Gifting to Charities
There are several methods of gifting to charities, from the very simple method to the extremely complicated. Each method has its own tax ramifications which should be considered.
Upon death
Upon the death of an individual, if so provided in one’s Trust or Will, gifts may be given to charities according to the wishes of the deceased. In preparing a Trust or Will, attention should be given to what happens to the gift if the charity is no longer in existence or if the charity should refuse the gift. Many charities have restrictions on the type and amount of gift they will accept.
Gifts given to charities upon death have the usual effect of reducing the gross (taxable) estate so that less estate taxes may be payable.
During one’s lifetime
Gifts given during one’s lifetime have the effect of helping the charity now while also usually giving an income tax deduction to the person giving the gift (there are limitations imposed on how much of the gift can be deducted for income tax purposes). Giving also has the effect of reducing one’s gross (taxable) estate if estate tax is a consideration.
Methods of giving
Normal giving may be accomplished by simply giving the asset or writing a check to the charity. Some people wish to have a gifting program of a certain amount each year. In this case, it is extremely important that your Trust or power of attorney contains instructions for the gifting to continue if you should become mentally incompetent.
Another method of gifting is to set up a private foundation which you would fund. The foundation would then decide, within your guidelines, how much to give each year and to whom the gift(s) would be made.