• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

The Mendel Law Firm, L.P.

Attorneys & Counselors

Call Now: (281) 759-3213

  • FB
  • TW
  • IN
  • RSS
LP Payment button
  • Home
  • Our Firm
    • About Our Firm
    • About The American Academy
    • Advantages of Working With Our Firm
    • Attorney and Staff Profiles
    • Mission Statement
    • Multimedia
    • Published Books
    • The Academy Fellow Designation
  • Services
    • Asset Protection & Business Planning
    • Elder Law & Medicaid Services
      • Are You A Caregiver
      • Coping With Alzheimer’s
      • Guardianship & Conservatorship
      • Hospice Care
      • Emergency Medicaid & Nursing Home Planning
      • Medicaid Planning
      • Veteran’s Benefits
    • Estate and Gift Tax Figures
    • Estate Planning Services
    • Family-Owned Businesses & Farms
    • Financial Planning Assistance
    • Incapacity Planning
    • IRA & Retirement Planning
    • Legacy Planning
    • LGBTQ Estate Planning
    • Pet Planning
    • SECURE Act
    • Special Needs Planning
    • Trust Administration & Probate
  • Seminars
  • Testimonials
    • Client Testimonials
    • Representative Clients
    • Review Us
  • Resources
    • Areas We Serve
      • Baytown
      • Conroe
      • Galveston
      • Houston
      • Pasadena
      • Woodlands
      • West University Place
    • Elder Law Reports
    • Elder Law Resources
      • Galveston Elder Law
      • Houston Elder Law
      • Sugar Land Elder Law
      • West University Place Elder Law
      • Woodlands Elder Law
    • Estate Planning Resources
      • Estate Planning Checkup
      • Estate and Gift Tax Figures
      • Estate Planning Definitions
      • Estate Planning Reports
      • Incapacity Planning Definitions
      • Is Your Estate Plan Outdated?
      • Top Estate Planning Techniques
      • Top 10 Estate and Legacy Planning Techniques
    • Frequently Asked Questions
      • Asset Protection Planning
      • Avoidance Tax Planning
      • Avoiding Probate
      • Business Succession Planning
      • Charitable Gifting
      • Elder Law
      • Estate Planning
      • Frequently Asked Questions for Families Without an Estate Plan
      • IRA and Retirement Planning
      • Legacy Wealth Planning
      • LGBTQ Estate Planning
      • Living Trusts
      • Medicaid
      • Medicaid Planning
      • Nursing Home Planning
      • Pet Planning
      • Power of Attorney
      • Probate
      • Trust Administration
      • Trust Administration & Probate
      • Trusts
      • Veterans Benefits
      • Wills
    • LGBTQ Resources
    • Probate Resources
      • Houston Probate
      • Sugarland Probate
      • Woodlands Probate
      • West University Place Probate
    • Probate & Trust Administration Resources
      • Bereavement Resources
      • How to Know if You Need Extra Help With Your Grieving
      • Loss of a Loved One
      • The Mourner’s Bill of Rights
      • Things You Need To Do When a Loved One Passes Away With a Trust
      • Things You Need To Do When a Loved One Passes Away With a Will
      • Trust Administration & Probate Definitions
    • Special Needs Resources
    • Newsletters
  • Contact Us
  • BLOG
Home » Estate Planning Articles » Three Ways the IRS Rewards Your Generosity

Three Ways the IRS Rewards Your Generosity

November 30, 2012 by Stephen A. Mendel, Estate Planning Attorney

Compliments of Our Law Firm,
By: The American Academy of Estate Planning Attorneys

Giving generously to charity has many advantages, some obvious, and some not so obvious. First and foremost, your donation helps to support your favorite cause. Giving also makes you feel great, and if you itemize deductions on your tax return, gifts to qualified charities may result in an income tax deduction.

But what if you want to do a little more, and make a large contribution to your alma mater, your favorite nonprofit, or another charitable cause? In that case, you should consider including philanthropy in your estate plan. Larger gifts to charity often mean greater tax benefits, and there are many methods available for making a contribution.

Here are three common options:

  1. Charitable Lead Trust. When you establish a Charitable Lead Trust, you can minimize your estate or gift tax bill. Here’s how: the trust is established for a predetermined period of time, and you transfer assets to it. During the designated period, the trust pays an income stream to your chosen charity. After the period expires, the trust assets are distributed to your designated “remainder beneficiaries” – generally your children or other family members. Because the remainder beneficiaries have to wait for their portion of the trust property, the IRS assigns a reduced value to their share. The result is a lower gift or estate tax bill for you.
  2. Charitable Remainder Trust. If you plan to give a portion of your property to charity during your life or after your death, a Charitable Remainder Trust might be a good option. This arrangement is similar to a Charitable Lead Trust, only it’s reversed. You transfer property to the trust, and you or a family member receives an income stream for a designated period of time. When this time period expires, the remaining trust assets are distributed to the charity of your choice.

    In addition to benefiting your favorite nonprofit or other charitable institution, a Charitable Remainder Trust gives you an income tax deduction for the actuarial value of the trust property that will ultimately be distributed to the charity.
  3. Donation of Appreciated Property. What if you want to make a direct donation of valuable property? If the property has increased in value since its purchase, such a donation can result in significant tax savings for you. When you donate appreciated property, the IRS usually allows you to claim a deduction for the full, current value of the asset. Since you are donating, rather than selling, the property, you escape paying tax on any gain in the property’s value.

For example:

John bought stock for $2,000. It has increased in value and is currently worth $10,000. If he sells the stock, he’ll pay capital gains tax on $8,000 (the difference between his purchase price and the sales price). Assuming a 20% capital gains tax rate, the sale means a $1,600 tax bill for John.

If, on the other hand, John decides to donate the stock to charity, he’ll pay no capital gains tax – a $1,600 savings.

These are just a handful of the available options for reducing your tax bill while giving generously to charity. Your estate planning attorney can help you explore all the strategies available to you and help you choose those best suited to your individual goals.

About Stephen A. Mendel, Estate Planning Attorney

Mr. Stephen Mendel is an attorney who focuses a substantial part of his practice on estate planning. Mr. Mendel’s guiding principle is to provide his clients with quality legal services tailored to each client’s specific needs and goals.

Primary Sidebar

The Mendel Law Firm

Follow Us

  • FB
  • TW
  • IN
  • RSS

Plan For Your Future and Protect Your Legacy

There's a lot that goes into setting up a comprehensive estate plan, but with our FREE worksheet, you'll be one step closer to getting yourself and your family on the path to a secure and happy future.

  • This field is for validation purposes and should be left unchanged.

HOUSTON

The Mendel Law Firm, L.P.
1155 Dairy Ashford, Suite 104
Houston 77079
United States (US)
Phone: (281) 759-3213
Fax: 281-759-3214

Map

map

Office Hours

Monday8:00 AM - 5:00 PM
Tuesday8:00 AM - 5:00 PM
Wednesday8:00 AM - 5:00 PM
Thursday8:00 AM - 5:00 PM
Friday8:00 AM - 5:00 PM

Footer

The Mendel Law Firm

The information on this website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. This information on this website is not intended to create, and receipt or viewing of this information does not constitute, an
attorney-client relationship.

© 2023 Mendel Law Firm, All Rights Reserved. Privacy Policy | Contact Us | Disclaimer | Site Map | Powered by American Academy of Estate Planning Attorneys