A Quick Guide to Planned Giving
Almost any large nonprofit organization has a planned giving department that will guide you through the maze of giving options available. While planned giving can be very beneficial – and profitable for organizations, it’s also an effective way for you to realize significant tax benefits, have income provided, and be assured that the organization or charity that you’ve supported for years will continue to be provided for in the future.
Navigating through the various planned giving options is not for the faint of heart, and most people will benefit from the assistance provided by a financial planner, who can help you create an estate plan that is centered on the planned giving options you’re most comfortable with. Here are just a few of the options to keep in mind when creating your estate plan:
Leave a Bequest - One of the simplest ways to remember your favorite charity is by giving through a will or living trust, designating an amount or leave a percentage of your estate to the charity of your choice.
Life Insurance or Retirement Plans - Designating an organization as a beneficiary of your life insurance, retirement plan or annuity assets is an easy way to ensure that your estate will still be passed down to loved ones, while also making sure that the organization that you’ve faithfully supported will continue to be supported in the future.
Create a Donor Advised Fund - Creating a Donor Advised Fund is a great way to maximize tax benefits immediately while also helping to ensure that any financial gifts you choose to make can continue to be made in the future.
Donate Stocks, Bonds, Mutual Funds or Securities - Donating appreciated investments can provide you with significant tax savings, while also working to increase the impact of your donation.
A Charitable Gift Annuity - Typically, in a charitable gift annuity, you will provide an organization with a large donation. Upon receiving the donation, the organization then provides you with a set income derived from the sum donated, which continues through the balance of your life, with the organization retaining the balance upon your death. It’s important to note that states have different laws surrounding charitable gift annuities, so it’s best to check with a financial advisor.
A Charitable Remainder Trust - Similar to a gift annuity, a charitable remainder trust is gifted to an organization, which in turn provides you with an annual income until the trust is completed, with the charity retaining the remaining funds.
Real Property - If you choose, you can provide the organization of your choice with real property, which includes land, buildings, machinery, and all the property rights associated with the land.
Personal Property - Personal property can also be left to an organization, though it’s best to check first, as many smaller organizations are not equipped with the personnel or expertise to handle disposition of personal property.
Planned giving can be a beneficial way to reap significant tax benefits today, while ensuring that the organization closest to your heart will continue to be supported in the future.
The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable by having the policy approved. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications. Although it is possible to have guaranteed income for life with a fixed annuity, there is no assurance that this income will keep up with inflation. There is a surrender charge imposed generally during the first 5 to 7 years or during the rate guarantee period. Charitable Remainder trusts are used to develop a vehicle for donations to a favorite charity, which also allows for the reduction of income taxes through a charitable deduction and favorable tax treatment at the date of the gift by non-recognition of built-in capital gains. The use of trusts involves a complex web of tax rules and regulations. You should consider the counsel of an experienced estate planning professional before implementing such strategies.
Resources
1. https://plannedgiving.com/what-is-planned-giving/
2. https://www.suntrust.com/resource-center/investing-retirement/article/the-benefits-of-charitable-giving#.WtPZeYjwaUl
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2021 Advisor Websites.
