3541 Old Conejo Road
If you have the choice of paying taxes ("giving" to the government) or making a charitable gift to a qualified non-profit organization (voluntary philanthropy), chances are that you would choose the latter because it provides an inherent satisfaction of helping others, doing good, and making our world a better place. It also allows you to direct your resources to the cause or benefit of your choice. There can be financial and tax benefits, too, which are like “icing on the cake.”
Whether it’s being a good steward of assets during life or beyond your lifetime, we can assist with establishing a charitable plan as part of your financial, tax and estate goals.
What are charitable strategies? What are the different ways to make charitable gifts?
There are two general types of charitable gifts. One is the more common gift, which is made during your lifetime (“lifetime gifts”). This may be a one-time or perhaps ongoing gift to a qualified non-profit organization. These may provide an income tax deduction for the year the gift is made, depending on your income and other factors such as whether the standard deduction is more advantageous for you. Lifetime gifts may also allow you to give an appreciated asset, such as shares of stock or a piece of real estate, to a non-profit and avoid having to pay capital gains taxes on the appreciation. This is a double benefit because you may also receive an income tax deduction for the full value of the gift.
The other type of charitable gift is a planned gift that provides the non-profit recipient with the benefits after the donor passes away, even though action is taken now to make the gift effective. Using charitable planning, a donor can transfer assets to a non-profit after death, either by establishing a vehicle now (such as a trust) that will handle the asset until death, or by setting up a vehicle that will pay a gift to the non-profit upon the donor’s death — such as by designating a charity as the beneficiary of a life insurance policy. Some planned gifts incorporate methods for a donor to continue to receive income from assets throughout their lifetime while knowing that the assets will generate benefits for a worthwhile cause after the donor dies. Some planned giving strategies provide an income tax deduction now, even though the assets will transfer to the non-profit at the donor’s death. Many planned giving strategies can allow the donor to avoid estate taxes, if any would be due.
There are many different vehicles for making planned charitable gifts, including: charitable gift annuities, private foundations, donor advised funds, life insurance beneficiaries, IRA and retirement plan beneficiaries, charitable lead / remainder trusts.
Each of these methods of planned giving are different, and the one that is right for you depends on your specific financial and tax situation. The important thing to remember is that without proper planning, your intended gifts will not happen as you wished.
We have close relationships with estate planning attorneys and CPAs and can provide referrals if you need them, or we can work with your existing team of professional partners. When handling the interrelated matters of investments, taxes, insurance and estate planning, it helps to have a quarterback who can coordinate with these professionals, manage the pieces of the puzzle, and make sure that all aspects of your plan are being carried out according to your wishes. That is the role our financial advisors can play.
* This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.