Planned Giving: Gifts That Make a Difference
by A. Scott White, CFP®, ChFC, CLU
Planned giving is a way to leave a philanthropic legacy and support charities you care about with a major gift made during your lifetime or at death. Although there are many types of planned giving vehicles, bequests—or a gift given through a will—make up over 90% of all planned gifts. Depending on the size of your estate, there are limitations on how much you can leave to your heirs. Planned giving, as part of a comprehensive financial plan, can help ensure your wealth goes to where you determine it is most needed and in the most efficient manner.
Benefits of planned gifts include:
- Donors can create a legacy for themselves or their families.
- Planned gifts may offer tax savings for donors or their heirs.
- Planned giving donors can determine how their gifts are spent.
Most planned gifts are not made with cash, and are made as part of your overall estate or financial plan. For many donors, their significant assets are in their investments, retirement plans, real estate, and ownership interest in their business. Planned giving focuses on how to secure gifts from your assets in a manner that is more beneficial than writing a check.
There are many vehicles to make planned gifts, including charitable remainder trusts, charitable gift annuities and many others. Bequests are the most common and perhaps the simplest way to share your legacy. There are three main types of planned gifts:
Gifts payable to charities upon the donor’s death.
You can give either a specific amount of money or item of property (a “specific” bequest), or a percentage of the balance remaining in your estate after taxes, expenses, and specific bequests have been paid (a “residual” bequest). Gifts payable to a charity upon the donor’s death, like a bequest or a beneficiary designation in a retirement account or life insurance policy, do not generate an income tax deduction for the donor. They may, however, be exempt from estate tax.
Gifts that use appreciated assets.
Donors can contribute appreciated property, like securities or real estate, to a charity. They can receive a charitable deduction for the full market value of the asset, and pay no capital gains tax on the transfer.
Gifts that have income or other benefits.
Donors who establish this type of gift can receive a tax deduction for the full, fair market value of the assets contributed, less the present value of the income interest retained. If donors fund their gift with appreciated property, they pay no upfront capital gains tax on the transfer.
Please contact me if you have questions. I’m happy to discuss philanthropic and estate planning to help you determine the best planned giving options for you.
Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
Any opinions are those of Scott White and not necessarily those of Raymond James.