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9 ways to donate your property to a charity

People choose to give for many reasons: altruistic, fueled by more practical goals such as potential tax benefits. Whatever your motivations, if you plan to incorporate charitable donations into your financial plan, it is important to understand the different ways of giving to maximize impact while reaping the benefits.

The following asset donation methods are commonly used by those with philanthropic and tax planning goals.

1. Gifts of money, securities and real estate

The easiest way to donate your assets is to donate to the charity of your choice. Almost all charities accept cash or marketable securities, such as stocks and bonds, while few have the ability to receive real estate.

2. Give tangible property

The rules for donating items such as works of art and other collectibles are a bit more complicated and not all charities are equipped to accept such donations. The associated income tax deduction depends on your classification as a broker, investor or collector, the type of charity that receives the asset, and the charity's intended use of the charity .

3. Charitable annuity

A charitable annuity is a contract between a charity and a donor under which the charity pays him a lifetime annuity in exchange for a gift in cash or other assets. This arrangement is a part of a charitable donation, part of the purchase of an annuity contract of equal duration to the life of the donor. The administrative burden falls on the charity. Generally, the donor receives an income tax deduction corresponding to the difference between the value of the property transferred and the value of the annuity.

4. Funds advised by donors

Donor Advised Funds (DAF) are accounts created within a charitable organization, such as a community foundation. With a DAF, you contribute to your personal assets in an account where the contribution can be invested and whose growth is tax-free until a subsidy is paid to a charity qualified. The administrative burden is on the responsible management body. The donor receives an income tax deduction on its contribution, based on the same contribution limits as for public charities.

5. Retained life property

To implement a conserved estate, the donor donates a residence, farm or other property to a charity and retains the right to occupy the property for a fixed term or lifetime, the property returning to the charity at the end of the month. the end, or the death of the last person who has retained an interest in the property.

6. Family foundations

A foundation is a private wealth fund created for charitable purposes. The donor can have full control over the granting of grants and can pass control to parents or other people while he is still alive or at his death. Foundations require significant administrative oversight over other funding strategies and can result in high up-front costs, making them less convenient for smaller donors.

7. Charitable Remainder Trust

A residual charitable trust is an irrevocable trust that pays a source of income to the transferor or other non-charitable beneficiary for a specified period of time and then pays the remaining value of the trust to the charity at the end of the period. The administrative burden rests with the trustee, who is responsible for the preparation and filing of income tax returns, the calculation of the annual payment and the monitoring of the various income categories. As a rule, the settlor receives an income tax deduction equal to the present value of the remaining interest in the trust up to a certain threshold.

8. Charity Lead Trust

A principal charitable trust is an irrevocable trust under which one or more charities receive a fixed or variable amount during the term of the trust, the remainder being transferred directly or in trust to the donor's heirs upon dissolution. The deduction of the tax on the income of the donor varies depending on whether it is a constituent trust or not. The administrative burden is placed on the trustee.

9. Charitable LLC

A charitable LLC is a relatively new way of making strategic gifts to charities. The LLC is not exempt from tax; instead, taxes payable as well as deductions and losses are transferred to the donor or other LLC members. Like a foundation, the donor can have full control over the granting of grants and can pass on control to others. However, the LLC is governed by applicable state company law and does not have separate IRS reporting requirements for charitable activities. Generally, the LLC has no restrictions on donations, investments or income.

Each charitable method has its advantages and disadvantages, and some may be more attractive than others depending on the level of control you want to maintain and the degree of involvement you want to associate with the administrative aspects. Because the implementation requirements and tax implications of these strategies can be complex, you can consult your financial advisor or estate planning advisor to determine the most appropriate gift strategy for your situation and goals. financial.

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9 ways to donate your property to a charity

People choose to give for many reasons: altruistic, fueled by more practical goals such as potential tax benefits. Whatever your motivations, if you plan to incorporate charitable donations into your financial plan, it is important to understand the different ways of giving to maximize impact while reaping the benefits.

The following asset donation methods are commonly used by those with philanthropic and tax planning goals.

1. Gifts of money, securities and real estate

The easiest way to donate your assets is to donate to the charity of your choice. Almost all charities accept cash or marketable securities, such as stocks and bonds, while few have the ability to receive real estate.

2. Give tangible property

The rules for donating items such as works of art and other collectibles are a bit more complicated and not all charities are equipped to accept such donations. The associated income tax deduction depends on your classification as a broker, investor or collector, the type of charity that receives the asset, and the charity's intended use of the charity .

3. Charitable annuity

A charitable annuity is a contract between a charity and a donor under which the charity pays him a lifetime annuity in exchange for a gift in cash or other assets. This arrangement is a part of a charitable donation, part of the purchase of an annuity contract of equal duration to the life of the donor. The administrative burden falls on the charity. Generally, the donor receives an income tax deduction corresponding to the difference between the value of the property transferred and the value of the annuity.

4. Funds advised by donors

Donor Advised Funds (DAF) are accounts created within a charitable organization, such as a community foundation. With a DAF, you contribute to your personal assets in an account where the contribution can be invested and whose growth is tax-free until a subsidy is paid to a charity qualified. The administrative burden is on the responsible management body. The donor receives an income tax deduction on its contribution, based on the same contribution limits as for public charities.

5. Retained life property

To implement a conserved estate, the donor donates a residence, farm or other property to a charity and retains the right to occupy the property for a fixed term or lifetime, the property returning to the charity at the end of the month. the end, or the death of the last person who has retained an interest in the property.

6. Family foundations

A foundation is a private wealth fund created for charitable purposes. The donor can have full control over the granting of grants and can pass control to parents or other people while he is still alive or at his death. Foundations require significant administrative oversight over other funding strategies and can result in high up-front costs, making them less convenient for smaller donors.

7. Charitable Remainder Trust

A residual charitable trust is an irrevocable trust that pays a source of income to the transferor or other non-charitable beneficiary for a specified period of time and then pays the remaining value of the trust to the charity at the end of the period. The administrative burden rests with the trustee, who is responsible for the preparation and filing of income tax returns, the calculation of the annual payment and the monitoring of the various income categories. As a rule, the settlor receives an income tax deduction equal to the present value of the remaining interest in the trust up to a certain threshold.

8. Charity Lead Trust

A principal charitable trust is an irrevocable trust under which one or more charities receive a fixed or variable amount during the term of the trust, the remainder being transferred directly or in trust to the donor's heirs upon dissolution. The deduction of the tax on the income of the donor varies depending on whether it is a constituent trust or not. The administrative burden is placed on the trustee.

9. Charitable LLC

A charitable LLC is a relatively new way of making strategic gifts to charities. The LLC is not exempt from tax; instead, taxes payable as well as deductions and losses are transferred to the donor or other LLC members. Like a foundation, the donor can have full control over the granting of grants and can pass on control to others. However, the LLC is governed by applicable state company law and does not have separate IRS reporting requirements for charitable activities. Generally, the LLC has no restrictions on donations, investments or income.

Each charitable method has its advantages and disadvantages, and some may be more attractive than others depending on the level of control you want to maintain and the degree of involvement you want to associate with the administrative aspects. Because the implementation requirements and tax implications of these strategies can be complex, you can consult your financial advisor or estate planning advisor to determine the most appropriate gift strategy for your situation and goals. financial.