Planned GivingSubmitted by Texas Legacy Wealth Management on December 15th, 2016
December is here and for many families this is a time to think about planned giving. There are many options when deciding how to contribute. Exploring different methods may allow donors to try to maximize their giving benefiting both donor and charity. Appropriate financial planning seeks to make supporting your preferred non-profit organization more effective from a tax standpoint. We will outline a few potential strategies to consider here:
Gifting publicly traded stock. We often see this method used if there is a large long term unrealized gain; however, there are several possible scenarios:
- Appreciated securities
- Long-Term: stock held for more than twelve months.
- Short-Term: stock held for twelve months or less.
- Depreciated securities (Long-Term and Short-Term)
Depending on the donor's circumstance, gifting appreciated securities that have been held for over a year may enable the donor to claim an income tax deduction for the full market value and avoid paying tax on the capital gains. It's important to note that the same tax treatment isn't given to stocks held for less than a year. Deductions for appreciated securities might be limited as per IRS rules.
Using your Required Minimum Distribution (RMD) as a donation to a charity. If you are 70 1/2 or older, you can consider donating your Required Minimum Distribution (RMD) directly from your IRA to the charity of your choice. By transferring directly to the charitable institution, it may be considered a tax-free distribution and might not increase your AGI.
Leaving your IRA to a charity upon death. Leaving IRA money directly to tax-exempt charities upon your death might also be a tax-efficient option. The process is straightforward: simply designate the specific charity or charities as the beneficiaries. Note, beneficiaries can be changed as many times as you want. Upon passing, there may be no federal or state income taxes due on the IRA money when the money is donated to the charity. In order to make sure you are seeking to maximize the potential benefits for both the donor and the charity various gifting techniques should be explored. Texas Legacy Wealth Management is a financial planning based firm and gifting is one of the many areas we explore with clients. Contact us directly to review your overall situation and these options in more detail.
This information is not intended to be a substitute for specific individualized tax or legal advice. TLWM and/or its investment representatives do not provide tax advice. We suggest that you discuss your tax or legal issues with a qualified tax advisor and/or attorney.
Consult your financial professional before making any investment decision.
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.
Investing involves risk including loss of principal.