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Making the Most of Your Charitable Giving Strategy

Making the Most of Your Charitable Giving Strategy

Charitable giving can play an important role in many estate plans. Philanthropy cannot only give you great personal satisfaction, it can also give you a current income tax deduction, let you avoid capital gains tax, and reduce the amount of taxes your estate may owe when you die.

There are many ways to give to charity. You can make gifts during your lifetime or at your death.

  • You can make gifts outright or use a trust.
  • You can name a charity as a beneficiary in your will, or designate a charity as a beneficiary of your retirement plan or life insurance policy.
  • Or, if your gift is substantial, you can establish a private foundation, community foundation, or donor-advised fund.

Making outright gifts

An outright gift is one that benefits the charity immediately and exclusively. With an outright gift you get an immediate income and gift tax deduction. Make sure the charity is a qualified charity according to the IRS.

Get a written receipt or keep a bank record for any cash donations, and get a written receipt for any property other than money.

Will or trust bequests and beneficiary designations

These gifts are made by including a provision in your will or trust document, or by using a beneficiary designation form. The charity receives the gift at your death, at which time your estate can take the income and estate tax deductions.

Charitable trusts

Another way for you to make charitable gifts is to create a charitable trust. You can name the charity as the sole beneficiary, or you can name a non-charitable beneficiary as well, splitting the beneficial interest (this is referred to as making a partial charitable gift).

The most common types of trusts used to make partial gifts to charity are the charitable lead trust and the charitable remainder trust. There are expenses and fees associated with the creation of a trust.

Download our eGuide to learn more about:

  • Charitable lead trusts
  • Charitable remainder trust
  • Private family foundations
  • Community foundations
  • Donor-advised funds
All information herein has been prepared solely for informational purposes only and opinions are subject to change. Past performance is not indicative of future results and all investments involve the risk of loss of principal. For information on how these general principles apply to your situation, consult an investment professional.

Article Topic Specialist: Beth Jacobsen

Beth is a Trust Officer with SVA Trust Company, LLC. She administers trusts and other fiduciary accounts for high net worth clients and their families. This includes trusts and other individually managed accounts as well as trust services without investment management.

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