Houston Estate Planning and Elder Law Attorney Blog
Even with the new tax laws in place, there are still advantages to philanthropy, at all levels of giving.
There are many ways to support causes that matter to you. Some charitable giving can be incorporated into your estate plan, according to Investopedia’s article, “A Primer on Philanthropic Vehicles.” However, some people enjoy giving while they are living, to have control over their generosity and enjoy the positive impact their giving has on others.
Cash is the most basic donation and is one that most people know about. That’s as simple as writing a check to the charity or other tax-qualified organization of your choosing.
Gifts of appreciated securities, like shares of individual stocks, mutual funds, ETFs, or closed-end funds, can be made to qualified organizations. After contacting the organization directly to confirm they can accept such gifts, transfer the shares from your account to the brokerage account of the organization. You get the tax benefit of the charitable contribution, based on the market value of the shares at the time the contribution is made, and you won’t be subject to the capital gains that would incur, if the security was sold outright. This can be a large amount for securities that have been held for some years with an extremely low-cost basis.
You can also choose to gift non-securitized assets. With real estate, stock in a privately held business, art, or collectibles, the value of the asset at the time of the gift is deductible, like publicly traded securities. Similar to publicly traded securities, you also won’t be subject to capital gains tax due on the amount of unrealized appreciation of these assets. However, the charity needs to be able to take these types of assets as gifts. Contact the organization and make sure that this is the case. You’ll usually need to have a third party conduct an appraisal of the asset to be donated, to determine its value.
Giving directly to the charity by donating unrestricted funds is one of the most appreciated forms of giving, since it allows those running the organization to use the money in ways that are most always not so visible but are just as necessary.
Donor advised funds are offered by many brokerage houses. They are philanthropic funds created as public charities that invest money on behalf of the donor. Donors can usually designate the recipients of their donations. The donor advised fund allows donors to gift several years’ worth of donations at one time, receiving credit for the gift for tax purposes in the year of the donation, but spreading them out over years.
Talk with your estate planning attorney about how to make charitable giving a part of your estate plan, and maximize its benefits for your estate.
Reference: Investopedia (April 16, 2018) “A Primer on Philanthropic Vehicles”