The end of the year is approaching, and with it comes holiday shopping and gift-giving. While you are considering what to purchase everyone, be sure to add your church to your list.
RumboughThere are lots of ways to give that don’t include cash. Stock gifts seem to be the most popular non-cash gift. If you have owned the stock for more than one year, you receive a charitable deduction for the market value rather than your cost. Your broker can help you make the transfer. Be sure, however, to make the gift in stock so that you don’t have to recognize any capital gains.
With real estate, you transfer the deed over to your church. An attorney can help you with this. To determine the value of the property, you may need a qualified appraisal.
Sometimes you may want to make these gifts, but you are concerned that either you may need the income from them later, or you may want to leave something to your children and you don’t have another large asset. In that case, you may want to consider a Charitable Remainder Trust.
With this type of trust, you place the stocks or property into the trust and the trustee sells the asset, invests it, and then pays you a set percentage each year. Then, after you and your spouse have passed away, your children can receive the same percentage payments you did for a pre-determined number of years, thereby allowing you to pass on your inheritance to them. Many like this feature because they aren’t dumping their estate in their children’s laps all at once.
Once the trust term ends, what’s left in it goes to the church or other charity. The charity won’t receive it right away, but at least they will get it later. You receive the charitable deduction in the year you make the gift. This is a great way to increase your income, teach philanthropy to your children, benefit your church or other worthy cause, and receive a tax deduction. Remember Proverbs 20:21!
– Rumbough, CPA, CFP, is chief operations officer with the Baptist Foundation of South Carolina. Contact her at 800-723-7242. In accordance with IRS Circular 230, any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.