Investopedia provides us with some things to evaluate, when considering charitable giving in the article “A Primer on Philanthropic Vehicles.” There are many strategies and techniques that can be incorporated into an estate plan, but many people prefer to focus on how they can contribute during their lifetime.
Cash is the most basic donation and is one 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 is one of the most common forms of giving.
Donor advised funds are philanthropic funds created as public charities. Many major custodians offer a version of these funds that take donor gifts and invest the money on the donor’s behalf.
Depending upon the fund, donors can select from investment options offered by the fund or have the money invested in a way suggested by an advisor.
One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security. Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.
Reference: Investopedia (April 16, 2018) “A Primer on Philanthropic Vehicles”