Q&A – Appreciated Assets and Charitable Gifts

As a 1995 and 1997 MBA graduate of St. Ambrose, Dan Timmons has close ties to the university. But it wasn't until associate vice president for university advancement Sally Crino approached him about the Planned Giving Council did Dan meld his expertise and passion for his alma mater into an opportunity to give back.

Dan's 18 years of experience is incredibly valuable to the council and the university, in general. As a financial advisor at Edward Jones, Dan spends the majority of his time working with clients to meet their investment and estate planning needs. He's Quick to note that while he likes the financial and analysis-driven aspects of his career, his favorite part is the ability to work with his clients to determine their needs and objectives and ways to accomplish those goals. Dan was kind enough to share some of his knowledge about appreciated assets and the details of how they can be used as a gift. Read on to learn more.

Q. What is an appreciated asset?
A. An appreciated asset is one that has increased in value. The best example of an appreciated asset is buying a common stock for $10 a share and the current value is $20 a share. This term also refers to bonds, mutual funds, land, or any kind of asset or real property that has increased in value.

Q. What is the benefit of using appreciated assets in charitable giving?
A. Using the example of an individual stock, if I sell that appreciated stock myself, I have to pay the capital gains taxes on the appreciation. If I gift that asset to a charity, their non-profit status allows them to sell that asset without tax implications. Giving an appreciated asset instead of cash passes the tax liability onto the non-profit, which is not affected. This leaves you with more cash for other pursuits.

Q. How do I know if my assets will work for a charitable gift?
A. The most common thing to use is individual/common stock, but any invested asset would work.

Q. Who should I consult with about giving a charitable gift using an appreciated asset?
A. I suggest three people; a financial advisor, an accountant, and an attorney. Each of those individuals has a slightly different view as to the best way to accomplish that objective. If you can get a consensus, generally speaking, you are headed in the right direction.

Q. I'm not a wealthy person. Does this gift plan still apply to me?
A. You don't have to be a multi-millionaire. Maybe you inherited stock or worked for a company that provided stock to you. Many people will never use those assets because of the capital gains taxes. This is a great thing to gift to a charity.

Q. Why are charities willing to accept appreciated assets? It seems more burdensome to the charity when compared to a flat donation.
A. The process is very simple and it is not a burden for the charity. These types of investments are normally very liQuid and can be turned into cash very easily.

Thank you to Dan for his time and expertise. If you are interested in receiving educational materials to help you begin planning your estate or refining the plan you already have in place, please contact Sally Crino at 563-333-6080 or [email protected]. You may also browse our planned giving website to find articles related to specific topics.