A Lifetime Giving Plan is a strategic approach to making charitable contributions while maximizing the benefits for both the donor and the recipient. This plan enables individuals to systematically give away their assets or income during their lifetime, rather than waiting until death to distribute their estate.
The Lifetime Giving Plan typically involves several key components:
-
Annual Exclusion Gifts: Donors can give a certain amount, often adjusted for inflation, to as many individuals as they wish each year without triggering gift tax. For example, in 2023, the annual exclusion limit is $17,000 per recipient.
-
Lifetime Exemption: Beyond annual exclusions, there is a lifetime gift tax exemption, allowing individuals to give away a larger sum without incurring tax, usually linked to the federal estate tax exemption. As of 2023, this exemption is approximately $12.92 million.
-
Charitable Contributions: Many individuals incorporate charitable giving into their Lifetime Giving Plan to fulfill philanthropic goals while potentially receiving income tax deductions. Contributions to qualified charities can reduce the taxable income of the donor.
-
Family Involvement: A Lifetime Giving Plan can also facilitate family engagement in charitable giving, allowing family members to participate in decision-making regarding donations or to experience the impact of philanthropy firsthand.
-
Asset Types: Donors can use various assets for their giving, including cash, stock, real estate, or other personal property. Each asset type may have different implications in terms of tax benefits and valuation.
-
Planning Considerations: It is crucial to consider personal financial situations, tax implications, and the wishes of the donor. Consultation with legal and financial advisors is often recommended to tailor a plan that aligns with the individual’s goals and values.
Overall, a Lifetime Giving Plan allows for meaningful engagement in charitable activities while providing financial advantages, and it can create a legacy of giving that extends beyond the donor’s lifetime.
« Back to Glossary Index