Charitable Gifts Planning

Tax Law – Charitable Gifts Planning

There are many ways to help a good cause and help yourself at the same time. For example, you can make a gift to a charity of appreciated stock. If you gift the stock and the charity liquidates the stock, you won’t have to pay the taxes on the increased value of the stock.

If I include a gift in my Will or Trust, what’s the tax impact?

The value of any bequests to a charity is subtracted for the value of your estate before the federal estate tax is calculated after your death. This means that you can reduce estate taxes by giving gifts to charity, though your beneficiaries may not get any more, since the estate is reduced by the amount of the gifts to charities.

What types of gifts should I consider making to a charity?

Gifts to charities take all forms, including stocks, real estate, cash, and life insurance.

What types of questions should I answer prior to seeing an attorney?

(1) Is there a preference for, or do circumstances dictate, a lifetime gift or a testamentary gift? For example, some people may need the money to live on but want to make a substantial donation to a charity at death.

(2) Do you need some degree of retained income, use or enjoyment of the gifted property? For example, some trusts will allow for a person to make a donation to a charity, while continuing to receive a steady stream of income from the gifted property.

(3) Is the need for a federal income tax deduction a driving factor?

(4) Do you wish to provide input to the charity with regard to how the charity uses your donation?