Articles and Columns

Carissa Giebel column: Think of giving in estate planning

11:00 PM, Jan. 30, 2012 |

Charitable giving can change lives. It can have an even greater impact when it's done strategically.

Donors have the options of giving during lifetime, after death, or some of both.

Donors often wonder what to give. While some assets provide a greater tax savings than others, what to give strongly depends on whether the giving is done during your lifetime or after death.

Unfortunately, charities are sometimes completely left out of an estate plan inadvertently, or sometimes people desire to leave assets to a charity, but never do because they are not exactly sure how.

When gifting during lifetime, consider appreciated publicly traded securities. If they are owned by the donor for at least one year and then given to a charity, the donor can deduct the full fair market value as a charitable deduction.

When the charity sells, neither the donor nor the charity has to pay any capital gains tax on the appreciation. The same applies to real estate owned by the donor for at least one year.

Any stocks or bonds that may have appreciated over time are always an asset to consider donating, especially if you think they might decrease in value in the near future.

Donating retirement assets to a charity during lifetime may not be the best planning technique. These donations are treated as a distribution and are treated as ordinary income to the account owner, and subject to income taxes.

If you want to leave retirement assets to charity, it's probably best for the charity to inherit after death.

Charitable planning for after death changes things.

Oftentimes, retirement assets are the asset of choice. Retirement assets left directly to charity are not subject to income taxes or estate taxes. Noncharity beneficiaries are stuck paying the deferred income taxes on retirement assets, whereas charities do not.

If you don't want to leave your entire retirement account to charity, then leave a portion to charity, while leaving the remainder to a spouse, children, or other beneficiaries.

For example, it may be more beneficial to name a charity as a beneficiary of $50,000 of your retirement account, rather than leaving the charity a $50,000 bequest in a will or trust.

Nonretirement assets are the best to leave to individual beneficiaries because they will receive a step-up in basis. This means that if an asset was purchased for $5, it is worth $100 at the time of your death, and it is sold for $100, your beneficiaries do not have to pay a capital gains tax on the $95 appreciation. The basis gets stepped up from $5 to $100.

This is only true if they inherit from you. It is not true if you gift the asset during your lifetime. There is no step up in basis on lifetime gifts.

If you are considering making a charitable gift or leaving something to charity at death, consult with a professional to help you determine what makes the most sense for you.

Carissa Giebel is an estate planning attorney and partner at Legacy Law Group LLC. She can be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it., or (920) 560-4651.

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