Many people put off making gifts until the end of the year. If you want to make a charitable gift and be able to deduct the gift in 2011, timing is critical.
The requirements for making a year-end charitable gift by check or credit card effective for the current calendar year are relatively simple. A gift by check will be effective for 2011, if you sign the check and place it in the mail or deliver it to the charity by Dec. 31. As long as the check is paid in ordinary course, the gift is effective as of the date of mailing or delivery even if not actually cashed until the following January.
Similarly with a credit card, the gift is effective when the charge is made on the card owner’s account. Because credit card charges are normally created immediately by electronic debit, it should be possible to make a gift by credit card as late as Dec. 31. Credit card charges at year-end are deductible even though you will not receive the bill and make the payment until the following year.
In many cases it is also possible to make gifts of stock late in the year. The best option if you hold stocks in a brokerage account is to have the charity create an account with the same brokerage firm. In that case, the transfer can be made immediately from your account to the charity’s account. If you hold stock certificates, it is possible to endorse the certificates and deliver them to a local charity in person. If the charity is not local, you can send the stock certificates in one envelope and a form called a “stock power†in a separate envelope. As long as both envelopes are postmarked before the end of the year, the gift will be effective.
It is also possible to transfer real estate to charity late in the year, but in most cases you will need to allow sufficient time for an attorney to draft the deed and for the charity to complete its acceptance process. Once signed and notarized, the deed can be delivered to the charity prior to the end of the year to make the gift effective.
If your gift will be in the form of a charitable gift annuity or charitable trust instead of an outright gift, you will need to allow more time for the appropriate documents to be drafted. It may be possible to implement a charitable gift annuity during the last week of December, but a charitable trust would almost certainly need to be started before Christmas.
If you want to make a charitable gift, but have not yet decided on a charity, consider a gift to a donor advised fund. This allows you to receive the deduction for 2011, but select your charitable recipient in 2012.
Amy Lewis is an attorney with Eisenhower, Carlson, PLLC, in Tacoma. She specializes in charitable gift planning, estate and tax planning. Please consult a qualified estate planner before making a charitable gift.