Over 70 percent of Americans donate to charity during their lifetimes. Among taxpayers who itemized deductions in 1992, 90% made charitable donations. In Arkansas, many charitable organizations are supported by voluntary contributions. Chances are most of your clients are already making charitable gifts.

As a professional advisor, you have an opportunity to assist your clients in achieving their philanthropic objectives as effectively as possible. Because our tax system accords special benefits to those who give, you also have a unique opportunity to help your clients achieve other financial, personal, or business goals through charitable giving.

Your role is to help clients select the right assets to give as well as the appropriate timing and gifting vehicles to maximize the charitable impact. In turn, the client receives the maximum financial benefit. Here are five things to remember when planning your client's financial future:

Point I:
Your client already has a charitable giving partner – the government. Since 1917, Congress has granted favorable tax treatment to individuals who choose to make charitable contributions to the charities of their choice. By using the charitable deduction, your client reduces the amount of taxes otherwise owed and supports a favorite cause.

Point II:
"Giving while you're living" is a tax-wise idea. Charitable gifts made during your lifetime provide an income tax deduction that is not available through a bequest gift. Because the outright current gift is no longer a part of your client's estate, these gifts ultimately avoid estate taxes as well.

Point III:
Giving assets is better than giving cash, especially long-term, highly appreciated ones. This is because of the dual tax benefit of an income tax deduction based upon the fair market value of the gift plus the added benefit of avoiding the capital gains tax.

Point IV:
Planned giving provides your client with powerful benefits. It provides significant income tax and estate tax benefits that can also offer a lifetime income stream as well as a significant remainder gift to charity. Such plans offer your client the opportunity to:

• Make a current commitment to charity
• Receive lifetime income stream for client and spouse
• Avoid an immediate capital gains tax on a gift of appreciated property
• Receive an income tax deduction for a percentage of the total amount gifted
• Remove the property from client's estate which may provide significant estate tax savings

Point V:
Be sure to remember the client's pension plan as a giving opportunity. Income in respect of decedent's assets such as pension plans generally provide better tax benefits in a testamentary gift and is the best type of asset to gift to charity through an estate plan. Otherwise, the pension plan will normally be an asset that produces taxable income. Most inherited assets are free from income tax. However, with the exception of a surviving spouse, an heir will pay income tax on amounts received from a decedent's retirement plan. If a client is going to make a charitable bequest, it is usually better to transfer assets to a charity and avoid income tax and transfer non-taxable assets to heirs.

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