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3 smart ways to give in the current economic climate
The best way to make a gift may depend on the current economic climate, your financial situation and your stage of life. Here are three gift options:
1. Gift of appreciated stocks
Situation: The total value of your portfolio of securities has decreased this past year, but that portfolio includes some stocks that have appreciated in value since you purchased them a number of years ago and some that are worth less than you paid for them. Because you have recently sold some of your stocks, you are holding a significant amount of money in cash. What can you do if you want to help us meet a current need and maximize your tax savings?
Suggestion: Consider contributing outright some of your most highly appreciated stocks. Then use some of your cash to repurchase those stocks or to buy other stocks of comparable quality. You will not be taxed on the capital gain, and you will receive a charitable deduction for the current value of the contributed stocks. The purchase price of the replacement securities is your new cost basis; so if you sell those stocks in the future, you will be taxed only on gain accruing from this point.
2. Percentage bequest
Situation: You want to make an impactful gift, but because of uncertainty about the economy and your personal circumstances, you are not comfortable making a large gift at the present time.
Suggestion: Consider updating your will and including a charitable gift for a percentage of whatever remains after paying expenses and specific bequests. This is a revocable future gift, so you can modify it at any time. An alternative, which may be better from a tax standpoint, is to name us as beneficiary of remaining taxable retirement funds in plans and IRAs, and give other assets to heirs.
3. Gifts that pay you income
Situation: You want to ensure you have enough income to maintain a good quality of life during your retirement years. You might consider making a gift today if it would not diminish that income.
Suggestion: There are gift arrangements that allow you to contribute cash or stock and receive an income stream for life. Often, the income from that gift will be larger than the interest and dividends you are currently receiving. We would be pleased to prepare a personalized illustration describing the payments you would receive and the amount of your deduction. You can avoid tax on the capital gain if you transfer appreciated assets, such as securities. There is also an option for those who wish to transfer appreciated real estate, such as a vacation home that isn't being used. |
