Common Estate Planning Mistake #15: Using the wrong assets to fund charitable gifts and bequests

Making charitable gifts or bequests to religious or other non-profit organizations is a generous gesture and an excellent way of making a difference. But, there can be a right way to do it and a not so right way to do it, in terms of getting the most of your donation while still preserving your assets.

In this Estate Planning Minute, Wes Coulson, Illinois Elder Law attorney, discusses another common estate planning mistake and the financial burden that can happen when using the wrong assets to fund charitable gifts and bequests.

Common Estate Planning Mistake #15: Using the wrong assets to fund charitable gifts and bequests


Hi, I’m Wes Coulson and this is your Estate Planning Minute. This is another in our series on Common Estate Planning Mistakes. The one we’re going to talk about today is using the wrong assets to fund charitable gifts and bequests. What do I mean by that? Well, let me explain this by way of giving you a hot tip.

Let’s say that you want to give $5,000 to a religious organization or to a charity. And so you’ve got some money that’s invested, and it has gained money over time, your investments have. And you’re saying, “You know, I’d like to cash that in, but I’m going to have to pay capital gains tax.” So, you cash it in, you pay capital gains tax on it, and then you take the money and write a $5,000 check out to the religious organization or charity.

Well, what if instead, you had just said, “Let me directly from my investment account give that money over to the charity.” You know what, they still get the same $5,000 worth of gift, but you didn’t have to pay capital gains tax. They won’t have to either because they’re a tax exempt organization. Nobody pays the income tax on it. You win. The Charity wins. That’s the way to do it. Thanks.

For more Common Estate Planning Mistakes, visit these articles:

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