Whether you are single, married, raising a family, or planning for or enjoying retirement, your financial security and that of your loved ones will be affected by the plans you make for your estate. Below are a few options to help you protect the Bay and its watershed, and enhance your financial well-being and that of those you care about most…
- Support the causes you care about with your will – This is the most common way people provide for their loved ones in the future, but it can also be a thoughtful way to make charitable gifts. By having your attorney revise your will or add a simple amendment, you can provide for a gift of a specified amount or a gift of what remains after you provide for loved ones.
- Give through a revocable living trust – A living trust is a legal arrangement that allows a trustee to hold title to assets and manage them for beneficiaries. They have become a popular alternative to a last will and testament. A revocable living trust can both minimize the expense and delays of probate. Much like a charitable provision in a will, these gifts are tax-deductible and are designed to take effect only after first providing for your loved ones.
- Gifts that provide you with a fixed or variable income – There are ways to give while enjoying an additional source of income for life or other period of time. Generous payments based on your age or a pre-determined payout can be a welcome supplement to your retirement income. When the payments end, funds that remain are given to your beneficiaries. You may also realize capital gains and other tax savings as well.
- Making a gift while providing for your loved ones – If you wish to make a gift over time, for which assets will ultimately be returned to you or your loved ones, you may be interested in a charitable lead trust. Under the terms of this gift, assets are transferred to a trust that makes payments to beneficiaries for a number of years that you choose. At the end of that period, assets are transferred to those you name. This can be an effective way to control when an inheritance will be received while lowering or eliminating gift or estate taxes.
- Making a gift of life insurance – Your need for life insurance may change over time. Insurance policies that you originally purchased for additional income or payment of taxes may instead be used for other purposes. You can name a beneficiary to receive all or a portion of the proceeds of a policy. Or you may wish to make a gift today of a policy you no longer need and perhaps benefit from immediate tax savings. In either case, future premiums can be tax-deductible.
- Giving through retirement plans – Funds remaining in your retirement plans can be subject to taxes, so it can be wise to make gifts from these accounts while leaving other assets to loved ones. Whether you participate in a company plan or have an individual retirement plan, you may have more funds than you need. In that case, it may be convenient to make a charitable gift from retirement assets. If you are over age 70 and 1/2 you can also make a lifetime gift of up to $100,000 per year from your IRA. This gift qualifies as part of your Minimum Required Distribution if one is required.
- A lasting legacy – With any of these options, you can make meaningful gifts while you also provide a tribute to a loved one. There may be no better way to honor a loved one or their memory! These types of gifts can be particularly thoughtful on Mother’s Day, Father’s Day, upon the birth of a child or grandchild, on a birthday, or a wedding anniversary.
Possible Tax Benefits
- Income tax – Individual taxpayers who itemize deductions in 2021 are generally allowed charitable deductions for gifts to qualified charitable recipients of up to 100 percent of their adjusted gross income (AGI) for gifts of cash, and up to 30 percent of their AGI each year for gifts of securities and certain other property that have increased in value. Individual taxpayers who do not itemize may be able to deduct up to $300 ($600 on a joint return) in 2021 for cash gifts to qualified charities. You may also enjoy additional benefits as a result of state income tax savings.
- Capital gains tax savings – When you give property that increased in value since you have owned it, there can be additional tax benefits. Under federal income tax law, you may give property that has increased in value and been held for more than a year, and deduct the full fair market value of the property. You also do not incur capital gains tax at the time of the gift.
- Estate and gift taxes – Your assets may be subject to federal estate and gift taxes. As illustrated in many of the options above, certain gifts can provide income for you or others while also minimizing estate and gift taxes.
- Check with your advisors – Tax laws are subject to change; we recommend discussing your plans with your professional advisors.
To learn more, please contact Denise Swol, Director of Philanthropy at or (410) 216-9441
The purpose of this article is to provide general gift planning information. It is not intended as accounting, legal, or other professional advice. For assistance in planning charitable gifts with tax and other financial implications, you should obtain the services of appropriate advisors. Consult your attorney for advice when your plans involve the revision of a will or other legal document. Tax deductions vary based on applicable federal discount rates, which change often.