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Planning & Economy

Charitable Giving Strategies

April 30th, 2018

Written by:  Brook Davidson with Stewart Melvin & Frost, Christina Jones with Windsor Wealth and Lauren Samples with Tillman, Bailey Samples and Associates

We are grateful for the friendships we have with other professionals in Gainesville to work with and collaborate with to benefit our clients and our community. In the last few months we have been working together on different charitable giving strategies that our clients and friends could benefit from hearing about.

We are fortunate to live in a philanthropic community where donors fulfill their passion by supporting non-profit organizations. Many people in our community benefit from these supported non-profits whether it’s through health, education, poverty, safety, the arts or animal welfare. Our community may be small, but it is one of the most giving communities and this community truly cares about the people that live here.

We put together some gifting and legacy ideas that may be beneficial for you and your family and your favorite organization(s):

Life Insurance:

Many younger families purchase insurance as it’s a need if a spouse predeceases the other spouse earlier in life to help with income replacement, debt payoff, retirement savings replacement and higher education expenses. As couples get older and experience an empty-nest life insurance is not as much as necessity and for most couples entering retirement life insurance can sometimes become an unnecessary financial instrument. Life insurance can be a great way to leave a legacy to an organization especially if you own a permanent policy and there’s no real income replacement need. Plus, changing a beneficiary on a life insurance policy is a free way to be sure a non-profit receives a legacy in your name. And, as many of you know, you can have as many beneficiaries on life insurance policies as you would like. You can have family members and non-profit organizations listed. This strategy also works well for old buy/sell agreements once a partner has sold his/her portion of the business.

Charitable Bequest:

A charitable bequest is a written statement in your will directing a gift to a charitable organization. The gift can be very specific with the amount of money, a certain item or piece of property. It can also be a residual amount which is all remaining assets in the estate after expenses or other specific bequests are paid. A bequest can also be contingent which would only become effective if the primary beneficiaries predeceased the testator or if the beneficiaries disclaim their interest in the estate. If you do make a non-profit organization a bequest in your will it’s always a good idea to let them know so that they can plan for it.

Charitable Remainder Trust:

A donor (the grantor of the trust) transfers appreciated assets into an irrevocable trust which removes the asset from the donor’s estate and the donor receives estate and income tax benefits. Once the asset is in the trust the trustee will sell the asset with no capital gains tax and reinvests proceeds in income-producing assets. The trust pays an income to the donor or designated beneficiary for their lifetime and when the donor/grantor passes the trust can either continuing paying the income to a designated beneficiary or the remaining trust assets pass on to a charitable organization or to several charitable organizations. Benefits of this strategy include: bypass capital gains tax on appreciated assets; income tax deduction of value of remainder interest at date of transfer; income stream to donor; appreciation of assets over time creates larger eventual benefit to charity.

Please be aware that there may be substantial fees, charges and costs associated with establishing a charitable remainder trust.

IRA Accounts:

In December 2015 there was a law passed that made permanent the provisions for Qualified Charitable Distributions. This law states that IRA owners of 70 ½ years or older can direct the IRA trustee to distribute up to $ 100,000 per year to a charity, church, etc. of the donor’s choice without having to pay taxes on the distribution. This can satisfy all or a portion of the minimum mandatory distribution mandated by the IRS for all IRA owners of 70 ½ years and older, allows the IRA owner to make charitable distributions tax-free, and allows a benefit for donors who either do not itemize deductions, or whose deductions are subject to phase-out.

Since IRA accounts pass by through named beneficiaries leaving an IRA account or a portion of an IRA account is also an easy way to leave a legacy to a charity or a number of charities of your choice, while avoiding leaving heirs with a tax burden due to the inheritance of an asset subject to ordinary income taxation.

Private Foundation & Donor-Advised Fund:

A private foundation is an organization created to provide the donor with many benefits such as income tax deductions, potential avoidance of capital gains tax, reduction of estate tax, donor control, family legacy, growth of funds tax-advantaged and the foundation can support multiple organizations. A private foundation is a great tool for some families, but some things to remember about a private foundation is that there are legal and accounting fees to get started and there is a 2% excise tax on investment income annually. A donor-advised fund is a great alternative option for a donor interested in doing something similar. The donor-advised fund is typically less expensive because there’s not a legal document that is required plus there is no tax on investment income. Either allows a current year tax deduction for gifts to be ultimately made to charities in the future.

Please note contributions to DAF are irrevocable.

There are many ways to leave a legacy that benefits an organization of your choice; above are just some of the strategies we see the most. If there is anything you would like to learn more about we are happy to discuss these features with you.


Brook Davidson, Attorney at Law, Partner with Stewart Melvin & Frost

Christina Jones, CERTIFIED FINANCIAL PLANNER™, Partner, Windsor Wealth

Lauren Samples, CPA, Partner, Tillman Bailey Samples & Associates


While are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters.  You should discuss tax or legal matters with the appropriate professional.  Donors are urged to consult their attorneys, accountants or tax advisors with respect to questions relating to the deductibility of various types of contributions to a Donor-Advised Fund for federal and state tax purposes.  To learn more about the potential risks and benefits of Donor Advised Funds, please contact us.


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