Elon Musk of Tesla was asked to fund a six-billion-dollar donation to the UN to address world hunger. He agreed to give provided they presented him with an acceptable detailed plan on how it was to be accomplished. Even such a large gift (2% of his estimated wealth) would not be a permanent solution. Solving world hunger, the effects of poverty, disease, and natural disasters not to mention research and long-term care require on going contributions from all who have means to give. We are all part of the solution and better for the sacrifice of time, change, small one time or regular donations, or a legacy after death thru a will or trust, land, life insurance or an annuity. As an estate planner I encourage my clients to consider gifting through their wills or as part of a trust. There is no limit on estate tax deductions that can be taken for charitable bequests.
Donors age 70 ½ and older may direct lifetime distributions from a traditional or Roth IRA to a nonprofit that counts toward your taking of the required minimum distribution. You effectively bypass income tax on the contribution! You can also avoid estate taxes with death time distributions to nonprofits. The cap for a death time retirement plan contribution is $100,000. There is no charge to update a beneficiary designation form if you decide to add a charity as one of you beneficiaries. These designations can be separate from your will or trust.
Creating a charitable gift annuity or a testamentary charitable remainder trust lets the non-spousal beneficiaries (i.e., children and other issue) of your IRA receive fixed payments of over a longer span of time than the 10-year distribution required by Congress as of January 1, 2020.
If you make a gift of stocks, bonds, and mutual funds you receive an immediate tax deduction for the fair market value on the date of transfer to the nonprofit with no capital gains! You can gift to a specific nonprofit and designate a particular project you like.
When gifting a paid-up life insurance policy, you receive an immediate tax deduction for the cash value of the policy. You have satisfaction knowing you made a significant gift without it affecting your cash now.
Likewise, you can gift a vacation home, commercial building, or undeveloped land. The IRS requires an independent appraisal to establish fair market value and there are additional IRS procedures. If interested check it out online. With these kinds of real property gifts, you can give up to 30% of your adjusted gross income and carry the deduction forward for up to five years. Good news after the gift you are free of property taxes, insurance, maintenance costs AND CAPITAL GAINS TAXES. You can also keep a lifetime interest and pass the property at death via a life estate deed.
Some fun gifting ideas I have noticed this year are The Church of Jesus Christ of Latter-day Saints donation machines – it is like putting money in for a candy bar, but instead you buy a pair of gloves for a homeless person. They are also promoting The Light the World with Love Campaign that encourages you to do some act of kindness each day from December 1st until Christmas. You can find this online at LighttheWorld.org. I have a sign in my kitchen that reads “Kindness Begins with Me.” And I believe it does.
I really like buying a cow, goat, some rabbits, or chickens for a family who then learns to raise animals for their milk or meat at Heifer International and eventually they earn enough to sell the excess and further their self-sufficiency. Oh, and it’s just not Christmas without something for children. Over the years we have been involved through various programs – Secret Santa, Angel Trees, the Smile Train, Make a Wish, and Toys for Tots. This year our ladies’ group at church made fleece blankets for at risk children.
I practice elder law and my office fills shoe boxes with small gifts for home bound seniors through our local programs on Aging.
I read a book a few years back titled Christmas Jars and started saving all my change to give jars of coins at the holidays to whoever my heart directs. I see people all around who need to be lifted with a little cash.
Here’s the final tip: Count your blessings at Thanksgiving. I do which always opens my heart to prepare for Christmas.
DISCLAIMER The information given in this article is of a general nature and does not create an attorney-client relationship. You should always consult with an attorney one-on-one regarding the specific facts of your situation. November 2021