Have you filed your taxes yet? If not, this can be a good time to review your charitable donation strategy and make sure it aligns with your estate planning goals. Without a clear plan for your donations, you could lose out on money that you could have saved while still contributing to nonprofits and causes you believe in. Here are some things to consider as you complete your 2016 tax returns:
Strategize with appreciated assets. Do you have assets that you could donate to charity instead of writing a check or paying by credit card? You can avoid capital gains taxes on those assets if you donate those assets instead of making a more traditional payment.
Keep track of donations and know which contributions are deductible. Gather all your documents before embarking on your 2016 taxes so you know the full scope of what you’ve donated. The full amount of charitable expenses may not be deductible in every case, so make sure you consult with an accountant who can tell you if and how much of any particular expense you can write off.
Consider opening a donor-advised fund (DAF). A DAF is a charitable vehicle to which donors can contribute instead of giving directly to an individual charity. The assets invested in a DAF grows tax free, and can be directed by the donor to selected philanthropic causes.
Your estate plan isn’t necessarily something that you do once in your life and leave it. It can be an evolving strategy that you update and revise as needed. An experienced estate planning lawyer can help you to understand and integrate the parts of your estate plan to incorporate charitable tax planning.