Thank you for your interest in financially blessing orphaned and vulnerable children!
Here are some of the most common ways you can maximize your gift:
Cash versus Appreciated Securities
Many gifts we receive come in the form of cash. This easy-to-donate asset often makes the most sense for a donor. Gifting an appreciated stock or mutual fund in lieu of cash might provide benefit to you, as any gain in the security passes tax-free to Back2Back. You can then use the cash you would have given otherwise to repurchase shares in that same security, or any other, and now have a stepped-up basis in your investment. This means you’ll have less tax to pay in the future.
Planned Giving – Will, Trusts, and Other Legacy Gifts
A charitable bequest is one of the easiest and most flexible methods to leave a legacy of hope for future generations. One of the simplest ways we see this being done is including a bequest to Back2Back in your will or trust. Naming Back2Back as a beneficiary on your life insurance policy or IRA is another straight-forward way to make this life-changing gift.
- Maintain control of your assets during your lifetime
- Have the flexibility to modify your bequest if your circumstances change.
- Reduce your taxable estate by the amount given to Back2Back.
- Experience the satisfaction of knowing you can continue to help children even after you are gone.
If a legacy gift interests you, there are some other more complex giving options you should be aware of. For example, the charitable remainder trust (CRT.) We’ll demonstrate why by way of example:
Bob and Mary have decided they want to leave roughly $100,000 of their estate to Back2Back upon their deaths. Doing so by will, trust, or beneficiary designation is the simplest way to do so. But Bob and Mary’s advisor explains to them, given the fact they currently draw $3,000 per month from their investment accounts for living expenses, a charitable remainder trust (CRT) will be more beneficial to them. Bob and Mary agree. They gift $250,000 into a CRT which provides them the $3,000 per month in income they need for the balance of their lifetimes, then transfer the expected remainder of $100,000 to Back2Back when they pass. They are happy their current advisor can continue to manage the CRT assets and even happier they now get a $100,000 tax deduction they would not have received if they had given the same amount by simple bequest.
Gifting from an IRA
Individuals aged 701/2 or older are required to withdrawal assets from their IRA account each year as dictated by the IRS. If you are over 70 ½ and required to withdraw more than you need for living expenses, gifting directly from your IRA to Back2Back can provide added tax advantages to you, as any such gift is excludable from taxable income at both the federal and state levels. This can also benefit those that will not itemize deductions under the new tax law’s doubling of the standard deduction (meaning a donor can take the higher standard deduction but still receive a tax benefit from their IRA gift).
This list is not intended to be a comprehensive review of all gifting options available, but rather a cursory review of some of the advantages of gifting through less commonly-used instruments. We encourage you to consult with your advisor or contact email@example.com if you have questions. This is in compliance with the 2018 tax guidelines.