Planned Giving Myth #5:
 Money is always the best asset by which to make a bequest.

When people think about donating to charity, they usually think about donating cash. Cash may be the easiest and best option for many donors, but often donating other assets make better sense.

Donating gifts of securities such as stocks, bonds and mutual funds is wise if they have highly appreciated. If you cash in these securities, you may pay a large amount of money in capital gains taxes. One mistake many donors make is to sell shares of stock and then donate the cash to charity. Always donate the stock itself to the charity, so that you do not incur capital gains tax during your transaction.

Life insurance policies make great planned gifts. Many people buy life insurance policies for particular times of their lives (most commonly for when their children are young). When those specific periods are over, there is often no longer a great need for the policy anymore. Turn life insurance policies into planned gifts by requesting the change of beneficiary form from your policy holder and listing your favorite charity as the full or partial beneficiary. Or you can simply transfer ownership of the policy over to your favorite charity. In irrevocably transferring your life insurance policy to charity you can claim an income tax deduction for the policy’s cost basis or cash surrender value, whichever is less.

Adding your favorite charitable organization as the beneficiary of a retirement account such as a 401K, IRA or KEOGH is also a great way to make a planned gift without giving any cash now. As is with your life insurance policy, you simply request a beneficiary designation form from the company that has your plan and list your favorite charity as either the full or partial beneficiary. Some plans even allow you to make the change online; it doesn’t get much simpler than that.

Real estate is another option for making a planned gift that does not include giving cash. You can make an outright donation of your house, condo, lake cabin, etc. to a charitable organization and receive a tax deduction for the full market value. With an outright donation you are relieved of management, taxes, insurance and maintenance costs and you reduce your tax liability as a result of the income tax deduction. You also avoid the tax that may have applied if you had sold the property. Another way to donate your property is to give it to a charitable organization that that uses the asset to fund a charitable annuity for you or a loved one. By choosing this planned giving option you receive a current income tax deduction and you or your loved one receive a guaranteed annuity payment for life.

A donor can make many different planned gifts without using cash. You just have to decide which gift is the best fit for you to make. We always encourage you to speak with your financial advisor or lawyer to help you decide which gift is best for you. And remember, if you have the desire to make a planned gift to your favorite charity, there will always be a way for you to make it work.

If you have any questions or would like to talk with someone about the prospect of leaving the Sisters of St. Joseph of Carondelet Ministries Foundation in your estate plan, please contact Lisse Regehr, Planned Giving Officer, at 651.690.7092 or lregehr@csjstpaul.org.

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