Planned Giving Can Be a Win-Win
Donating to a worthy cause is a success for all and impacts children and their families in a positive way.
When asked why they donate to a cause, most people mention connecting with its mission, wanting to make a difference or recognizing how good it feels to be generous.
Few people claim to think first about potential tax breaks, although understanding when and how to give can make the act more effective. Many taxpayers are used to making end-of-year donations to increase their charitable contribution deduction. With more people now opting to use the increased standard deduction when they file taxes, those year-end gifts help the cause but rarely impact the donor’s taxes. Planned giving strategies may make more sense for both the donor and Johns Hopkins All Children’s Hospital. Past planned gifts to Johns Hopkins All Children’s Hospital helped fund academic chairs, cancer research, Maternal, Fetal & Neonatal Institute initiatives, Child Life expansion and more.
“Planned giving means more than just writing a check,” says Byron Smith, C.P.A., A.B.V., personal financial specialist at Gregory, Sharer & Stuart CPAs in St. Petersburg. “These gifts are structured to be both tax-efficient and impactful.”
Options to Consider
Taxpayers able to itemize should discuss the pros and cons of various tax planning strategies with a trusted financial adviser. Possibilities include:
- Qualified charitable distribution — If you are at least age 70 and a half, consider making a donation directly from your traditional IRA rather than taking the required minimum distribution. “This should be a trustee transfer so the amount is not considered taxable income for you,” Smith says.
- Appreciated stock — Donating a publicly traded stock allows you to avoid paying capital gains tax on the appreciation. “You still get the charitable deduction at fair market value,” Smith says.
- Closely held business interest — Entrepreneurs planning to transition out of a business holding may want to consider making it a charitable donation. “The business owner would get the double benefit of avoiding taxable capital gains and receiving the charitable donation, but timing of the gift is critical for its success,” Smith says.
A Family Affair
“One popular form of planned gift is a donor-advised fund,” says Alan Gassman, J.D., LL.M., Attorney at Gassman, Crotty & Denicolo, P.A. in Clearwater. “The gift can be distributed over a longer time span. When set up as a family foundation, younger family members can experience the personal satisfaction of active giving.”
Gassman urges anyone considering planned giving to first define their legacy goals and consider the organizations they want to support, then work with trusted advisers who are aware of all of their assets. Smith and Gassman have longstanding service on the Johns Hopkins All Children’s Seminar Committee. The committee plans the Foundation’s Annual Estate, Tax, Legal and Financial Planning Seminar, a continuing education program celebrating its 22nd year.
“Large charities can connect donors with specialist advisers,” says Gassman, who is in the Dream Builders giving society for those who include the hospital in their estate plans. “Working with experts well in advance allows you to take advantage of the best opportunities for you.”
Don’t wait until December to consider a tax-year donation of property or other noncash assets, and don’t rush an important process like setting up a gift annuity, charitable remainder trust or beneficiary designation. Of course, Johns Hopkins All Children’s Foundation welcomes any gift at any time, but a plan that rewards the donor with tax benefits is a win-win.
“My most successful clients are my most generous clients,” Gassman says. “They also tend to be my happiest clients because of the wonderful correlation between giving and helping others.”
This story first appeared in For the Kids magazine, a publication of the Johns Hopkins All Children’s Foundation. Please use the legal name “Johns Hopkins All Children’s Foundation, Inc.” and the Tax ID 59-2481738 when listing the hospital as a beneficiary. For more information, a referral to an adviser and to become a Dream Builder, please contact assistant director, planned giving Lydia Bailey at [email protected] or 727-767-8914.