Charitable gift planning allows our clients to support the organizations and causes that matter to them, while providing immediate income streams and generating valuable tax benefits. Numerous charitable giving strategies exist. Two significant gift options are the "Deferred giving" option and "Appreciated value donation" option.
Deferred giving - under this option you must create a trust to hold the investment. The charitable remainder trust is most popular because the trust can sell stock without triggering the capital gains tax. The downside is that your heirs will not receive these trust assets at the time of your death.
Appreciated value donation - this is a donation to charity of an asset that has enjoyed growth in its value from the time of its acquisition to the time of the gift. The donors can benefit twice under this option, first with a current deduction and second, by avoiding the capital gains taxes. However, there are limits to how much you may donate through this option and the Alternative Minimum Tax may be a problem.
There are numerous other charitable giving strategies in addition to these two. WDC & Associates tax professionals can lend guidance on the creation and compliance of charitable gifting that will maximize your gifting desires while taking into consideration the potential tax savings or impact on you.
Charitable donations can result in tax savings, but donors must be warned that philanthropic efforts cannot build personal wealth. In addition to studying the goal and mission of the charity, donors should scrutinize.
- What percentage of each donation a charity spends on overhead, and
- What percentage of each donation is applied to the group’s actual work.