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Charitable Giving – Leaving a Legacy

Are there certain charities that move you to grab your checkbook? If you value their causes, consider supporting these charitable organizations long term with a program of planned giving.

What Is a Planned Giving Program?

a senior couple working on filing their taxes

Planned charitable giving is a mechanism for donating that can help maximize your gifts, reduce your tax liability, and maintain your assets. Even better, your generosity doesn’t have to wait: You can start giving today.

Types of planned giving take three general forms:

  1. Expectancy gifts promise a donation upon your death.
    • Simple bequests are gifts of cash or property specified in your will. You can also name a charity as the beneficiary of an IRA, annuity or life insurance policy.
  1. Deferred gifts specify a future date for your donation and offer financial benefits now.
    • Charitable gift annuities enable you to give ownership of cash or property to the charity in exchange for annuity payments—a lifetime income stream. You may have some income tax obligations with this type of gift, so check with your financial planner if you are thinking of setting up a charitable annuity.
    • Charitable remainder trusts let you turn over assets to a trustee and receive lifetime income—and often, the opportunity to avoid or delay capital gains taxes (though your payments will pick up a portion of the taxes). Money left in the trust upon your death is gifted to the charity.
  1. Outright gifts are planned donations that occur in your lifetime.
    • Charities often accept assets they can convert to cash, such as stocks, real estate, or personal property. If your stocks have appreciated, donating them may reduce your capital gains taxes.
    • In a charitable IRA rollover, you can donate your required minimum distributions directly to a charity to potentially reduce your gross income.

Planned giving can involve very simple or very complicated steps, so always seek the assistance of a financial advisor to navigate your charitable giving strategies and find an approach that works best for you.