Fourth Quarter 2012
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The Top 10 Tips for Year-End Giving
As we approach the end of 2012 —just 15 days left! – it’s time to reduce your tax bill and support your Jewish community. Here is our “Top 10 for Year-End”:
- Transferring stock? Tell us more! By transferring appreciated securities (owned for a year or more) to the Jewish Community Foundation of Greater MetroWest NJ (JCF), you will receive a charitable deduction for the fair market value of your gift AND avoid capital gains taxes that would be due if you sold the securities yourself. But we need to know about your plans. It’s not enough to tell your broker. Call (973) 929-3060 or email sbenfante@jfedgmw.org with the name and number of the securities you plan to donate so we can ensure your contribution is recorded properly.
- Want to give cash? Thank you! Remember: for tax-reporting purposes, the official date of your contribution is the postmark date for checks sent via U.S. mail. If you mail a check on December 31, you might want to request a receipt from the post office.
- If you need income in 2013 and are over age 65, consider creating a Charitable Gift Annuity (CGA). This one-time gift will provide you with an income-tax deduction in 2012, pay you or a designee guaranteed income for life, and may reduce your exposure to estate taxes. And, your donation will help to support our Jewish community for future generations.
- Using a credit card to make your gift? Call (973) 929-3000 or go online www.jfedgmw.org by December 31, 2012. Save your receipt to take the charitable deduction in 2012.
- Don’t know where to give? Create a Donor Advised Fund (DAF) at JCF. A contribution to establish a new DAF will provide you with an income tax charitable deduction in 2012 and will give you time to decide where to direct your philanthropy later. You can recommend where to direct grants from the DAF in 2013 or beyond.
- Interest rates remain at all-time lows. Consider establishing a Charitable Lead Trust (CLT) to support JCF (or our Jewish Federation) for a number of years, after which assets remaining in the Trust will pass to children, grandchildren, or anyone else you designate. CLTs can provide the opportunity to create a highly leveraged gift to family members at substantially reduced gift tax cost.
- In addition to stocks, bonds and mutual funds that have appreciated in value can be great vehicles to donate to charity. However, accepting them as contributions is more complicated, so if you are considering contributing these types of assets, please call (973) 929-3060 to talk with a member of our charitable planning staff.
- Remember, gifts of stock (for a Donor Advised Fund, to establish endowment, etc.) are official on the date JCF receives the transfer. To pay your UJA pledge with a gift of stock, please call Jean Cook at (973) 929-3007.
- Have an unusual item (artwork, jewelry, vehicles, partnership shares, real property, etc.) that you would like to donate? Call (973) 929-3060 and JCF will work with you and your professional financial advisors to facilitate the contribution.
- Want to learn more? Visit www.jcfmetrowest.org or call us at (973) 929-3060.
Give today and help our community have a happy, healthy, and prosperous 2013. Thank you!
“Trust Me”
by Joshua W. Rednik, CFP®
Over the past several weeks, I have received a number of phone calls from members of our community regarding the “fiscal cliff.” Possible increases in the capital gains tax rate — and the possible reduction or elimination of the income tax charitable deduction — in addition to other potential changes are causing people to carefully consider whether to make charitable gifts now or to wait until 2013.
It’s a confusing situation. If capital gains rates go up, donations of appreciated securities could be more valuable to donors who wait until 2013 to contribute them. At the same time, if the income tax charitable deduction is capped, reduced, or eliminated altogether, accelerating charitable gifts by making them before the end of 2012 could be a wise strategy.
As I write this, nobody truly knows where the fiscal cliff discussions will go. What we do know is that continued intransigence by our legislators will lead to greater confusion for charitable donors and their professional advisors.
So, in an environment like this, on what other charitable giving opportunities might donors focus?
Lately, I have been talking about a little known — and, admittedly, slightly esoteric — charitable giving vehicle that offers unique benefits. The Charitable Lead Trust (CLT) offers donors an ingenious way to shield assets from estate and gift taxes, leaving more for their children and/or grandchildren while providing in generous ways for our Jewish community.
A lead trust is an irrevocable arrangement that provides annual income to a charitable organization, such as the Jewish Community Foundation of Greater MetroWest NJ or Jewish Federation of Greater MetroWest NJ, for a period of years. At the end of that period, assets remaining in the lead trust are given to non-charitable beneficiaries, usually the donor’s children or grandchildren.
Generally, the best candidates for a lead trust are people who make annual gifts to charity and have a substantial enough income to take advantage of the tax deduction generated by the creation of the trust. While they can be funded with virtually any type of asset, lead trusts generally are appropriate for assets that are likely to appreciate over the life of the trust (typically 10 to 20 years).
A driver of recent increased interest in lead trusts is the current, nearly unprecedented, low interest rate environment. And, of course, the ability to reduce the exposure of the donor’s estate to the significant estate tax is attractive as well, as any assets contributed to create the lead trust are removed from the donor’s estate.
Lead trusts may offer you and your family a unique opportunity to provide for the Jewish community you love while setting aside assets for your heirs, all in a tax-efficient manner. For more information, feel free to call me at (973) 929-3060 or send a confidential email to jrednik@jfedgmw.org.
JCF advises donors to seek their own legal and tax advice in connection with charitable giving and planning matters. JCF does not provide legal or tax advice.
Joshua W. Rednik is executive director of the Jewish Community Foundation of Greater MetroWest NJ.