Year-End Options for Giving to Charity: Make an Impact and Plan Smartly

As the year comes to a close, many people are reflecting on the causes and organizations they care about most. Charitable giving is a powerful way to support those causes while also offering potential tax benefits. Whether you're looking to donate cash, property, or create a lasting legacy, strategic planning can maximize the impact of your generosity.

Here are key year-end options for charitable giving and how you can align them with your financial and estate planning goals.

1. Cash Donations for Immediate Impact

The simplest and most common way to give to charity is through cash donations. When you make a contribution to a qualified charitable organization (typically a 501(c)(3)), your gift is tax-deductible up to 60% of your adjusted gross income (AGI).

Tip: Remember to keep receipts and documentation for any charitable gifts to ensure you receive the deduction at tax time.

2. Donating Appreciated Assets

If you own investments like stocks, real estate, or artwork that have grown significantly in value, donating them to charity can provide double the benefits:

1.      You avoid paying capital gains tax on the appreciation.

2.      You get a tax deduction for the full fair market value of the asset.

For example:
Imagine you purchased stock for $5,000, and it’s now worth $15,000. By donating the stock to charity, you avoid taxes on the $10,000 gain and can deduct the full $15,000 value.

3. Use RMDs for Charitable Giving with QCDs

If you’re over 70½ and don’t need all the income from your Required Minimum Distributions (RMDs), consider making a Qualified Charitable Distribution (QCD). This strategy allows you to transfer up to $100,000 directly to a qualified charity, satisfying your RMD requirement without increasing your taxable income.

Why it matters: By lowering your taxable income, a QCD may also reduce the taxes you owe on other income sources, such as Social Security.

4. Establish a Donor-Advised Fund (DAF)

A Donor-Advised Fund allows you to make a charitable gift today, receive an immediate tax deduction, and decide later which charities will receive the funds.

Benefits:

·       Great for individuals unsure of where they want their donations to go right away.

·       Can serve as a family giving fund, allowing future generations to participate in charitable decisions.

5. Create a Lasting Legacy Through Your Estate Plan

Charitable giving isn’t just for today—it’s also an opportunity to leave a lasting legacy through your estate plan. Options include:

·       Charitable Bequests: Leave a gift to charity in your will or trust. These gifts are tax-deductible and reduce your estate's taxable value.

·       Charitable Remainder Trusts: Provide income for your loved ones while ensuring that what remains goes to a cause you care about.

·       Beneficiary Designations: Name a charity as a beneficiary on retirement accounts or life insurance policies.

For example, one of our clients used a charitable trust to fund scholarships for local students while providing income for their family. Their gift will continue to support future generations—while preserving the family’s financial security.

6. Involve Your Family: Give the Gift of Generosity

Charitable giving can be about more than tax savings—it’s also an opportunity to inspire your family. By involving loved ones in your giving decisions, you can pass down values like generosity and community support, creating a legacy of impact that lasts beyond your lifetime.

Key Takeaways

1. Plan Smart: Charitable giving can offer significant tax benefits when done strategically.

2. Maximize Your Impact: Options like donating appreciated assets or using RMDs can increase the value of your gift.

3. Leave a Legacy: Your estate plan can ensure your values and generosity carry forward for generations.

Ready to Make a Plan? Let’s Get Started.

If you’re ready to explore charitable giving options that align with your financial and legacy goals, we’re here to help.

Schedule your complimentary 15-minute consultation today and learn how to make the most of your year-end giving. (859) 344-6742

This article is a service of Freedom Law Services. We don’t just draft documents; we ensure you make informed, empowered decisions about life and death for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™. During the session, you will get more financially organized than ever before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this valuable session at no charge.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you seek legal advice specific to your needs, such advice services must be obtained independently, separate from this educational material.