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Proactive Giving in Uncertain Times

With the looming “fiscal cliff” and a grid-locked congress the economic climate is uncertain at best. Yet one thing is for sure - charitable giving is changing. Therefore, the path of wisdom is to plan your giving now in order to take advantage of the current tax benefits and deductions.

Four Strategies for Proactive Givers

1) Establish a Giving Fund Before Year End

By opening a donor advised giving fund at South Carolina Christian Foundation, your deposits made before December 31st will receive the maximum charitable benefits based on 2012 tax rates and deduction limits. You then can make distributions from your fund to your charities in 2013 or later.

2) Deposit Today, Give More Tomorrow

Currently for gifts of cash the maximum allowable tax deduction is up to 50% of your Adjusted Gross Income (AGI) and, for non-cash gifts up to 30%. In the future, the rates may change even to the point that many will pay taxes on the monies given to charity. Depositing assets this year locks you in to the current rates but allows you to gift out over time.

3)Use Non-Cash Assets in Gifting

The potential changes to the Capital Gains Tax rates and the possibility deductions may be capped or limited next year highlights stocks, bonds, mutual funds, even real estate and business interests as assets to be used for giving today. By gifting these to a Donor Advised Fund you can deduct the full current value and you are not required to pay capital gains as you would if you sold the asset and then gave or contributed cash.

4) Create a Trust

The Estate tax rates are due to return to pre-2001 levels unless Congress intervenes. Estates worth more than $1million will be subject to taxes at a maximum rate of 55%. You have a choice. Give your estate to the government or to the charities about which you are most passionate. Establishing a Charitable Remainder Trust or a Charitable Lead Trust is a great way to receive the maximum tax deduction for your gift now, create an income stream, and leave assets to your favorite ministries. By naming your donor advised fund as the beneficiary of the Trust you and your heirs have the opportunity to change the charities you support without changing your will.

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