiaries, while any amount over that can go to your charity.
Give and Get with a CRT
A charitable remainder trust (CRT) allows you to donate property or money to a charity, and in return you receive an income tax deduction in the year the gift was made and income (or use) of the property usually until you pass away, at which time the charity will receive the asset. Although a more complex estate planning tool, the CRT can be a great fit for anyone that is looking to lower their income and estate taxes while receiving a steady income in retirement.
Using Donor Advised Funds
The fastest growing charitable giving vehicle in the US, donor advised funds, affords you all the benefits of your own private foundation without having to establish and administer one. Because the fund is housed by a specific public charity, donations made to the fund receive the maximum tax deduction.
Establish a Lasting Legacy
The ultimate in planned giving is the private foundation. By establishing and administering a private foundation, you are able to directly help the causes or individuals you care about most with your donations. However, with increased control comes an increase in cost and administration.
No matter where you find yourself on the spectrum of planned giving, with a little creativity you can develop a plan that meets both your current goals while working within your overall Financial Plan. If you would like more help in developing your Giving Plan and understanding how it fits into your overall Financial Plan, please give us a call and I would be happy to set up a meeting focused on helping you give back to the causes that mean the most to you. As always, be sure to discuss any gifting with your tax preparer and attorney to make sure your gifting plan is right for your particular situation.