Estate planning ensures control over your assets and documents your wishes. For investors, those “wishes” often include charitable gift planning, so, at Geyer Law, our attorneys were very interested in the latest blog post by Tom McAllister CFP®.

With the Dow above 23,000 and the S&P 500 Index well over 2,500, McAllister says, investors might be reluctant to sell and pay capital gains tax on their profits. So, he says, he’s suggesting practical things we can do that have nothing to do with “whether the market is too high or headed lower”. Those practical moves involve charitable gifts of stock, which give investors an income tax deduction with no capital gains, while allowing them to “rebalance” their portfolios by diversifying their holdings, the financial planner explains.

McAllister is referring to “now” charitable giving, cautioning investors to “proceed in a tax-smart way.” Surprisingly, he finds, 90% of high net worth households who make charitable donations do so with cash, often the most expensive asset to give to charity! As an example, the author compares the tax difference of making a gift to a charity of $50,000 worth of stock that has $30,000 of unrealized capital gains. If the investor first sells and pays the tax, the net gift might be only $42,800. A gift of the stock itself might generate a potential tax savings of $19,800 to the investor, while the charity would get the entire $50,000.

Our Indiana estate planning attorneys often discuss with clients different ways to incorporate charitable giving into their “later” planning as well. Examples include:

1. Specifying a contribution to a charity in your will
2. Designating a charity as beneficiary of an IRA
3. Creating a split interest trust (you receive part of the benefit; the charity
4. receives part)
5. Using a donor-advised fund to give during your lifetime and beyond

In fact, at Geyer Law, as we assist clients with a periodic review of their estate plan, one important topic involves charitable planning. Are you in a different position when it comes to donating certain assets to charity than perhaps a year or two ago? Has your tax situation changed? Has “increased awareness of issues” made getting involved with the right charity seem more important? Have you learned of a charity that seems to be in better accord with your principles than the ones to which you’ve donated in the past?

The right time to make charitable gifts might well be now AND later!

– by Cara M. Chittenden