ESTATE & GIVING
Contribute to the causes you care about with strategies that match your intentions.
Two 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 year-end giving, although there’s no need to wait. Generosity doesn’t have a deadline.
Donate your time to get an insider’s view of an organization, its people and practices. If you still prefer to limit in-person interactions, consider opportunities that support social distancing (like drive-by food collections, for example) or allow you to give back remotely (such as mentoring or tutoring via video chat).
Qualified charitable distribution
Traditional IRA owners can make required distributions directly to qualified charitable organizations. The money is excluded from adjusted gross income, potentially reducing taxes. This means you can enjoy helping a worthy cause while simultaneously reducing your taxable income.
Donate appreciated securities
Receive an immediate tax deduction for the current value of the stock and avoid capital gains tax on the appreciated portion of their value. Gifts also have the potential to reduce estate taxes. Gifts of securities are deductible up to 30% of your adjusted gross income, depending on where they’re directed.
Use life insurance
One option is to 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.
Or, consider gifting property to an organization of your choice and then using tax savings to fund a life insurance policy to benefit other beneficiaries.
Donor-advised funds (DAFs)
Create a de facto family foundation with no legal expenses or administrative and tax reporting requirements. Deduct contributions immediately, and recommend distributions to your favorite charities when you’re ready. The account can be invested and grow tax-free.
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 $16,000 per beneficiary; a couple can give $32,000.
Consider naming a charity or donor advised fund 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.
Other strategies you may consider include charitable gift annuities, pooled income funds, charitable remainder trusts and charitable lead trusts. Your financial advisor can walk through the characteristics of each and, together with your tax and legal professionals, develop a strategy that fits your charitable intentions.
- 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.
* If the donor doesn’t survive the five-year period, a prorated amount reverts back to the donor’s taxable estate.
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.