Investing with Faith / Elisa Smith

Optimize your legacy giving for the new tax law

For people in our archdiocese prayerfully considering establishing or giving to endowment funds through the archdiocesan Catholic Community Foundation (CCF), there have always been tax implications to consider. With the new tax law, that’s as true as it has ever been.

In the Gospel of Matthew, Christ says, “Repay to Caesar what belongs to Caesar and to God what belongs to God” (Mt 22:21). Clearly, he taught that while we are called to provide for God’s work on Earth, we should also pay our taxes. However, that doesn’t mean we can’t maximize our tax advantages so our generosity can do more good.

The changes in the new tax law led me to initiate a conversation with Jim Laudick, advisor to the CCF board and a tax partner with BKD, a national accounting firm based in Missouri. According to Jim, there are many tax strategies you can use to fine-tune your legacy giving. Here are the most common:

First, in some cases, biannual contributions may make more sense instead of annual ones. The federal government has nearly doubled the standard deduction for taxpayers, creating a much higher annual threshold to clear if you itemize: $12,000 for individuals, and $24,000 for joint filers.

If you give annually to a CCF managed fund, your gift—combined with your other deductions—may not be greater than the standard deduction. In this case, you may be better off doubling your gift and paying it every two years instead. Over time, the amount you give will be exactly the same, but every other year you may be able to itemize and take a larger deduction.

Secondly, if you are taking required minimum distributions (RMDs) from your IRA, you can contribute a portion (up to $100,000 each year) tax free to an endowment fund managed by CCF. This will reduce your adjusted gross income (which has some advantages), but it will not count as a charitable deduction.

Finally, you can contribute appreciated stocks or mutual funds directly to any endowment managed by CCF. You will pay no capital gains on the appreciation, and you will be able to deduct the fair market value as a charitable contribution.

The parish, school or ministry accepting the gift will receive the full value of the stocks or mutual funds.

For more information about making the most of your endowment giving, please contact us at ccf@archindy.org or by phone at 1-800-382-9836, ext. 1482, or 317-236-1482. You can also visit our website at archindy.org/CCF.
 

(Elisa Smith is director of the archdiocesan Catholic Community Foundation. Tax information or legal information provided herein is not intended as tax or legal advice and cannot be relied on to avoid statutory penalties. Always check with your legal, tax and financial advisors before implementing any gift plan.) †