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Charitable Holiday Giving: Good for Your Health and Pockets

Whatever charitable giving strategy works best for you, let the season of giving begin


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'Tis the season for giving, and we all know that helping others creates the warm and fuzzies, but as it turns out, philanthropic actions are good for our health and taxes, too.

POSSIBLE HEALTH BENEFITS

Research shows that philanthropy can improve our health and possibly extend our lifespans. When we contribute time or money to a charitable cause, the hormone oxytocin is released in our bodies, causing warm feelings of euphoria and a connection to others. In turn, this can decrease stress levels, which may improve physical health and longevity. Researchers say giving to others may also help warn off heart disease by as much as twice the impact of taking an aspirin. People who help others also report fewer aches and pains, have more energy and feel stronger.

Ultimately, our generosity can not only produce far-reaching effects on the well-being of others, but on our own health and happiness as well.

TAX BENEFITS

Most charitable gifts provide you with a current-year income tax deduction. There are several ways to qualify including gifting directly to nonprofits, naming a charity as a beneficiary on your life insurance policy, donating to pooled income funds, creating a private foundation or funding a Charitable Remainder Trust or Donor-Advised Fund. Review these options with your tax advisor to determine what might work for you.

LEAVING A LEGACY WITH CHARITABE REMAINDER TRUSTS

An effective and popular choice for individuals who wish to leave a lasting legacy to their favorite charity, but also reap various financial benefits is the Charitable Remainder Trust. In exchange for a future gift to charity, the Charitable Remainder Trust provides several major tax and economic benefits that may allow you to:

  • Defer capital gains taxes
  • Increase diversification and cash flow
  • Receive a current-year federal income tax deduction
  • Reduce future estate tax liabilities

FLEXIBILITY + MAXIMAL IMPACT WITH DONOR-ADVISED FUNDS

A Donor-Advised Fund (DAF) can be a good option when you want more time to decide where to direct assets. When using a DAF, your charitable donation is both administrated and managed by a 501(c)(3).

Because DAFs are public charities, you'll receive the full tax benefit when you contribute to the fund, whether you choose to give in installments over time or want to wait to decide exactly where your money is going. Ultimately, this option gives you more time to develop a thoughtful and impactful giving strategy. You might also consider a DAF if you are looking for additional deductions before year-end because of the changes in the tax laws.

Whatever charitable giving strategy works best for you, let the season of giving begin. You may even feel healthier doing it.

Madison Carter is a financial advisor with the global wealth management division of Morgan Stanley in Denver. She can be reached at 303-316-5169. Email her at Madison.anne.carter@morganstanley.com or visit her website: https://fa.morganstanley.com/thecherrycreekgroup/

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