Charitable Giving: Gift of Stocks

Many philanthropically minded people provide financial support to charities throughout their lives, and in some instances, they would like their donations to continue after their death. There are numerous ways to make charitable contributions via estate planning, including through the gift of stocks. There are specific rules regarding the transfer of stocks, though, and it is important that people who intend to bequeath stocks to charity understand them; otherwise, their objectives may not be met. If you are interested in learning more about estate making charitable donations of stock options, it is smart to consult a knowledgeable estate planning lawyer.

Ways to Donate Stocks to Charity

Gifting stocks directly to an organization is the most straightforward way to make a charitable donation. The charity will most likely liquidate the stock after the transfer. You can also donate stocks to a charity via a bequest in your will or through a revocable trust. The bequest must clearly specify what stocks you would like to transfer to the charity and use the correct legal name of the charity. A lack of specificity can create confusion. If you have specific goals in mind in making the donation, you should include those as well; you should be certain that the charity can fulfill the request, though, otherwise it may not be able to accept the gift.

The Benefits of Donating Stocks

There are numerous benefits to donating stocks to a charity as opposed to money. First, donating stocks directly to a charity allows you to avoid incurring the capital gains tax you would face if you sold the stock and will most likely allow you to take a greater tax deduction. Additionally, the process of donating stocks is relatively simple.

Types of Stocks You Can Donate

There are multiple considerations when determining what types of stocks to donate. For example, if a stock has appreciated greatly over time, gifting it can help you avoid the large capital gains tax that would be associated with a sale. Similarly, donating stocks that you have owned for more than a year will provide a much greater tax benefit than those you have held for a short time. Generally, it is better to gift highly liquid stocks that are traded on a public exchange rather than privately held stocks, as they can be more complicated for the organization you are donating to liquidate. If a stock is worth less than it was at the time you purchased it, it is most likely better to sell the stock and gift the proceeds of the sale to the charity, as this allows you to claim a capital loss on your taxes.

Meet with an Experienced Estate Planning Attorney

Stocks are valuable assets that would benefit many organizations, and charitable gifts in the form of stocks are a good way to continue to support organizations you care about after you pass away. If you are interested in making charitable gifts through a will or trust, please contact our office to discuss your options.