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Dec 13

‘Tis the Season for Giving

During the holiday season, you may want to give to a charitable organization that’s important to you.  Giving to a charity can consist of volunteering your time, writing a check, or donating through other means, such as a charitable trust.  Whatever your method of giving, make the most of your gift.

Choosing a Charity

All charitable organizations are not equal.  Do your research to learn about an organization’s mission and accomplishments.  Your money will go farther if you choose one that uses donations primarily to pay for your programs instead of administrative costs.

Giving Guidelines

If you decide to donate directly to a charity, writing a check may be more effective than using a credit card since the card issuer may charge the charity a processing fee.  A donation of appreciated stock can be a tax-effective alternative to a cash gift.

Trust Gifting Strategies

You can make a substantial donation to charity while also benefiting your family (or yourself) by giving through a charitable trust.

Charitable lead trusts.  This trust will pay a specified amount to a charity for a specific period of time.  At the end of the trust period, the trust assets pass to the person or persons you’ve named as the trust’s remainder beneficiary.  For example, you could name a child or grandchild as the remainder beneficiary so you would be helping out a charity and a loved one.  You can potentially reduce gift, estate, and income taxes by giving through a charitable lead trust.

Charitable remainder trusts.  You can set up a charitable remainder trust to pay you, you and your spouse, or another non-charitable beneficiary an income (at least annually) for life or a term of up to 20 years.  At the end of the trust term, the charitable organization you’ve chosen will receive the remaining trust assets.  You can take a charitable income-tax deduction in the year of the contribution for the present value of the charity’s remainder interest, subject to limits.  And the value of the gifted assets is removed from your estate for gift- and estate tax purposes.

The information in this article is not intended to be tax and/or legal advice and should not be treated as such. You should consult with your tax advisor and/or attorney to discuss your personal situation before making any decisions.

Additionally, If you are looking for additional help, seek help from a CERTIFIED FINANCIAL PLANNER™ Professional that can look at your individual situation holistically.