Investment Giving

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Benefits of year end gifting

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As the air turns cooler and the days grow shorter, our minds quickly turn to the final three months of the year, with thoughts of family gathering around the dinner table over Thanksgiving and then quickly turning to the writing of wish lists and the ensuing rush of gift buying for the holiday season. One item on your end of year to do list which may outlast a stylish sweater or the latest electronic gadget may be to contemplate making charitable donations before the calendar ushers in year 2018.

In the spirit of the holiday season, many gift givers enjoy donating to their favorite cause(s) up to the annual gift tax exclusion amount of $14,000 per donee. Gifting can be a powerful estate planning tool, allowing you to transfer wealth during your lifetime, as opposed to at your death. Many people who make lifetime gifts are motivated by a combination of nontax and tax factors.

One of the more common reasons for gifting is to remove an appreciating asset from your estate. Real estate, common stocks and antiques are all likely to appreciate over time. By giving away this kind of property, you are removing the appreciation from your estate at your passing when these assets will likely have grown in value.

For people with a strong interest in charity, lifetime gifts to a charitable organization may be more productive than donations made at death because these gifts are generally fully deductible from both federal gift tax and federal income tax. Since charitable donations are income tax deductible, you essentially receive a double tax benefit if you are inclined to make these kinds of gifts during your lifetime.

If you are an IRA owner and age 70 ½ or older, you can take advantage of a provision in the tax code that allows you to make a direct transfer to a qualified charity in any amount up to $100,000 without having to pay income taxes on the distribution. This is an important advantage for a charitably minded IRA owner who doesn't need his or her required minimum distribution (RMD) for living expenses. Bear in mind you cannot claim the qualified distribution as a charitable tax deduction since you are receiving the benefit of the amount being excluded from your taxable income. However, in deciding to avail yourself of this opportunity, you enjoy two appealing advantages: You satisfy the removal of the required minimum distribution from your IRA and you pay no income taxes on the amount.

With respect to gifts made in kind (not made in cash), it is better to initiate these by the beginning of December to ensure proper delivery before end of year. We would certainly encourage you to consult with your tax and or legal advisor prior to making a decision to ensure the best outcome for you, financially.


Consider making an end of year gift to support United Way in the fight for the health, education and financial stability of everyone in our community.

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Guest Tuesday, 12 December 2017