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  • Writer's pictureSarah Morris Ocampo

The Impact of Planned Giving

Updated: Mar 28

The Impact of Planned Giving

Many of our clients here at Morris Law Center view creating their estate plans as more than just “getting their affairs in order.” They see this as an opportunity to control their legacy even after their deaths. Leaving charitable bequests allows a person to communicate his or her values and make a difference even after they are gone. The Greeks have a saying which states a legacy is like planting a tree which will need years to grow. Though you will not sit in its shade, the generations who come after you will.

A charity has a mission. Heaven Can Wait Animal Society, for example, believes that spaying and neutering pets can lead to the deaths of fewer unwanted animals. Planned giving supports the missions of charities like Heaven Can Wait by enabling donors to give larger gifts than would otherwise be feasible. These gifts may take the form of the equity in a home, the proceeds of life insurance, a gift of personal property, or of course, cash. All are appreciated by the recipients during the lifetime of the donor and long after his demise.

Getting Started with Planned Giving

Planned giving can be either a large donation given over time while the donor is alive or a donation that goes to the charity through the estate planning process after the donor’s death.

There are many complicated, intricate ways to structure a gift to a charity in order to maximize the value of the gift to the charity while minimizing the costs to the donor. Most of these are for large, complex estates with diverse assets and needs. Donors from those estates should consult specialists. For most of us, though, there are a few simple, reliable ways to give without hiring a team of experts.

Just Give It

A will, or a codicil to a will, can hand over money to the charity on the donor’s death. This is the simplest way to ensure your support of an organization’s cause continues after your death. A bequest which takes effect upon your death costs nothing during your lifetime.

This outright gift can be a dollar amount or a percentage of the estate. Some examples:

  1. “$10,000 to Heaven Can Wait Animal Society, located at 546 N Eastern Ave #175, Las Vegas, NV 89101” (just an example, of course!)

  2. “25% of my estate after debts are paid to Heaven Can Wait Animal Society, located at 546 N Eastern Ave #175, Las Vegas, NV 89101”

  3. “If my estate at my death is worth more than $500,000, then $10,000 to Heaven Can Wait Animal Society, located at 546 N Eastern Ave #175, Las Vegas, NV 89101”

Cursed by Success

Ever pat yourself on the back for a savvy stock purchase, then realize the capital gains taxes are going to hurt? If you have owned that stock for a year or more, you can transfer it to a charity. Charities are immune to the pain of capital gains, so giving your stock successes to your favorite cause can help all involved.

If you left the stock to your heirs, they would be responsible for the realized gains in the value of the stock. Donating the stock to a charity can avoid those capital gains while still garnering the charitable donation tax benefit for yourself. Giving the stock “really” only costs your estate what you spent on the stock. Once donated to the charity, though, you or your estate could deduct the entire market value of the stock at the time of the transfer. (Note: consult your tax professional for further information on your particular situation.)

This stock donation could be made during your lifetime or after your death. If made as part of a will or a trust, you could enjoy the dividends from the stock during your life before giving it away.

Insure a Legacy

Life insurance is one of those things paid for by the living for the benefit of others after death. If your heirs no longer need the insurance, surrendering the policy to the charity can net you an immediate income tax deduction.

By making a charity the beneficiary of your life insurance, you can salvage a joyful gift from a tragic time. Heirs would have to pay taxes on the proceeds of a life insurance policy, but a charity will not. Even a large insurance payout requires premiums that are much smaller.

Real Estate Keeps It Real

Owning property is usually a good thing, and no one buys land thinking it will someday smother its owner. Over time, though, property can become burdensome. If you’re thinking about moving into senior living, have rental property you’re sick of dealing with, a vacation home you don’t use much, or are just tired of home maintenance, you can give or bequeath that property to your favorite charity.

The charity will either use the property for its own purposes or sell it to fund its activities. Either way, you have avoided a capital gains tax on the home you bought decades ago while also getting a tax deduction for yourself or your estate.

Not done with your real estate? It’s also possible to donate the property but retain the right to live there, rent-free, for the rest of your life. You, of course, would have to maintain the home and pay the property tax during your lifetime.

Eliminate Clutter

Your favorite charity can also use things you no longer want or need. You can get a tax deduction for the item’s fair market value. There are some special rules for giving personal property, and some items may require a professional appraisal, but for the most part, you can give your things to your charity. There are many items a charity can use, such as doggie blankets donated to Heaven Can Wait Animal Society. Other items, such as artwork, need to be sold so the proceeds can help the charity’s mission.

If you want to talk more about this or any other estate planning needs, please feel free to give our office a call at (702)850-7998, or click here to schedule a complimentary 15-minute phone consultation.

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