Stocks, Real Estate, and Gifts of Other Real Property
Asset-based or non-cash gifts are made by donating something of value which the IRS not consider cash.
Stocks, IRAs, mutual funds and real estate fit into the non-cash category. There are favorable tax rules for donating assets that have appreciated in value if you have owned them for more than one year.
One benefit is that you do not have to pay capital gains on the appreciated asset. This can create a significant tax benefit, because what would have been a tax liability can become a tax break. This is often more advantageous than giving cash. To discuss ways to give that have the best tax benefits to you and the most impact on Four Seasons, please call (828) 513-2440.
IRA Required Minimum Distributions
Congress passed a law that permanently extends the Qualified Charitable Distribution provision, so you can now transfer money from your IRA to a charity anytime during the year.
If you are 70½ or older, you can transfer up to $100,000 to a charity tax-free each year — even if that’s more than your RMD. The money counts as your required minimum distribution but isn’t included in your adjusted gross income.
You can make the tax-free transfer from an IRA, but not from a 401(k). The tax-free transfer won’t count if you withdraw the money from the IRA first and then make a contribution to the charity. The transfer must be made directly from the IRA to the charity.
Simply ask your IRA administrator to send a check from your account to the charity, or if you have check-writing privileges, you can write a check to the charity fro your IRA.
Making a tax-free transfer prevents the money from being counted in your adjusted gross income (AGI). That could help you avoid the Medicare high-income surcharge, which could increase your Part B and Part D premiums. Keeping the money out of your AGI could also make less of your Social Security benefits taxable. (Keep in mind that you can make the tax-free transfer from the IRA to a charity but not to a donor-advised fund.) Please consult with your tax-advisor.
Wills, Trusts, and other Bequests
It is easy to make a gift through a will or living trust. A simple provision or amendment prepared by your attorney is all that is necessary. Gifts to Four Seasons in your will or living trust are flexible and may be changed with your life circumstances. Simply:
- Designate a specific amount as a charitable gift.
- Give a specific property, such as real estate, IRAs, or stocks.
- Designate a percentage of your estate as a charitable gift.
- Give the remainder of your estate, after all other bequests are satisfied.
There is no limit on amounts deductible from federal gift and estate taxes for charitable gifts made by will or trust, so no tax will be due on assets given to charity. To plan a charitable bequest, inform your attorney and ask him/her for advice regarding the best form for your gift.
Life insurance allows you to make a much larger gift to charity than you might otherwise be able to afford. Although the cost to you (your premiums) is relatively small, the amount the charity will receive (the death benefit) can be quite substantial. As long as you continue to pay the premiums on the life insurance policy, the charity is guaranteed to receive the proceeds of the policy when you die. Since life insurance proceeds paid to a charity are not subject to income and estate taxes, probate costs, and other expenses, the charity can count on receiving 100 percent of your gift.
Taking out a life insurance policy is actually one of the best ways to leave a charitable legacy. Using an insurance policy with the charity as a beneficiary can be a quadruple benefit if you qualify.