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Giving with Love, Purpose, and Practicality: Making the Most of your Giving

In Sarasota it seems love is all around throughout the year. If you are considering sharing your success by donating to charities or making gifts to family, read on to learn how to make the most of your giving.

Presented by Allegiant Private Advisors February 15, 2019

Giving to nonprofit organizations can be an important and rewarding part of many peoples’ lives. Motivations and methods for charitable giving are often complex and personal: some give their time or energy, others give financial assets, and some donors choose to make gifts of real assets like property or cars. Making a difference in the lives of others may fulfill a passion project, provide a way to stay involved in the community, or create a legacy for generations to come. No matter your motivation, you can make the most of your giving by speaking with your financial advisor and tax advisor about strategies to maximize your financial gift.

There are some general ground rules for effective giving.  First, understand that in order to receive a tax benefit from your gift, you must contribute to a qualified tax-exempt organization. (You can search the IRS database online to verify an organization’s status.) Make sure to keep records of your gifts and obtain receipts.  Due to the increased standard deduction this year, some people may find that they are no longer itemizing their deductions, which was the typical way to receive a tax benefit for charitable gifts. If your tax advisor indicates that your traditional gifts are no longer deductible, there are several strategies that may help. First, for those over 70 ½ who have to take a required minimum distribution from their IRA, a strategy called a qualified charitable distribution can be employed to give directly from your IRA to a charity. Next, for those who are seeking more itemized deductions, “lumping” several years of contributions into a single year by contributing to a donor advised fund may make sense. Lastly, if you have stock positions that have appreciated over time and consequentially have a low-cost basis, making an in-kind gift of stock can be an effective and tax-efficient way to make financial gifts to charities.

While charitable giving is one meaningful way to make a positive impact on the community, many people are interested in keeping their giving closer to home by making financial gifts to family. This is another way to generously make a difference in the lives of others. Similar to gifts made to charities, there are ways to make family gifts tax-efficient and maintain a suitable level of control by working with your tax advisor and trust or estate planning attorney.

It’s important to understand the tax implications of gifting. Each individual is permitted to make a gift up to $15,000 to any other individual without any federal tax reporting requirements. Gifts between spouses are exempt from a maximum. For gifts over this amount, speak with your tax preparer about filing a gift tax return.  Some types of gifts, such as contributing to a 529 college savings account, allow higher contributions to be made in a single year in lieu of annual contributions. If you would like to make a gift in excess of the annual exclusion amount, another option is to consider paying an institution, such as university or hospital, directly instead of giving the money to your family member first. This type of payment does not qualify as a gift (and is also not limited to the annual $15,000 gifting amount), and allows you to retain control over where your money is spent. If you are interested in making a gift to someone with special needs or a spending problem, speak with an attorney about creating a Trust, which could restrict some withdrawals and/or permit the gift recipient to continue receiving government benefits. For those wishing to make substantial gifts during their lifetime, other strategies are available and should be thoroughly discussed with your team of advisors.

If you’re interested in sharing your success and spreading the love, reach out to a Wealth Advisor at Allegiant Private Advisors for an initial consultation. The Allegiant team would love to speak with you and help you make the most of your giving.

Allegiant Private Advisors is located at 240 South Pineapple Ave., Suite 200, Sarasota, FL 34236. For more information, call 941-365-3745 or visit www.allegiantpa.comAdvisory Services offered through Allegiant Private Advisors, LLC, a Registered Investment Adviser