No matter how early you get the holiday cards sent, the presents bought, and the meals planned, you’ve only just begun to accomplish all that needs to be done by year’s end. This includes doing some holiday giving and planning for your last-year's tax return. Why not take care of both tasks at once? Take some time to determine your charitable giving plan this year and beyond, and then use the results to get some tax breaks.

Whether small or large, a charitable gift has very few down sides. "You’re helping to benefit others while reaping benefits personally and financially," says Lloyd Myster, specialist in fee-based financial planning at Thrivent Financial for Lutherans. People make charitable donations for a number of reasons. Among the most common are to leave a lasting imprint on society or to memorialize someone.

And don’t be ashamed to list tax breaks among your reasons for giving; our country’s well-being relies on public donations, which is why the U.S. government provides taxpayers with these benefits.

Some forms of charitable gifts commit cash and other assets to future philanthropic purposes, while assuring the donor continued income.

By establishing a life income gift, which can include charitable gift annuities and charitable remainder trusts, assets are irrevocably transferred to an organization to be managed for a term of years or until the end of a donor’s or beneficiary’s life.

In exchange for this commitment, donors secure annual income for themselves or other beneficiaries, as well as substantial tax and charitable advantages, says Myster. What’s more, with good management and favorable market conditions, the original value of the donor’s gift can increase over the term, resulting in a potentially larger future gift.

"These types of charitable gifts are excellent vehicles for making low- or non-income-generating assets more productive for donors and their beneficiaries while eliminating or minimizing capital gains tax," Myster says.

A charitable gift annuity, for example, typically involves transferring cash or property to a charitable organization in exchange for the charity’s contractual promise to make fixed annuity payments to the donor (and/or spouse) for life. Payments can begin immediately, or the start date can be delayed to coincide with a particular event, such as retirement.

If you would like to make a truly special gift—one that creates a living legacy in your name—life insurance may be the answer. It’s a low-cost way to endow a favorite institution or association and can go a long way to minimizing the final tax payable upon your death.

"Charitable giving through life insurance is a relatively straightforward estate planning solution," Myster says.

There are a few ways that donors can use a life insurance contract as a form of charitable giving. Donors can name an organization as a life insurance beneficiary. This may be a good option for donors whose beneficiaries have preceded them in death or whose beneficiaries are covered by other life insurance contracts or assets. Donors receive an estate tax deduction for the donated proceeds of the contract, but no tax benefit during their lifetimes.

Donors also can donate a contract that has been paid up. Because the gift is irrevocable, the donor receives an immediate income tax deduction. In signing over your life insurance contract, the contract proceeds are no longer counted as part of your estate. As a result, your estate may be subjected to lower taxes.

Because estate tax laws are extremely complex and dependent upon the individual donor, it’s wise to consult your Thrivent Financial representative, tax adviser and attorney when making final decisions.

Tools For Giving
Charitable Gift Annuity.
A charitable gift annuity is particularly attractive for giving highly appreciated property to a public charity because the donor’s income tax deduction will be based on the donated property’s appreciated fairmarket value. When compared with charitable remainder trusts, which require an individually prepared trust instrument, charitable gift annuities are economical and convenient to implement.

Charitable Remainder Trust.
Charitable remainder trusts are among the most popular methods of deferred charitable giving. The trust provides for a specified distribution to one or more beneficiaries, at least one of which is not a charity. The distribution must be paid at least annually for life or for a term of years. At the end of the trust term, the remainder interest is paid to one or more qualified charities.

Life Insurance.
Almost every estate plan includes life insurance as a key element. In addition, many estate and tax plans provide for charitable giving because of the desire of individuals to contribute toward the general public good and welfare of others. Fortunately, the tax laws encourage the use of life insurance in charitable programs by significant income, gift, and estate tax benefits. It is considered by many to be one of the most convenient forms of charitable giving.