There are so many good causes out there, and so many charitable organizations to serve them. What is important to you? Perhaps it is research to find a cure for Alzheimer’s Disease, cancer or some other disease that claimed the life of a loved one. Or, maybe you want to save abused animals or the rainforests, help underprivileged children, or aid the victims of domestic violence or natural disasters. You may wish to provide funds to your religious organization to assist in meeting its needs, or to your alma mater to offer scholarships or facilitate building improvements. Whatever it is, if you would like to provide financial support to any organization that serves a purpose about which you are passionate, there are many ways to do so.
The easiest and most common method is to make a donation of cash directly to the organization. You probably know that, subject to certain limitations, you can claim a deduction on your income tax return for qualified charitable donations made each year (so long as you itemize your deductions and keep the appropriate records). This is a great way to offset some of your taxable income and choose where and how your hard-earned dollars are spent, other than on taxes.
You can also donate assets other than cash to a charity. For example, donations of used clothing or household items are also deductible on your tax return in the year you give them away. You may have stocks that have gone up in value since your purchased them, thereby resulting in a taxable gain if you sell them. But if you donate these appreciated assets to a qualified charitable organization, you can take an income tax deduction and the charity can sell them with no capital gains tax. You should consult with your tax advisor to determine the deductibility of different donations.
In addition to making donations during your life, you can leave a legacy gift to charitable organizations. This can be done by including a gift in your Will or Revocable Living Trust. It can be a specific dollar amount or a certain non-cash asset, a percentage of your total estate, or even a contingent gift to be made only if you have no family living.
You can also name a charity as a beneficiary on life insurance policies or Individual Retirement Accounts (IRAs). Distributions from an IRA are taxable income to the recipient in the year received, unless the recipient is a qualified charity. Charities to do not pay income tax. This means that the charity that you choose to receive all or a portion of your IRA will be able to use 100% of that IRA distribution for its purposes, rather than giving a cut to Uncle Sam.
There are even more tools available for you to make meaningful gifts to charities, including various types of trusts, donor advised funds, and private foundations, any of which may be right for you under your individual circumstances.
Donations made to a qualified charitable organization, using any of the methods described above, will be deductible for federal and Illinois estate tax purposes.
If there is a cause that is important to you, and you would like to provide financial support to that cause, we can work with you and your tax professional to make the gift in a manner that will assist the charitable organization in achieving its mission, and result in a tax benefit for you and your family. Call our office at (847) 253-8800 to schedule a no-charge initial consultation with one of our experienced estate planning attorneys to discuss this, as well as all of your personal estate planning goals.
Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Business Immigration, Litigation and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law, Collaborative Divorce & Mediation.
This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.