Michael Afflitto, CAP®
Southern New England Division
855 Asylum Avenue
Hartford, CT 06105
Toll Free: 1-888-468-5356
Tel: 860-702-0070 Direct
In addition to outright gifts, individual stocks also are very popular for funding life income gift plans. With little, if any, valuation problems, such gifts are easy to make. What’s more, the plans can generate substantial tax benefits in the year they are set up and provide a good income for the donor for life or a term of years. With some plans you can choose between a fixed and variable income.
There are many reasons for using appreciated stock to fund a life income plan. Here are just a couple:
If you have participated in the financial market in the last few years, you may own stocks that pay very little in dividends. Suppose you now want more income for retirement. If you sell your stock and reinvest it to achieve a higher yield, you may face a capital gains tax liability as high as 23.8%. If you are charitably inclined, a better strategy might be to fund one of our life income gift plans with the stock. These gifts provide relief from the capital gains tax, and the full value of the stock is used to determine the payout of your life income gift. You also receive a substantial income tax charitable deduction, which will further improve your cash flow. Of course, you also get the personal satisfaction of knowing that your gift ultimately will have an impact on our future work.
If you are retired or approaching retirement, you may want to be more conservative with your investments. Fixed income often replaces growth as a primary investment objective, especially during times of economic uncertainty.
Let’s say your current investment objective is a mix of 40% equities and 60% fixed income, but you are overweighted in stocks. Again, selling off stock to rebalance your investment mix might trigger a hefty and unwanted capital gains tax. You can utilize a life income plan to mitigate the tax, rebalance your portfolio and make an impact with your gift to further our good work—another good example of how charitable giving can address personal financial planning objectives as well as support worthwhile institutions.
It’s easy to find out. Please call or email us and we’ll be happy to answer any of your questions. You can request a free, no-obligation proposal, which will spell out the anticipated financial and tax benefits of a hypothetical gift. We will provide you with the procedures for making a gift of your choice which will help to ensure that you receive the maximum benefits from your gift.