What is charitable planning?


Well, charitable planning is when a client wants to provide for a favorite charity, and also receive a tax benefit. Now, making a charitable contribution during life normally provides the charitable donor with an income tax charitable deduction, which would be limited to either 35 or 50% of their adjusted gross income. That depends on whether or not the charitable recipient is a public or private charity. When a donor passes away and leaves assets in their estate at the time of their death, they receive a 100% deduction from the value of their estate for the assets that go to charity.

Charitable planning is mixing and matching a client’s charitable inclination, whether or not it’s something that would like to do during their lifetime, or whether it’s something they would like to do when they pass away.

Note: The Tax Cut and Jobs Act of 2017 signed into law in December 2017 increased the exemption amounts mentioned in these videos. The personal estate, gift, and generation-skipping tax lifetime exemption was increased to $11.18 million per person. The annual gift tax exclusion was increased to $15,000 per donee per year.

Both amounts are indexed for inflation and may increase year over year until December 31, 2025, when the law sunsets and reverts to 2017 values.