In December of 2017, President Trump signed into law the Tax Cuts and Job Act. The law does not change a taxpayer’s ability to deduct charitable contributions as long as they are itemized deductions. But because of the increased standard deduction, it is likely that the number of taxpayers who itemize their deductions will be smaller and it could possibly impact future donor contributions.
Some alternatives for your donors to consider when making charitable gifts as part of an estate plan include:
- Making a specific bequest to the organization of choice. This can be a certain dollar amount or a specific percentage of assets.
- Naming a charity as a beneficiary of an individual retirement account. A charitable deduction is available for the federal estate tax so 100% of funds going to a qualified charity are tax free.
- Creating a donor advised fund during the lifetime of the donor. The donor’s will or trust can direct assets to be distributed to the fund at the time of the donor’s death and the fund can make distributions over many years. Frequently, charitable gifts made by a donor advised fund are directed by family members giving the potential for several generations to understand the impact of long-term charitable giving.
As with all legal or tax issues, please consult your organization’s legal counsel to determine how to best accept charitable gifts as part of an estate plan.