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Planning can help maximize charitable giving

| Mar 14, 2013 | Charitable Donations, Estate Planning, Planned Giving, Wills / Living Wills

This article originally appeared as a column for the Cleveland Jewish News.

Frequently, charitable donations are made as isolated, one-time events. Perhaps you are checking out at a store and opt to make a small cash donation to whichever organization is sponsored there. Or maybe you’ve left a bag of clothing or household goods on your front porch for a scheduled pickup. Maybe you donate annually to your alma mater, to your synagogue/ shul/temple, to an organization dedicated to finding a cure for a specific ailment, to a particular Jewish foundation, a homeless shelter, or an animal shelter where you adopted a beloved furry friend. Whatever your preferred cause, if your charitable donations are more than sporadic you should consider the financial benefits of planned giving.

When people think of “planned giving” they often think of a bequest made in a will or trust. Such bequests are quite common and may be used for all sorts of purposes, including the transfer of lump sums of money, of other types of assets, or of real property. Often, these gifts will be established as a trust for a particular purpose, such as a scholarship fund for deserving students, or a facility to house the operations of a particular nonprofit.

Certainly, a primary reason to create such a will or trust provision is simply to share your wealth with a personally meaningful cause. But there are further financial benefits to such a bequest. Certain donation vehicles, such as charitable gift annuities, can actually provide annual income to the donor even while providing a charitable gift tax deduction. And, with some careful deliberation and a good estate-planning attorney, you can determine which assets or funds are best to donate, and which are most favorable to leave for your heirs, to minimize their tax impact upon the passing of your estate.

But planned giving is actually much broader than just wills and trusts. Planned giving really refers to any charitable giving that involves a bit more forethought than a spur-of-the-moment Harvest for Hunger donation made at the grocery store.

The planning aspect of this type of giving is quite important – with a little forethought, it is possible to give a charitable gift in such a way it not only benefits the organization, but you as well.

Generally speaking, a gift of money or other valuable property either directly to or for the use of a qualified organization is going to be tax-deductible. The donated property might be clothing, household goods, jewelry, paintings, antiques, and other art objects, collections of things like stamps, coins, books, vehicles, including cars, boats, and aircraft. The deduction will typically be the fair market value of the asset at the time of the gift.

And did you know that capital gains tax wouldn’t be assessed on an appreciated asset that is donated?

All in all, most individuals like to donate. It feels good to help out. But with a little planning, you can donate in a way that benefits not only your cause of choice but also you.

*Andrew Zashin writes about law for the Cleveland Jewish News. He is a co-managing partner with Zashin & Rich, with offices in Cleveland and Columbus.