Charitable Gifts in Estate Planning
Many of us volunteer our time and make gifts to causes close to our hearts, such as gay, lesbian, bisexual and transgender rights and AIDS service organizations. This spirit of giving should also be an important consideration in how we plan for our estates.
What are the tax reasons for making gifts?
Gifts are important in estate planning because of the ultimate transfer-tax dollars they may save. Tax-wise giving requires sensitivity to three key points: amount of the gift, timing and nature of the asset.
How much can I give without incurring tax?
Each person may give $11,000 each year per recipient to any number of persons without incurring tax and, more significantly, without using any of the estate tax exemption described in What You Need to Know About Taxes. Again, without the right to marry, same-sex couples miss out on tax laws that allow married couples to double their exclusion to $22,000 a year. Nevertheless, the $11,000 exclusion should be considered strongly, especially if you intend to divide your assets widely.
The $11,000 exclusion applies to each recipient. In other words, you can give $11,000 to each of five recipients and transfer $55,000 a year to reduce or avoid your estate or gift taxes. For GLBT people with children or grandchildren, this is particularly worth considering.
What if I want to give more in any one year?
When your yearly gifts exceed the $11,000 per recipient exemption, you begin to reduce the exemption against estate taxes. In cases where large estate tax bills are certain, it may make sense to use the exemption when the gift is an asset that is expected to appreciate significantly, thus avoiding the taxation of that asset.
Where can I find out more about charitable giving?
To learn more, email Timothy Mahoney, HRC’s deputy director for planned gifts.
Many of us volunteer our time and make gifts to causes close to our hearts, such as gay, lesbian, bisexual and transgender rights and AIDS service organizations. This spirit of giving should also be an important consideration in how we plan for our estates.