Thursday, October 28, 2021

Spark Kindness

“Kindness is a language the blind can see and the deaf can hear.” ~ Mark Twain

Question: What strategies or techniques do you suggest using to implement the charitable gifting ideas you discussed in a recent column? Our family is ready to get started and take action on this over the holidays.

Answer: It’s great to hear that you’ll be moving ahead with this idea and will hopefully make it an annual family tradition. This is a great way to pass along your values and beliefs via the power of example.

The word philanthropy is derived from the Greek word phil meaning love of, and the word anthropos which means humanity. So the word philanthropy means the love of humanity. That high school Latin class was evidently worthwhile.

In some instances, your desire to do good things may improve your tax situation as well. Private initiatives as gifting strategies also provide you the freedom to select who is the recipient of your gift or donation. Here are a few of the ways to benefit others, starting with the simplest and advancing to more complex strategies.

Sincerely Simple

Writing a check. This is one of the easiest ways to gift, especially for those who give sporadically to a limited number of charities. Of course, you can also donate gently used items and clothing directly to certain organizations.

Donating appreciated securities. This technique potentially helps you avoid paying capital gains on the appreciated portion of the gifted value and you’ll receive an immediate tax deduction. Gifts also have the potential to reduce future estate taxes.

Donor-advised funds (DAFs). Think of this as a charitable checking account. DAFs are popular because they combine the simplicity of direct giving with the benefits of a private foundation – with much less work and commitment. DAFs are sponsored by a charitable organization so you as a donor avoid the cost and obligations associated with creating a foundation, but still have a hand in the grant-making decisions and can even name the fund itself. To get started, you make an irrevocable contribution (e.g., cash or marketable securities) to the fund. You take an immediate tax deduction, subject to income limitations; the fund sells and reinvests the assets, and you help direct when and how the proceeds are used, often with a few simple clicks online.*

Bunching. If you’re charitably inclined but won’t have sufficient itemized deductions to exceed the increased standard deduction, you could group together or bunch deductions by making a large charitable gift during a single year, equal to the total donations you would have made over several years. This may help you take advantage of itemizing in the year of your large donation, while taking the standard deduction in future years. This strategy can work particularly well with donor advised funds (DAFs) as described above.

Volunteering. Donating your time can give you an insider’s view of the organization, its people and practices. Plus, it feels good to give back.

Seriously Sophisticated

Charitable remainder trusts (CRT) are a significant step up for serious donors. The popular CRT is an irrevocable trust that allows you to donate an asset, which the trustee will sell and reinvest the proceeds in an income-producing portfolio. You then receive the tax deduction, as well as a percentage or fixed amount of income. When you pass away, the remaining funds go to the designated charity.

Charitable lead trusts (CLT) are similar to CRTs, whereby you gift an asset that then funds a portfolio, but the CLT reverses the payout order. The charity receives the annual (or lead interest) income for a set number of years; afterward, the remainder passes back to you or other designated beneficiaries.

Gifting life insurance. If you have a policy that is no longer needed for its original purpose, you can use it to maximize a charitable gift and minimize exposure to estate taxes by transferring ownership to a charitable organization or naming the organization as beneficiary. There are other strategies as well. Ask your tax and financial advisors about wealth replacement and maximum gifting using life insurance.

Charitable gift annuity. This is a simple contract between a donor and a qualified charity. The donor contributes cash or assets and is entitled to a charitable tax deduction (subject to income limitations) for a portion of the donation. The charity agrees to pay a fixed sum to designated recipients annually. Any remainder reverts to the charity.

Giving Wisely

As mentioned, year-end giving can benefit you with a tax deduction. Because everyone’s tax situation is unique and the codes are complex, work with your financial and tax advisors before gifting to determine what strategy is best for you as you and your family make a difference. Stay focused and plan accordingly.

Raymond James financial advisors do not render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. *Donors are urged to consult their attorneys, accountants or tax advisors with respect to questions relating to the deductibility of various types of contributions to a Donor Advised Fund for federal and state tax purposes. To learn more about the potential risks and benefits of Donor Advised Funds, please contact Raymond James.

Views are as of October 16, 2019 and subject to change based on market conditions and other factors “Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.”

This article provided by Darcie Guerin, CFP®, Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at 239-389-1041, email

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