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Opinion: Charitable giving techniques make a difference

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Each year, thousands of individuals across the region are positively impacted by the generous work performed by the many charitable organizations and nonprofits in 417-land. Our nonprofits provide guidance to the at-risk youth in our population, assist the homeless and abused, and provide sanctuary for animals, among many other missions.

Furthermore, our community is well known for its generous and giving spirit. According to reports analyzing IRS data by Insider and The Kansas City Star, Missourians donated over $4 billion to charitable organizations in 2018 and the average Missourian donates nearly $5,200 to charity each year. Greene County residents led among the 10 counties with the highest incomes in Missouri in 2017, donating an average of 5.1% of their gross income to charity, according to the IRS data. Our neighbors in Taney County were the most generous statewide, donating 5.7% of their gross income. That’s certainly something to be proud of.

With the admirable missions of our local nonprofits in mind, coupled with our community’s giving spirit, it is no surprise that many individuals are motivated to support charitable organizations financially in their estate plans. With planned giving, these charities live and breathe on the goodwill and donations of their supporters.

Planned giving is the process of arranging a contribution that will be made at some point in the future. While lifetime giving remains an important and fulfilling approach to giving, there are situations when making a planned gift makes the most sense. Luckily, a wide variety of planned giving techniques exist to allow you to make a meaningful impact on those who need it most. Here are five ideas to consider.

1. Outright bequests. The simplest method is to provide directly in your will or trust that a specific dollar amount or percentage of your estate be distributed to the charity upon your death. You also can provide for bequests of real estate or other appreciated assets to your charity of choice. Limitations on the ways in which such bequests can be used by the nonprofit may be included as well – e.g., to be used toward a specific event.

2. Beneficiary designations. You also might decide to name the charity as the primary beneficiary of a retirement account or life insurance policy. This ensures the assets pass directly to the organization immediately upon your death, avoiding the time and expense of probate administration.

3. Individual retirement account charitable rollover. Individuals ages 70 and a half and older have the unique opportunity to direct up to $100,000 each year from their retirement accounts to be paid directly to a qualified charitable organization, all while satisfying their required minimum distribution for the year. This is an especially useful technique for those who do not currently need the income that their annual RMDs provide and want to avoid the tax implications that result from such withdrawals. It is important to note these distributions must be made directly to the charity, rather than withdrawn by the account owner and then transferred at a later date.

4. Donor-advised funds. DAFs are charitable giving vehicles administered by a public charity or community foundation. The donor enters into an agreement with that institution to deposit assets into a fund to be managed by the institution. While the donor must surrender ownership over the assets, they may retain advisory privileges over how those assets are invested and ultimately distributed. The donor may put specific limitations on how those funds may be used – e.g., “solely to benefit charities serving the homeless in the Springfield area.” Donors also may choose to involve future generations with the fund as successor advisers to teach philanthropic values.

5. Charitable trusts. More complicated giving techniques involve the use of charitable trusts, which provide the creator of the trust or some other named beneficiary with a steady income stream for a certain period, while allowing the charity to benefit from the trust, as well. These trusts are used primarily by those concerned about paying estate taxes.

As a bonus, each of these planned giving techniques receives beneficial tax treatment when April rolls around, depending on your specific situation.

No matter which planned giving technique you decide to use to leave your legacy, please know the effects of your gift directly impact those that our tremendous 417-land nonprofits are serving, and, in turn, help make our community a more fulfilling place in which to live.

Andy Peebles is an estate planning and business attorney with the law firm of Carnahan, Evans, Cantwell & Brown PC. He can be reached at apeebles@cecb.com.

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