The third giving option in this series is Donor Advised Funds. A donor advised fund is an investment account established through a reputable investment advisor. You can donate cash, stocks, real estate or other assets and receive an immediate charitable tax deduction. However, the gift grows in the account until you designate what IRS-qualified charity the funds should be distributed to. This allows your gift to grow income and capital gains tax free, over time, while permitting you the freedom to decide to whom, and when, the gift should be distributed. As a note, once money is deposited into a donor advised fund it cannot be withdrawn for your own benefit.
The second part to our Giting Series discusses the idea of a One time, Direct Gift to Charity. The reasons for giving are varied, but we are blessed to help our clients give strategically so that our client’s gift can help establish and continue their legacy.
One-time, Direct Gifts to Charity: This has the dual effect of reducing your income taxes, and your estate for tax purposes. There is no limit on the amount you may give directly to charity. The IRS defines charity as an “exempt organization;” you may check the IRS website to confirm that an organization is exempt at https://www.irs.gov/charities-non-profits/exempt-organizations-select-check. You may choose to gift real property, stock, or other business assets, which would allow the charitable organization to receive the entire value of the sale, and not incur any capital gains taxes.
There is never a bad time to want to give. The reasons for giving are varied, but we are blessed to help our clients give strategically so that our client’s gift can help establish and continue their legacy. This series of gift giving will go over six ways of giving. The first one being: One Time, Direct to Individuals :
You can give one-time, direct gifts to individuals. The IRS Code limits the gifts one person can give to another person to: $14,000.00 per year; or, an unlimited amount directly to a medical facility for another person’s medical expenses; or, an unlimited amount directly to an accredited education institution for another person’s education expenses. Unfortunately, funding a 529 Plan or Education Savings account does not qualify for the education gifting exemption. This means that you may gift up to $14,000 to one other person, but also help them by directly paying for medical or educational expenses. If you are married, you may each give the cash amount so that you can gift $28,000.00.