For many, charitable giving goes beyond the occasional donation of outgrown clothes or household items and becomes a lifelong mission.  However, as with everything else, winning requires planning. The positive impact of your charitable dollars is highly dependent on a winning strategy. To take your charitable giving to the next level this year, consider these mechanisms.

  1. The Charitable Remainder Trust – This neat tool allows you to gift cash, stock, or property to the trust and immediately realize the deduction benefits of your contribution. You (or a beneficiary you name) can then collect taxable gains from the fund over your lifetime. The principal gift, and any unused gains, are eventually directed tax- free to a charity of your choosing.
  2. The Donor-Advised Fund – Convenience, timing, and control are the pillars of the donor-advised fund. With this charitable tool, you can pick the optimal times to contribute to the fund and maximize your deduction benefits. As the donor, you determine how the fund is invested and you decide which charities receive monies, while the managing organization handles administration and compliance for a small fee. Custodians like Charles Schwab and Fidelity offer a variation of the donor-advised fund called “charitable donor accounts” where you can gift appreciated securities from your investment accounts, making it easy to set up recurring or one-time gifts to any qualifying charity.
  3. Donate Appreciated Assets and Double Dip on Tax Benefits – When you gift cash to a charity, you receive one tax benefit – a deduction. However, when you gift appreciated assets such as stock, investment securities, or ownership in a business, you secure the benefit of the deduction and also avoid capital gains tax on the asset. A win-win, both for you and the charity!

When gifting within your family

Avoid unnecessary scrutiny as a taxpayer, unexpected tax liability, and penalties. Abiding by these family gifting guidelines may keep you out of trouble with everyone’s favorite uncle – Uncle Sam:

  • Keep gifts under the annual limit of $15,000 per recipient. A husband and wife can gift a total of $30,000 to the same individual (known as “gift splitting).
  • Making tuition or medical payments directly to an educational or medical institution allows you to sidestep annual and lifetime gift limits.
  • Gifts to your spouse and gifts to a political organization for its exclusive use are exempt from family gifting limits.
  • Take care when giving gifts such as cars, housing, furnishings, cash, or securities to an account in a child’s name.  Even gifts made to 529 education savings plans may appear to be covered by the exceptions when in fact they are not; each of these counts toward the $15,000 annual limit.
  • Leverage your professional resources year-round as you plan and implement your gift strategy.  Your CPA, attorney, and financial advisor make up your team of experts, and the best results come when they work together for your financial growth and wellness.

 

Disclosure: The opinions and assumptions expressed herein are those of SYM Financial Corporation (“SYM”) and are subject to change without notice. SYM is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about SYM including our investment strategies, fees, and objectives can be found in our ADV Part 2, which is available upon request. SYM-102