There are many ways each of us can help our favorite charitable interest. However, some ways are better suited to certain donors while other methods make more sense for other donors. Following are a few of the many ways that you can use to help your charitable interest of choice thrive.
Give cash outright to the charity. This is the easiest and most common method.
Name the charity the beneficiary of an IRA, annuity, or other tax deferred account. The entire amount in the account passes to the charity without the payment of deferred income taxes.
Give appreciated property to the charity. If done properly, you get a deduction for the full fair market value of the property.
Set up a lifetime Charitable Remainder Trust with the charity as the remainder beneficiary. With a lifetime Charitable Remainder Trust you contribute property to a trust and you receive a fixed dollar amount or a fixed percentage of the value of the trust each year. At the end of your life, or at the end of a term up to 20 years, the property remaining goes to the charity. You get a current income tax deduction for the value of the interest that eventually goes to the charity. You can control how the assets of the trust are invested. This can be particularly important when the asset is stock in a family business.
Give a remainder interest in your home or farm. You can give the charity the right to have your home or farm after your death. You have full rights to live in the home or use the farm. The charity has no right to use the property until your death. You get a current income tax deduction for the value of the interest going to the charity. The value of the interest going to the charity is calculated by using your life expectancy at the time of the gift of the remainder interest.
Set up a Charitable Remainder Trust at your death with the charity as the remainder beneficiary. This is similar to a lifetime Charitable Remainder Trust. However, your children or other beneficiaries would receive the income stream and then the assets would go to charity after their deaths or the specified period of time. Your estate would receive an estate tax charitable deduction for the value of the interest that ultimately would pass to charity.
During your lifetime, donate a minimum amount of $10,000 to a charity and receive a fixed annuity payment for life and an income tax deduction. This is known as a Charitable Gift Annuity.
Give of your time and expertise. However, you will not receive a tax deduction for this type of giving.
This is a sampling of options. A qualified estate-planning attorney can help you select the method which maximizes the income tax, estate tax, and personal advantages of the contribution to your charity of choice.