Retirement & Financial Planning Report

If your estate plan calls for making contributions to charity, some techniques for making such donations work better than others.


* Avoid giving cash gifts. Instead, make bequests from your IRA. If an IRA is included in your estate, all of the deferred income tax must be paid by your heirs, as money is withdrawn.

However, if you give away money in your IRA, you’re giving away the tax obligation as well. You might, for example, make a $10,000 charitable contribution with IRA money that’s worth only $6,000 or $7,000 to your family, after-tax.

* Most important, don’t donate appreciated assets at your death. You’ll get better results if you leave appreciated assets to your loved ones, who will inherit those assets with a step-up in basis.

Subsequently, if your heirs decide to sell those assets, they won’t owe any capital gains tax on the appreciation that took place during your lifetime.