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Benefits of lifetime charitable gifts can outweigh bequests, says Atlantic Trust


Lifetime gifts may carry considerable advantages over charitable bequests, according to Atlantic Trust, the US private wealth management division of CIBC.

"One interesting aspect of lifetime giving is that you get to see your donation in action, even if you prefer to do so anonymously," says Linda S Beerman, chief fiduciary officer for Atlantic Trust. "Even the less charitably inclined sometimes view this as a valuable incentive, considering that at least a portion of those funds would otherwise go to taxes."

There is also the prospect of achieving an income tax deduction, in addition to estate tax savings. Generally, those who give cash to public charity, for example, are entitled to an income tax deduction of up to 50 per cent of adjusted gross income (AGI) or up to 30 per cent of AGI for donations of other appreciated assets that are held for at least 12 months. These deductions can be carried forward for up to five years if they cannot be taken in the year that the gift was made.

Several factors will come into play when designing a giving plan. Donors will not only want to consider the pros and cons, from a tax perspective, of donating various types of property, but also how the gift will be made and when. There are other ways to give besides writing a check. Structured giving vehicles, such as a donor-advised fund, private foundation or charitable remainder trust, may offer the additional benefits of convenience, control and anonymity. Donors can even utilise multiple giving vehicles to maximise their charitable impact.

Gifting real estate or tangible property, such as valuable works of art, are also options, though these donations may carry complications. Timing is also important in choosing a charitable vehicle. A donor's financial profile and tax picture might influence whether to make a gift in a single year or to initiate a multiyear gifting program.

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