Hardy & Holmes Llc - Gifting Strategies : Article: Gifting Strategies

What Gifting Strategies Are Available to Me?

There are a number of different gifting strategies available for planned giving. Each has its advantages and disadvantages.

Instead of making an outright gift, you could choose to use a charitable lead trust. With a charitable lead trust, your gift is placed in a trust. The recipient of the gift draws the income from this trust. Upon your death, your heirs will receive the principal with little or no estate tax.

If you prefer to retain an income interest in your gift, you could use a pooled income fund, a charitable remainder unitrust, or a charitable remainder annuity trust. With each of these strategies, you receive the income generated by your gift, and the recipient receives the principal upon your death.

Finally, you could purchase a life insurance policy and name the charitable organization as the owner and beneficiary of the policy. This would enable you to make a large future gift at a potentially low current cost.

The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable.

As with most financial decisions, there are associated expenses with the purchase of life insurance. Policies commonly have contract limitations, fees, and charges, which can include mortality and expense charges. Most have surrender charges that are assessed during the early years of the contract if the contract owner surrenders the policy; plus, there could be income tax implications. Any guarantees are contingent on the claims-paying ability of the issuing company. Life insurance is not guaranteed by the FDIC or any other government agency; they are not deposits of, nor are they guaranteed or endorsed by, any bank or savings association.

	Advantages	Disadvantages
Outright Gift	Deductible for income taxes	No retained interest
Charitable Lead Trust	A current gift to charity Current income tax deduction Pass assets to heirs at a future discount	Transfer of assets is irrevocable If current income tax deduction is taken, future income is taxable to donor Donor gives up use of income for life of the trust
Pooled Income Fund	Income tax deduction Income paid to beneficiary for life Non-income-producing assets can be converted to income-producing assets	Income is unpredictable from year to year Income received is taxed as ordinary income Remainder interest will usually go to only one charity
Charitable Remainder Unitrust	Current income tax deduction Avoids capital gains tax on appreciated property Reduce future estate taxes	Transfer of assets is irrevocable Qualified appraisal generally required Complex administration and setup
Charitable Remainder Annuity Trust	Income tax deduction Avoids capital gains tax on appreciated property Fixed income	Fixed payment cannot be limited to the net amount of trust income Qualified appraisal generally required Complex administration and setup
Gifts of Insurance	Current income tax deduction possible Enables donor to make a large future gift at small cost in the future	May require annual premiums In some cases the death benefit could be part of donor’s taxable estate

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor.

Stan Hardy is a registered representative registered to transact business with clients in Oregon, Washington, California, Utah and Wyoming. Stan Hardy is advisory licensed in the following states: Oregon, Washington, California, Utah and Wyoming. Stan Hardy is also an insurance agent licensed in Oregon, Washington, California and Utah. Lindsay Holmes is a registered representative registered to transact business with clients in Oregon and Washington. Lindsay Holmes is advisory licensed in the following states: Oregon and Washington. Lindsay Holmes is also an insurance agent licensed in Oregon. If you are not a resident of the states noted above, all investment-related information on this site is for informational purposes only and does not constitute a solicitation or offer to sell securities or insurance services over the Internet. Securities offered through H.D. Vest Investment Services SM, Member:SIPC, Advisory Services offered through HD Vest Advisory Services SM, non-bank subsidiaries of Wells Fargo & Company, 6333 North State Highway 161, Fourth Floor, Irving, TX 75038, 972-870-6000.

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