CHARITABLE GIVING – Lifetime vs. At Death

Charitable Giving


Lifetime vs At Death



1.        Lifetime Giving


·                     You get to see the impact

·                     Control

·                     Income Tax Savings

·                     Estate Reduction



2.        Giving at Death


·                     Leaves a legacy

·                     Preserves principal while you are alive

·                     Estate tax benefits



3.        What is your Motivation?


·                     Give to society

·                     Benefit a cause/organization you feel strongly about

·                     Become involved

·                     Tax savings (income or estate)




1.      Lifetime Giving


Option #1 – Write a Check


·                     Easy


·                     Immediate


·                     Income Tax Deduction


·                     Removed from Estate


·                     You see the charity benefit while you are here



Option #2 – Donate Appreciated Asset


Example – You bought stock for $100.  It is now worth $10,000.  You donate to Do Good Charity.


·                     Simple


·                     Income tax deduction of $10,000


·                     Charity can sell without paying tax on the gain


·                     Asset is removed from your estate


·                     Possibilities – stock, real estate

 1.      Lifetime Giving


Option #3 – Transfer Life Insurance


·                     You have charitable deduction equal to “interpolated terminal reserve value.”


·                     Charity ultimately can receive face value.  (Consider lifetime transfer versus naming charity as beneficiary.)


·                     Additional payment of premiums by donor is additional charitable deduction for income tax purposes.


·                     Face value of life insurance is removed from your estate.  (Be aware of three year rule.)



          Other Options – can also be accomplished at death


Charitable Remainder Trusts


·                     Charitable Lead Trusts


·                     Private Foundations


·                     Charitable Gift Annuities


·                     Donor Advised Funds at Community Foundation


·                     Charitable Funds at Investment Firms




2.      Death Giving


Option #1 – Bequest


·                     Gift is made by Will


·                     Gift occurs after death


·                     Gift can be made to one or more charities


·                     Gift can specify an endowment fund


·                     Estate tax deduction


·                     You do need a will (or trust)



Option #2 – Name Charity as IRA Beneficiary


·                     IRAs are “double” taxed at death in the sense of being included in your estate and being subject to income tax as distributed.


·                     If an IRA is part of your estate and you desire to make a charitable gift at death, this is one of the most tax effective techniques.


·                     This approach is also SIMPLE.  All that is required is a beneficiary designation.



Additional Tax Effective Death Giving Options


·                     Interest on U.S. savings bonds


·                     Accounts receivable


·                     Deferred compensation


·                     Payments on installment obligations


·                     Death benefits from annuities


·                     Accrued royalties under a patent license


3.      Other Considerations


Income Tax


            Not all charities are the same –


·                     50% of AGI v. 30% of AGI


·                     Appreciated property – Full market value to 30% of AGI vs. Cost Basis up to 20%


·                     Unused contributions can be carried forward 5 years



Estate Tax


Federal Estate Tax applies at $1.5 million


·                     Nebraska State Estate Tax applies at $1 million


·                     Nebraska State Inheritance Tax – $10,000



Appraisals required for non-tax gifts over $5,000.



Delivery of gifts must be accomplished to obtain deduction.


© 2009 Parsonage Vandenack Williams LLC

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