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Contributing appreciated securities to charity continues to be an invaluable tax strategy. With a strong market and a reduced corporate tax rate, investors are in a position where they will likely incur capital gains if they sell their positions. Donating those highly appreciated assets can reduce the donor’s overall income tax liability, eliminate capital gains tax, and provide a larger donation to charity. Leveraging the expertise of a donor-advised fund provider like Fidelity Charitable is an effective way to facilitate these types of donations.
Moving assets into a donor-advised fund is a smart move for donors experiencing a high-income year or creating a plan for charitable giving in retirement. This supports tax benefits during the high-income year(s) while providing for long-term charitable giving. In particular, the limit increase to 60% of AGI for cash charitable contributions and the repeal of the Pease limitation make giving to charity more beneficial, for both the donor and the charities they support.
For high-net worth individuals, donor-advised funds continue to be a valuable tool in a comprehensive estate plan. Donors can employ a donor-advised fund as a flexible solution as they design their charitable legacy.