In the season of giving back, charitable gifts are a great way to give thanks to your favorite charity.

Planned gifts can take various forms and can offer beneficial deductions to your estate.  If you choose to name a charity as a beneficiary of a trust, be aware that doing so may delay the administration process, especially if the charity is named as a remote contingent, or backup beneficiary. 

A better alternative is to name a charity as a direct beneficiary of your retirement plans (IRA’s, 401(k)’s) or bank accounts.  By naming a charity as the beneficiary of a retirement account, you will be reducing taxes paid by your family at your death and will be giving a tax-free gift to the charity.  For example, if you have $100,000.00 in an IRA and the same amount in a life insurance policy, it is more beneficial to gift the life insurance to your family members, as they will receive the gift tax free, whereas if family members are named as beneficiaries of your IRA, they will pay income taxes on that gift.  On the other hand, if you leave a charity as a beneficiary of your IRA or 401(k), they will receive the full funds from the account, without paying income taxes.

Depending on your goals, it may be more beneficial to give to a charity during your lifetime vs. giving them a gift at your death.  For instance, giving to a charity during your lifetime can minimize capital gains on appreciated assets such as real estate or stock, whereas giving to a charity after your death can minimize taxes paid by your family.  

However you decide to give, know that what you contribute to a charity, whether big or small, is always appreciated. To learn more about your planned giving options, contact our office for a consultation.