Ronald McDonald House Charities of San Diego

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Give a House to The House

Vianca Tabuena—Associate Advisor and the Team at Christopher Weil & Company, Inc.

Here’s a statement that may raise some eyebrows. We are advising clients to stop donating cash. Before you worry that we’ve lost our philanthropic minds, hear me out. By all means, we believe in giving. But maybe not cash.

As wealth managers and financial advisors, it thrills us to work with philanthropically-minded clients to find gifting strategies that benefit both the client and the nonprofits receiving their gifts. Our tried and true strategies include recommending donations of low-basis stock over cash. And to not only make those donations directly, but to consider using a Donor Advised Fund (DAF) and/or a Charitable Remainder Trust (CRT). For the donor, there are potentially huge tax benefits. Additionally, some of your most paralyzing tax conundrums can be resolved by gifting more complex assets to Ronald McDonald House Charities of San Diego (as well as other worthy nonprofits).

There is a host of clever ways to incorporate our local Ronald McDonald House Charities (and other nonprofits) into your philanthropic plan. In addition to donating low-basis stock instead of cash, you could name them as the beneficiary of your IRA, 401(k), or a no longer needed permanent life policy or annuity. You could make them the income beneficiary during your lifetime of assets that revert back to your estate at your passing (for example oil and gas rights).

Many donors are not aware that more complex assets, like real estate, can be suitable for philanthropic gifting. For example, many high-net-worth San Diegans own rental properties that have appreciated substantially since they were originally purchased. (According to the Zillow Home Value Index, the average San Diego County home has appreciated by nearly 153% in the last decade.*) Some of those owners are ready to stop being landlords and/or are looking for ways to diversify their portfolios. Many are disincentivized by the prospect of triggering a massive capital gains tax. Fortunately, charitably inclined landlords can contribute their rental property to the San Diego Ronald McDonald House. (Many other nonprofits also provide this convenient option.)

There are so many win-win reasons to do this. You might:

  • avoid capital gains tax while divesting yourself of an asset you no longer wish to own and manage;
  • take advantage of the opportunity to realize historic values in the San Diego real estate market;
  • retain the full value of the asset, undiluted by taxes, for the benefit of Ronald McDonald House Charities of San Diego;
  • receive a healthy tax deduction to apply over the next five years against other income from a Roth conversion, a large liquidity event from a business sale, or the sale of other highly appreciated assets (to name a few);
  • transfer the responsibility of selling the property to the Ronald McDonald House; and
  • strengthen the ability of the San Diego Ronald McDonald House Charities to serve families when they are most in need of it.

Should you desire more flexibility in your gifting, consider opening a Donor Advised Fund or creating a Charitable Remainder Trust and donating your real estate (or other assets) there.

With a Donor Advised Fund your flexible options include:

  • donating one asset and retaining the option to gift multiple recipients;
  • donating one or more assets and retaining the option to gift in periodic installments;
  • donating one asset, gifting a part of the proceeds, and then holding the rest until such time as you identify additional suitable recipients; and/or
  • receiving your tax deduction at the time of the donation, not at the time the gift is sent to the end recipient.

A Charitable Remainder Trust includes the following benefits:

  • converting a low-basis asset into a lifetime of income;
  • receiving your tax deduction at the time of the donation, not at the time the gift is sent to the end recipient; and
  • supporting the San Diego Ronald McDonald House Charities (and/or another worthy nonprofit) by designating them the recipient of the assets in your Charitable Remainder Trust at your passing.

At Christopher Weil & Company, Inc., philanthropy is central to our culture. Our firm’s employees have a tradition of community involvement where they frequently donate their time, talent, and treasure. Staff participate in decision-making when gifts are made on behalf of the firm. One of our advisors serves as an in-house philanthropy specialist. And we believe this helps give us and our clients particular insight into the world of charitable giving. If you would like to discuss ways you might support Ronald McDonald House Charities of San Diego, please reach out to Beth Van Eetveldt, the Director of Individual Philanthropy for the Ronald McDonald House, or connect with any member of Christopher Weil & Company Inc.’s advisory team.

Please note that guidance from a tax professional is crucial in determining the optimal charitable gifting strategy for any donor’s particular circumstances.

*www.noradarealestate.com/blog/san-diego-real-estate-market

Grantor Charitable Lead Annuity Trust

Provides income payments to a qualified charitable organization for a period of years, the lives of one or more individuals or a combination of the two; after which, trust assets are paid to the donor of the trust.

A power of attorney form that transfers ownership of stock.

Securities such as stock that are in certificate (paper) form.

Investments that have increased in value since the time of their purchase.

Testamentary means bequeathed through one's will.

A charitable bequest is one or two sentences in your will or living trust that leave to Ronald McDonald House Charities of San Diego a specific item, an amount of money, a gift contingent upon certain events or a percentage of your estate.

an individual or organization designated to receive benefits or funds under a will or other contract, such as an insurance policy, trust or retirement plan

I give [insert amount, percentage of the estate, or 'the rest and remainder of my estate'] to Ronald McDonald House Charities of San Diego, Inc.

Federal Tax ID #95-3251490

able to be changed or cancelled

A revocable living trust is set up during your lifetime and can be revoked at any time before death. They allow assets held in the trust to pass directly to beneficiaries without probate court proceedings and can also reduce federal estate taxes.

cannot be changed or cancelled

tax on gifts generally paid by the person making the gift rather than the recipient

the original value of an asset, such as stock, before its appreciation or depreciation

the growth in value of an asset like stock or real estate since the original purchase

the price a willing buyer and willing seller can agree on

The person receiving the gift annuity payments.

the part of an estate left after debts, taxes and specific bequests have been paid

a written and properly witnessed legal change to a will

the person named in a will to manage the estate, collect the property, pay any debt, and distribute property according to the will

A donor-advised fund is an account that you set up but which is managed by a nonprofit organization. You contribute to the account, which grows tax-free. You can recommend how much (and how often) you want to distribute money from that fund to the House or other charities. You cannot direct the gifts.

An endowed gift can create a new endowment or add to an existing endowment. The principal of the endowment is invested and a portion of the principal’s earnings are used each year to support our mission.

Tax on the growth in value of an asset—such as real estate or stock—since its original purchase.

Securities, real estate or any other property having a fair market value greater than its original purchase price.

Real estate can be a personal residence, vacation home, timeshare property, farm, commercial property or undeveloped land.

A charitable remainder trust (CRT) provides income to you, as the donor of the CRT, or to other named individuals, and does so each year for life or for a period not exceeding 20 years. The remainder of the assets go to your chosen charity.

You give assets to a trust that pays our organization set payments for a number of years, which you choose. The longer the length of time, the better the potential tax savings to you. When the term is up, the remaining trust assets go to you, your family or other beneficiaries you select. This is an excellent way to transfer property to family members at a minimal cost.

You fund this type of trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. You can also make additional gifts; each one also qualifies for a tax deduction. The trust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. When the trust terminates, the remaining principal goes to the House as a lump sum.

You fund this trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. Each year the trust pays you or another named individual the same dollar amount you choose at the start. When the trust terminates, the remaining principal goes to the House as a lump sum.

A beneficiary designation clearly identifies how specific assets will be distributed after your death.

A charitable gift annuity involves a simple contract between you and the House where you agree to make a gift to the House and we, in return, agree to pay you (and someone else, if you choose) a fixed amount each year for the rest of your life.