We hope you’re enjoying your summer! We’ve put together six tips to keep in mind as you plan your charitable giving for the coming months, years, and even decades. As always, the staff at the Winona Community Foundation is happy to be a resource!

Donate appreciated stock to your fund.

Yes, yes, we absolutely understand how easy it is to write a check when you want to boost your donor-advised or make a gift to the Winona Community Foundation. But before you pull out your pen, consider whether appreciated stock would be a better way to make that gift. When you give shares of long-term appreciated stock, you can be eligible for a charitable tax deduction at the fair market value of the shares. When Foundation sells the shares as a 501(c)(3) charity–it doesn’t pay capital gains tax. By contrast, if you were to sell those shares and give from the proceeds, you’d have a lot less cash to work with. Please reach out anytime to learn more about how easy it is to take advantage of this tax-savvy giving technique.

Start paying attention now to the estate tax exemption sunset. 

The estate tax exemption–the total amount a taxpayer can leave to family and other individuals during their life and at death before the hefty federal gift and estate tax kicks in–is scheduled to drop, rather precipitously, after December 25, 2025. Unless legislation is passed to prevent it,  the exemption is scheduled to fall back to 2017 levels starting January 1, 2026. After adjustingfor inflation, d it would drop to roughly  $7 million per person. More people–maybe including you–could be subject to estate tax in the not-too-distant future. We’re happy to work with you and your advisors to explore how charitable giving techniques can help you avoid estate tax and leave a legacy for the community, especially if you start planning now.

If you can take advantage of the QCD, do it.

A Qualified Charitable Distribution (“QCD”) is a very smart way to support charitable causes. If you are over the age of 70 ½, you can direct up to $105,000 from your IRA to certain charities, including a field-of-interest, designated, unrestricted, or scholarship fund at the Winona Community Foundation. If you’re subject to the rules for Required Minimum Distributions (RMDs), QCDs count toward those RMDs. Through a QCD, you avoid income tax on the funds distributed to charity. Unfortunately, the IRS does not allow individuals to make a QCD to a donor advised fund. We can work with you and your advisors to go over the rules for QCDs and evaluate whether the QCD is a good fit for you.

Review your IRA beneficiary designations. 

As you review your assets and how they are titled, perhaps in connection with an annual financial and estate plan review, pay close attention to tax-deferred retirement plans such as 401(k)s and IRAs. Typically, a spouse is named as the primary beneficiary of these accounts. But as you and your advisors evaluate whom to name as a secondary beneficiary, don’t automatically default to naming your children or your revocable trust. After talking with your advisors, it may be that naming a charity, such as the Winona Community Foundation, is by far the most tax-efficient way to make gifts to your favorite causes. Doing this avoids not only estate tax, but also income tax on the retirement plan distributions. That’s why non-retirement fund assets may be better-suited to pass to children and grandchildren.

If you’d like to learn about additional ways to use a charitable remainder trust to help pass your tax-deferred assets to you heir, contact the Foundation today.

Embrace a holistic approach to philanthropy.

When you work with the Winona Community Foundation, charitable giving is easy, flexible, and rewarding. As the hub of your charitable giving, the Foundation offers a wide range of fund types, services, and ways for you and your family to get involved with the community you love. Many of our fund holders use a donor-advised fund to organize annual giving to charities. We can also help you establish a designated or field-of-interest fund to complement the function of your donor-advised fund. A designated fund allows you to support a specific charity over the long term, while a field-of-interest fund focuses your support on a particular area of community need. We’d also be honored to work with you and your advisors to structure a bequest to the Winona Community Foundation in your estate plan to support important causes beyond your lifetime. We are here to help you make the most of your philanthropic intentions, and it is an honor to work together.