Benefits Of Giving Appreciated Property Instead Of Cash

You've heard it before: Charitable giving accomplished with appreciated securities instead of cash makes good sense. Making the gift during your lifetime provides two extra benefits over charitable bequests - seeing the good resulting from your gift and realizing a potential income tax deduction based on the full current value of the asset.

Although most charitable organizations usually sell assets received as gifts, the Friends of José Carreras International Leukemia Foundation more often keeps gifted assets. Since the foundation is a tax-exempt institution, no one will ever be taxed - regardless of when gifted assets may be sold by the foundation.

Investors may be reluctant to sell certain securities because they may have been especially successful. However, this strategy may produce a portfolio that is inappropriate and non-diversified. Making selective charitable gifts from your portfolio can be a tax-advantaged way of rebalancing your assets.

It may seem easier to simply write a check for charitable contributions than to deal with the assumed-to-be-complex details of making gifts of appreciated assets, plus deciding which assets are most appropriate to include. In fact, it is very easy to make gifts of appreciated securities, and the foundation is willing to assist you in accomplishing your goals.

If you hold certificates representing your ownership of the securities to be donated (stocks, bonds, mutual funds), the Friends needs only the certificate(s) together with a signed stock/bond power and a gift letter, both of which will be supplied. It is possible to deliver a certificate larger than your gift and have the excess shares returned to you in the form of a new certificate.

If the securities to be gifted are stocks or bonds and are held by your broker, it is very easy for that firm to electronically deliver the assets directly to the brokerage account of the Friends. All that is required in this case is your signature on another kind of gift letter, which will be drafted for you according to your desires. The foundation will arrange for a signature guarantee to the letter and forward it to your broker. Securities can be delivered almost instantly to the foundation's account.

If you are giving mutual fund shares which are held unissued at the fund, the gift is accomplished through a specially crafted letter directed to the mutual fund. This form of gift represents a special opportunity to simplify your tax life as it is common to ignore the ever-changing tax "cost basis" of mutual fund shares for which there often are no records. Your gift can presumably be the oldest fund shares, those having the lowest cost basis and the least recorded information.

Remember: Help in arranging a gift of appreciated securities is only a telephone call away.  Please address any questions, tax-related or otherwise, to Robert E. Frey at 206-285-1730 or bob@lakesideadvisors.com.   He is a certified Financial Planner associated with KMS Financial Services, Inc. and Lakeside Advisors, Inc. and is a financial adviser to the Friends.