Time of year to consider giving locally
It’s that time of year. Time to stress out for the holidays, buy more gifts than you can afford, eat too much and prepare for the in-law’s visit. Not.
It’s time to celebrate the holidays, spend time with the family, and take stock in our lives. Time to be thankful.
It’s also the year’s end, time to consider giving back to the community in time for this tax year. Only ten days left for that write-off. With the economy strong, or so they say, notwithstanding a slowdown in the real estate market, it is the perfe ct time to consider charitable contributions.
Local charities, like the Truckee Tahoe Community Foundation, are in a position to help. The foundation assists in a range of areas, from youth programs and the arts to animal care, to education and the environment, to local non-profits working with the needy.
And believe it or not, we have our share of needy. Just ask Project MANA.
The Truckee Tahoe Community Foundation shepherded more than $1 million into our community last year. $1,102,487! And there are dozens, tens of dozens, of other charitable organizations worthy of your contribution: Boys and Girls Club, Tahoe Forest Hospice, Excellence in Education and Truckee Donner Land Trust, to name a few.
Through properly planned charitable bequests, you can preserve and transfer wealth to your family, and at the same time make a huge difference in a small community with your philanthropy. Your contributions to local organizations go further than to your well-funded alma mater (to expose my bias). Do you think Stanford University is in need of our contributions with an endowment over $15 billion? Harvard’s is twice that.
When we die, the government gets a chunk of everything we own ” too much. The trick is to convert the part of your estate that Uncle Sam normally gets, some call it “social capital,” into contributions that improve your community and save taxes while you’re doing it. It’s not necessarily a situation where the family gets the money or it goes to charity. Through good planning everyone wins.
What’s surprising is that charitable contributions aren’t just for the rich. The income tax breaks are significant ” deductions of up to 50 percent of adjusted gross income, which looks pretty decent compared to estate taxes as high as 60 percent.
Whether your motivation is passion for the community or avoiding taxes, there is a plethora of estate planning tools at your disposal.
A simple will is one means of disposing of your property. It is easy to name a charity as a beneficiary. In fact 80 percent of all planned gifts come from wills and trusts.
There are even more creative vehicles like Charitable Remainder Trusts, Unified Credit Trusts, Life Insurance Trusts, Family Limited Partnerships, generation skipping transfer trusts and more.
Even Q-tip trusts. I have no idea what that is, but I have always liked the name. (“Q-tips”, by the way, as told to me by our elderly relatives in Florida, are what you see when following a car with gray-haired seniors in the backseat).
Here’s how a Charitable Remainder Trust works. You have appreciated stock that if you were to sell would create a huge capital gains tax. So you give stock to a charity. If you need cash flow, keep the income from the stock for yourself during your lifetime. You get a tax deduction at the fair market value of the stock less the value of any income you keep. Or do the same with appreciated real estate.
You could consider funding an Irrevocable Life Insurance Trust (ILIT), perhaps funded by the contribution, for your kids, which would then pay upon your death outside of your estate, as a substitute for the cash given to the charity. When properly funded and administered, ILITs are a great way to accomplish charitable and family objectives. You avoid paying capital gains tax, create an income for your life and dramatically reduce estate taxes, while making a sizeable donation to your favorite charity rather than the IRS.
That beats two other options: Leaving the stock (or real estate) to your kids and paying merciless taxes, and when they sell, paying taxes again, or selling the stock and leaving the money to your kids and paying taxes twice. There are better ways to get your money to your children.
There are dozens of hardworking local organizations that could benefit from your generosity. The Truckee Tahoe Community Foundation can steer you toward your interests, whether that be the Family Resource Center in Kings Beach or Truckee or the Truckee Trails Foundation. You like protecting Martis Valley or the Truckee River? Try the Truckee River Watershed Council.
You can’t go wrong with Tahoe Nordic Search and Rescue. They risk their lives for us every winter.
Favor the arts? How about InnerRhythms or Lake Tahoe Summer Music Festival?
Affordable housing your passion? Contribute to the Workforce Housing Association of Truckee Tahoe.
Give locally and change a life ” and by doing so, define your own life. Like everything else, the hardest step is the first. Contact the Truckee Tahoe Community Foundation at 587-1776, or your favorite charity, or confer with your tax adviser.
Don’t just think about it.
Oh, I almost forgot, have a Merry Christmas and healthy New Year.