Q&A: JANE WILTON | GENERAL COUNSEL
Putting Your Assets to Work for Good
Jane Wilton, our general counsel, is a tax expert who helps charitable New Yorkers and their professional advisors create funds in The New York Community Trust. We asked her about strategies for giving.
What’s a good way to help people use charity to reduce taxes?
I advise people to use the right assets. For instance, appreciated stock that has been held for more than a year: You avoid capital gains taxes, yet your charitable income tax deduction is usually the full value of the stock. Compared to a check from your bank account, a gift of stock offers more bang for your buck.
What about deferred gifts?
Charitable remainder trusts are good tools for those who want a charitable deduction right away, but would like to wait until family and friends are taken care of before the gift is made. The charitable income tax deduction is based on the charity’s future interest. We often see these used at The Trust to create permanent funds that support grantmaking to help improve life in our city (like the funds on page 3).
Where do tax and retirement planning intersect with giving back?
By the time they’re ready to retire, many people find they don’t need all their IRAs or life insurance policies. And their grown children are independent (hopefully!). It’s easy to name The New York Community Trust as a beneficiary—in fact, you don’t even need to update your will to have distributions made from an IRA, or to transfer ownership of a life insurance policy.
What are the advantages of giving an IRA or life insurance policy?
By taking advantage of the “IRA charitable rollover,” a donor excludes the distribution amount from ordinary income instead of taking a charitable deduction. The IRA charitable rollover provisions don’t apply to a gift to a private foundation or donor-advised fund, but there’s good news: Donors can use them to create permanent funds that support the causes or communities they love, in perpetuity. In the case of an insurance policy, the donor may be entitled to a deduction for his or her basis in the policy.