Giving Cash Is Not Your Only Option!

Gifts of assets are a powerful way to give charitably and achieve financial goals, yet they are often overlooked in favor of simpler giving methods like writing a check. When giving from assets, it is important to consider the tax implications and how the gift can best be used by the recipient organization. With thoughtful planning, gifts of assets can provide significant benefits to both the donor and the recipient. In addition to the potential for reduced taxes, gifts of assets can also help to diversify the donor's portfolio and reduce their overall risk. For example, a donor who owns a family business or rental property may choose to gift these assets to a charitable trust. By doing so, they can receive an immediate tax deduction while still maintaining some control over how the assets are used. Ultimately, gifts of assets can be a powerful tool for those who wish to make a lasting impact with their charitable giving.

 

Here are a few of the most common asset-based gifts:

PUBLICLY TRADED STOCK AND MUTUAL FUNDS

Highly appreciated, low dividend publicly traded stocks and some mutual funds are often ideal for charitable gift purposes. For individuals seeking to make current outright gifts, they can receive a current deduction for the fair market value of the assets and avoid the recognition of capital gain income.

 

CLOSELY HELD STOCK

Experienced counsel is needed when dealing with closely held stock, but with good planning it is generally possible to enhance the value of what is retained for the investor’s lifetime, increase what passes to the next generation, dramatically reduce taxes, and dramatically increase benefits to charity.

 

IRAS AND OTHER RETIREMENT PLAN ASSETS

IRAs and other qualified retirement plan assets can work extremely well for individuals during wealth accumulation and retirement. Unfortunately, these same assets can be very ineffective assets to pass down to family. It is not uncommon for 1/3 to 1/2 of the assets to be lost to taxes at the death of the parents, and in some cases taxes consume 75% of the value. As a result, gifting part or all of these assets to charity can make a lot of sense. Because of the tax savings in such an arrangement, family and charity may receive more than would be possible without special planning.

 

LIFE INSURANCE

Some individuals own life insurance that is no longer needed for the purpose that it was originally acquired. In this situation, the gift of a life insurance policy to charity, and the gift of funds needed to make any ongoing premiums, could provide immediate tax benefits to the individual and create the potential for them to make a very significant future gift to charity.

 

FARMLAND OR INVESTMENT REAL ESTATE

Holding farmland or investment property may be unattractive due to management headaches and/or low income Selling may be unattractive due to the taxes that would be due upon sale. With careful planning, farmland and other investment property can be gifted outright to charity, or transferred to a life income plan that may increase financial benefits and produce charitable benefits.

 

GENERAL BEQUEST OF ASSETS

Leaving a portion of your estate to charity can often result in impact beyond your imagination while still blessing your family and loved ones. With thoughtful planning, it is possible to identify the assets that would be best suited for family members to inherit, and at the same time identify the assets that would be best suited for passing to charity.

 

And, here are two highly proven vehicles that can help you facilitate asset-based gifts:

CHARITABLE GIFT ANNUITIES (CGA)

If you need an additional source of reliable income now or in the future, you may be a candidate for a charitable gift annuity. Click here for more information about CGAs.

 

DONOR ADVISED FUNDS (DAF)

A donor advised fund is a charitable giving tool created for the purpose of managing charitable donations on behalf of an individual or family. A DAF "feels" like your very own family foundation, but is much more easy to establish, has lower costs, and yet is very flexible for making gifts on your time frame and to your charities. In addition, there are tax advantages to contributing gifts of appreciated stock and other assets to a DAF prior to sale. Click here for more information about DAFs.
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