Timing can also be key. “Often a client thinks about a large donation to offset a big gain. We can structure a part of the gain transaction itself as a donation, often significantly reducing the tax cost,” Levi said. Life insurance, whether currently in place but no longer needed or purchased as a philanthropic strategy, can be donated effectively, as can tangible personal property such as art and collectibles, he added.
Seniors looking to donate should have their retirement plans’ required minimum withdrawals (RMDs) paid to a charity, aka a qualified charitable rollover. “If the RMD is $20,000, the taxpayer could have [up to] $100,000 taken from the retirement fund and paid to charity,” Foss said. “The distribution is tax-free, they’ve reduced the fund from which further RMDs are required and they’ve benefited a favorite cause.
“Some requirements are that the amounts must come from an IRA, not a 401(k), SEP or Keogh, and the donor must be older than 70½ at the time of the gift,” she said, adding that for younger donors, appreciated assets work well for charitable gifts. “Either direct gifts to a charity [or by] creating a DAF or private foundation or establishing a charitable remainder trust."