TRANSCRIPT:
A lot of people give to charity the simple way. Write a check, feel good, and then move on. There’s nothing wrong with that, but if you own investments that have gone way up over time, there might be a smarter way to do it.
Hi, I’m Ken Hargreaves. I’m a certified financial planner and founder of WealthGen Advisors.
Now, here’s the basic idea. If you donate an appreciated asset, like a stock you bought years ago that’s worth a lot more now, you can usually do two things at once. You can avoid the capital gains tax you would have paid if you sold it, and you can deduct the full fair market value if you’ve held it more than a year. So more money goes to the cause and less gets lost to taxes. That’s the core of tax efficient giving.
Now what surprised me the most is learning that many people I talked to who have appreciated assets never give them in kind. They just sell, pay the tax, and then donate cash. That’s fine. It’s just not the most efficient path.
Now there’s a few ways to set this up: giving straight to a charity, using a donor advised fund if you want to give over time, or for bigger situations using a foundation. They all follow the same logic, but they don’t all have the same deduction limits or paperwork. And that’s where your income, size of the gift, and what you’re giving actually matter.
Now, I’m keeping this a little high level because once you start talking AGI limits, appraisals over 5,000, or gifting business interest, it gets very specific to the person really fast. So, if you’re already giving and you also have highly appreciated assets sitting there, well, that’s a good signal to have someone look at whether or not you could be doing it in a more tax-efficient way.
More to the charity, less to tax, same generosity. If you have any questions, let’s chat.
