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September 2013 Bulletin: Women in Medicine

Eleven Ways to Charitable Giving

Sara Toscano, CASL

Sara Toscano, CASL

One of the unique characteristics of our society is the ability and desire to engage in philanthropic endeavors. By supporting causes which resonate with our beliefs and values, we are able to redistribute wealth to those in need.

While writing a check is the simplest method of giving, many individuals may significantly leverage the impact of their gift through careful planning and analysis. A Financial Advisor can work with you to determine which strategies may make the most effective use of your charitable giving dollars. We have provided a list of eleven charitable giving techniques that our clients use to support their favorite charities.

Direct Gift

One of the easiest and most popular ways to provide for charity is through an outright gift during your lifetime or through your Will at your passing.

Gifts of Appreciated Stock

Although a cash donation is always well-received, giving a gift of appreciated stock that you've owned for at least a year is even better, not only for your tax situation but also for the charity's bottom line. If you were to sell the appreciated stock, you would be responsible for paying the capital gains tax liability. The net proceeds could then be gifted to charity. However, if you were to give the appreciated stock directly to the charity, the charity would receive the total market value of the stock. You would be able to claim the total amount as a charitable contribution on your taxes, and the charity would receive a larger gift. In addition, the charity may receive an even greater benefit if the stock continues to appreciate over time.

Donor Advised Funds

A donor-advised fund (DAF) offers an easy way for you to make significant charitable gifts over a long period of time. Once assets are gifted to the DAF, you may make ongoing recommendations to the DAF as to how, when, and where grants from the fund should be made. Additionally, you can offer advice to the DAF regarding how contributions should be invested. Technically speaking, the DAF is not obligated to follow any of your suggestions. However, as a practical matter, the DAF will generally follow your wishes.

Charitable Gift Annuity

A charitable gift annuity is a special type of agreement designed to provide you with the benefits of a traditional annuity while giving the underlying asset to charity. In exchange for a gift of cash or securities, you would receive annuity payments for life from your selected charity.

Charitable Remainder Annuity Trust (CRAT)

In a charitable remainder annuity trust, or CRAT, the noncharitable beneficiary has the first interest, and the charitable beneficiary has the remainder interest in the trust property. The trust pays out a fixed amount of income to the noncharitable beneficiary every year for the term of the trust, and then the remaining assets pass to charity.

Charitable Remainder Unitrust (CRUT)

The charitable remainder unitrust, or CRUT, is similar to the CRAT in that the non-charitable beneficiary has the first interest, and the charitable beneficiary has the remainder interest. However, instead of paying out a fixed amount each year, a CRUT pays the noncharitable beneficiary a fluctuating amount each year, equal to a specified percentage of the total value of the trust assets for that year. At the end of the trust term, the remaining assets pass to charity.

Pooled Income Fund

A pooled income fund is similar to a CRAT and CRUT in that the noncharitable beneficiary has the first interest, and the charity has the remainder interest. However, unlike these individually created trusts, a pooled income fund is established and managed by the charity. It consists of donations from several donors and operates similar to a mutual fund. The charity pays the noncharitable beneficiary a fluctuating amount each year, depending on the total income of the fund that year. At the end of the trust term, the remaining assets pass to charity.

Charitable Lead Trust

A charitable lead trust is the reverse of the above-named trusts. In a charitable lead trust, the charity has the first or lead interest, and the noncharitable beneficiary has the remainder interest. The trust pays the charity a certain amount every year for the term of the trust (you can specify either the annuity or unitrust method), and then the remaining assets pass to the non-charitable beneficiary.

Charitable IRA Rollover

The charitable IRA Rollover, or qualified charitable distribution, is a special provision allowing certain individuals to exclude from taxable income transfers of IRA assets that are made directly to public charities. The distribution also counts toward your required minimum distribution for the year. In order to qualify for this treatment, the individual must be 70½ or older. In addition, your total charitable IRA rollover gifts cannot exceed $100,000 per tax year.

Charity as Beneficiary of Retirement Account

While tax deferral makes retirement accounts a tremendous vehicle for retirement savings, tax deferred retirement accounts are not an ideal asset to pass on to non-charitable beneficiaries. The noncharitable beneficiary gets stuck with the deferred income tax burden following the passing of the account owner. If the beneficiary of a retirement account is a tax-exempt charity, the charity can take a tax-free withdrawal of the account balance following the passing of the account owner. In addition, leaving retirement assets to charity allows the owner's estate to take a charitable deduction.

Life Insurance and Charitable Giving

Giving life insurance to a charity may allow you to make a larger gift than you otherwise could afford. Typically, an individual makes a charity the owner and beneficiary of a permanent life insurance policy. However, there are many ways of structuring a charitable gift involving life insurance, and one alternative may better suit your needs and those of the charity than others.

Pursuant to IRS Circular 230, New England Financial is providing you with the following notification: The information contained in this document is not intended to (and cannot) be used by anyone to avoid IRS penalties. This document supports the promotion and marketing of insurance products. You should seek advice based on your particular circumstances from an independent tax advisor. Neither New England Financial nor its representatives offer tax or legal advice. Please consult your tax advisor or attorney for guidance. New England Financial is the registered mark for New England Life Insurance Company, Boston, MA 02116. L0813339027[exp0714][MA,ME,NH]

Sara Toscano, CASL Sara Toscano, CASL holds a bachelor of science degree from Tufts University. She has eight years of investment advisory experience and holds the Series 7, 6 and 63 securities licenses as well as Life, Accident and Health Insurance Licenses in Massachusetts, New Hampshire, and Rhode Island. She is currently pursuing the CFP designation from Boston University and the CASL designation from the American College. You may contact her at

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