James Zahansky, AWMA®
Principal/Managing Partner, Investment Advisor & Chief Goals Strategist
For many, the holidays are a time for giving back. But before you give to the causes you care about – during the holidays or at any other time – it’s important to choose the right strategy, paying close attention to potential tax and legal implications.
Here are some charitable giving options, along with some important points to consider.
1) Outright Gifts
Outright gifts of cash or property provide charities with immediate resources. Be sure to keep your receipts or bank records to validate any income tax deductions you wish to claim. Keep in mind that you may need a professional appraisal to qualify for a tax deduction on certain noncash contributions.
2) Donor-Advised Funds
3) Charitable Remainder Trusts
Charitable remainder trusts enable the donor to receive income from the trust for his or her lifetime, the lifetime of another person, or a period of up to 20 years. At the end of the specified term, the remaining trust assets are then distributed to a charitable beneficiary.
The greatest benefit of a charitable remainder trust is that you can take advantage of immediate tax benefits while continuing to utilize the assets, as you may deduct the present value of the charitable remainder interest. On the downside, charitable trusts tend to be complex to set up and usually require legal and administrative support.
4) Charitable Gift Annuities
A charitable gift annuity is a split-interest gift made directly to a charity that provides you, your spouse, or a family member with fixed income payments for life. The charity typically ends up with about half of your donation, while you get an immediate tax deduction and some guaranteed income. Keep in mind that an annuity is a contract between you and the charity, and your return isn’t guaranteed by the government.
5) Private Foundations
A private foundation is a charity established by an individual, family, or corporation. Although it offers donors a great deal of control over their gifts, a private foundation can be costly to administer, and it must adhere to a strict set of rules designed to ensure that it carries out its charitable purpose.
If you wish to give to charity posthumously, you may make bequests by way of your will, trust provisions, or beneficiary designations. Although bequests offer simplicity and are easy to set up, they are not income tax deductible during your life
7) Do Even More Good By Planning Well
With all the options available, choosing the best way to give to charity or family members can seem overwhelming. But charitable giving is an important and meaningful component of financial planning for many people. If you’re one of them, it’s best to give as part of an overall financial strategy that’s designed to help you achieve all of your financial life goals, including supporting the causes you care about.
We help our clients do this every day through our strategic Plan Well, Invest Well, Live Well process. Contact us to see how we can put that process to work for the benefit of you and your loved ones.
Presented by Principal/Managing Partner James Zahansky, AWMA®. Prepared by an independent third party for Commonwealth Financial Network®, copyright 2021. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259, 860-928-2341. http://www.whzwealth.com.