Beyond Cash and Stock: Takeaways from Our Complex Gifts and Trusts Session
Most household wealth isn't held in cash or publicly traded stock, yet cash and securities account for most charitable giving . At October's Insights and Impact webinar session, Brandon Butterworth, our Vice President for Philanthropic Planning, and Jen Flinchum, CPA and co-founder of Legacy Focus Group, explored how donors and their advisors can put other assets to work for charity.
Why Non-Cash Gifts are Rare
About 95% of U.S. household wealth sits in non-cash assets, but only 6% to 8% of individual giving arrives that way. Jen explained why: these gifts take more steps and cost more, and their tax treatment turns on the asset, the holding period, and the receiving vehicle. Unlike public stock, most non-cash gifts over $5,000 need a qualified appraisal prepared for income tax purposes. It is reported on Form 8283, signed by donor, appraiser, and charity, and its cost falls to the donor. If the charity later sells, it files Form 8282, and Jen expects more IRS auditing of these gifts in years to come.
Assets that can work
- Real estate. This includes personal residence, commercial property or an investment property. Relief of debt is treated as a deemed sale, so encumbered property makes the gift part sale and can trigger gain.
- Closely held businesses. Transfer shares before a sale is certain. Once an agreement is signed, or even a letter of intent, the assignment of income doctrine can tax the full gain to the owner. C corporation stock is simplest, S corporation stock generally can't be given, and LLC interests with ordinary income assets can create unrelated business income tax (UBIT) for the charity.
- Retirement accounts. From age 70½, Qualified Charitable Distributions (QCDs) can fund designated, field-of-interest, or unrestricted funds, though not donor-advised funds, while keeping the distribution out of adjusted gross income. At death, IRAs make efficient charitable bequests: the charity owes no income tax on them, while heirs avoid receiving an asset that may carry tax liability.
- Other assets, including life insurance, collections, digital currency (treated as property), and private foundations transferred into donor-advised funds.
The Community Foundation does not accept timeshares or cemetery plots, and since deductions track sale price, standard vehicles rarely make sense.
Putting trusts to work
Jen compared charitable remainder trusts, which pay income to you or another beneficiary before charity receives the remainder, with charitable lead trusts, which pay charity first and pass assets to heirs at the end. Annuity trusts pay a fixed amount, and unitrusts a percentage of current value; interest rates often drive the choice that is utilized.
A case study followed "Jill," 65, who co-founded a Richmond engineering firm and already held a designated fund supporting affordable housing. Her goals: give more during her lifetime and provide for an adult son who struggles to hold steady work. Starting three years before selling to a loyal employee, she gave shares pre-sale, funding a donor-advised fund with $250,000. She earmarked IRA funds for QCDs to her designated fund, created a remainder trust paying her son for life with the remainder to charity, and used a "lesser of" bequest, so her plan scales with her assets.
The takeaway: plan early
Start early, bring advisors in, and revisit the plan as balances change. Learn more about the types of gifts we accept at the Community Foundation or reach out to a Professional Advisor for more details.
This recap is for general education and isn't tax or legal advice. Donors and professional advisors are welcome to contact our Philanthropic Services team to talk through a specific situation.
Watch the video recap for more and tune in for Insights & Impact our monthly donor webinar series highlighting emerging transformational initiatives in our region or provide actionable strategies that can help you gain greater impact and satisfaction with your giving.