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Charitable Giving
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Definition
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Gift made to charitable, religious, scientific, or other specified
organizations.
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When Does It Apply?
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When the donor wishes to reduce income or estate taxes and/or assist a
qualified organization.
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How Does It Operate?
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Gifts must be made to qualified organizations before they are deductible (i.e.
churches and nonprofit schools).
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Advantages/Disadvantages
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Advantages - reduction of income or estate taxes; gift taxes do not
apply.
Disadvantages - without planning, family will receive a smaller
inheritance. (See Other Considerations below).
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Estate/Gift Tax Implications
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Gifts made to qualified organizations during life or made at death are not
included for death tax computation purposes.
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Income Tax Implications
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Current income tax deduction available to donor (with annual limitations). No
tax to charity upon receipt of gift or on any income produced by the gifted
property.
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Other Considerations
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Life insurance is an excellent charitable gift since death proceeds are many
times premiums paid. Wealth replacement trust with life insurance can
compensate for loss of asset given to charity.
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