The IRS has established rules that allow tax deductions for charitable donations. These laws allow you to support charitable organizations, like your church or KML, and receive a tax benefit at the same time.
There are also laws that allow you to make charitable donations through your estate plan that provide additional tax benefits. Your tax consultant or financial planner can suggest options that work for your specific estate, but here is some basic information for your consideration:
Appreciated Property – When stocks, mutual funds, real estate or other property has gained in value, you are responsible for taxes on the capital gains. By donating appreciated property, you could qualify for a tax deduction on the donation, and also avoid the taxes on the capital gains.
IRAs/401(k)s – These investment options encourage people to save for retirement while reducing their tax burden. The money is then taxable at the time of withdrawal. When the funds from these retirement funds are designated within an inheritance, the money might become taxable as a lump sum. When money from these types of funds is used as a charitable donation, the government allows the transfer to occur without collecting taxes. (Note: this information does not apply to Roth IRAs.)
Government Savings Bonds – Savings bonds present an interesting option for a charitable donation. If you redeem a savings bond and donate the money to charity, the interest from those bonds will be taxable to you. If you pass savings bonds to your heirs, they will be required to pay taxes on the interest. If, however, you pass the savings bonds to KML or other charitable organization through your will, there will be no taxes due on the earned interest.
Life Insurance Policy – A life insurance policy can be a great way to support KML or other charitable organization. The annual premiums require a relatively small investment compared to the benefit that is provided upon death. A donor can also save on current taxes by designating the charity as the owner and beneficiary. When the charity is named as the owner, the government allows certain deductions on the cash value of the policy as well as the premium payments.
Charitable Remainder Annuities and Trusts – Within these gift options, there are four unique parties – the donor, the trustee, the beneficiary, and the charity. The donor contributes money to a trust and selects a trustee to manage the funds. The beneficiary receives income from the fund for a pre-determined length of time, and the charity receives the remainder of the fund at the end of that time period. By naming KML as the charity, you can provide financial support to your loved ones, make a charitable donation to KML, and receive tax benefits on the donation.
To discuss a planned gift to KML, contact your KML Estate Plan and Deferred Gift Counselor,
Paul Snamiska, at 262-677-4051 or
The information that is provided on this site is for educational purposes only. Consult your personal tax consultant,
attorney, or financial planner for specifics that apply to your personal situation.