Charitable Planning Strategies

Charitable Planning Strategies

 If you have the choice of paying taxes (involuntary philanthropy) or making a charitable gift (voluntary philanthropy), chances are that you would choose the latter because it gives you an inherent satisfaction and allows you to choose who the money will benefit.

 At Lifetime Planning, an experienced financial advisor can help you make your charitable gifts with good stewardship in mind and with the goal of tax-efficiency.

 Whether you have been involved in a charitable activity that you would like to continue beyond your lifetime or whether you would simply like to integrate charitable giving as part of your financial, tax, and estate planning, we can assist you in targeting your charitable goals.

 Those clients that do participate in a high level of charitable giving usually get an enormous amount of satisfaction from making these types of gifts and at times they can provide financial and tax benefits that are like “icing on the cake.”

 What are charitable strategies and 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”) and may be a one-time or perhaps ongoing gift to a qualified non-profit organization.

 Lifetime gifts 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” where the non-profit recipient will generally receive the benefits of the gift after the donor passes away, even though action is taking 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 of the 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 of the 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 of the 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:



Each of these methods of planned giving are different and the one that is right for you depends on your specific financial situation and priorities. But the important thing to remember is that without proper planning and estate documents, your intended  gifts will not happen as you wished.

 An Advisor’s Role in Charitable Planning

 At Lifetime Planning, we have close relationships with estate planning attorneys and CPAs and can provide referrals to them. We also work collaboratively with your team if you already have a CPA and attorney in place. When handling the interrelated matters of investments, taxes, insurance and estate planning, it helps to have a quarterback who can coordinate the professionals, manage the pieces, and make sure that all aspects of your plan are being carried out according to your wishes and in the most effective manner possible. That is a 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.