As seen in Physician's Money Digest

Plan for Smart Charitable Contributions
By Donald T. Cohen
Newman + Cohen Financial Management

Physicians donate millions of dollars every year to charitable organizations. However, many do not know that with proper planning, they can maximize the benefits of their contributions for everyone involved.

Here are a few things to consider:

	Check the charity. Conduct research to make sure that you endorse the charity's goals and methods and that the charity applies the lion's share of its revenue toward the program.
	Keep accurate records. Most charitable contributions are tax-deductible, and you'll have to document them at tax time. Never give cash. Always consider using a credit card or write a check and make it out to the charity, not to an individual.
	Be aware of tax rules. Do nating property to a charity is more complicated than donating cash. The IRS generally allows physicians to deduct the fair market value of the property donated, and, in most cases, a receipt from the charitable organization will be required. Depending on the value of the property, certain substantiation requirements apply.
	Consider charitable trusts. A charitable d trust is established when a physician transfers property to an irrevocable trust-one that cannot be changed-that generally pays an annuity to a charity for a term of years. The remainder interest in the trust later returns to the physician or to a designated beneficiary. A charitable remainder trust pays an annuity to a noncharitable beneficiary either for a certain term or for the life of the beneficiary, after which the property in the trust passes to a charity. These planning techniques are normally tied to the estate plan of the family, and the specific situation and planning goals of the family will dictate which options are used.
	Consider naming charities as beneficiaries. A physician who has IRA accounts or other qualified plans and wants to donate to a charity upon their death should consider naming a charity as a beneficiary rather than passing the funds through their residuary estate. All monies left to charity will reduce the value of a physician's taxable estate dollar for dollar at a cost to your heirs of only 50 cents of every dollar, assuming you are in a 50% estate tax bracket. By naming a charity as beneficiary of your IRA, the cost of making the contributions at death is reduced from 50% to approximately 25% of the contribution, when income tax as well as estate tax are considered.
	Consider using life insurance as a charitable planning tool. Assuming you have named a charity as owner and beneficiary of a life insurance policy, the premium is considered a charitable contribution and is tax-deductible. For those physicians who would like recognition during their lives for contributions that will be made at their death, this planning tool offers a unique way of increasing the contribution to charity without reducing the amount of their legacy.
	Consider naming charitable foundations as beneficiaries. Many physicians have established foundations naming their children as directors. Their children enjoy the benefit of donating in their family's name, are courted by various charities, and receive compensation for their work as directors of the foundations.

The better you plan your giving, the more benefits you and the charity are likely to receive. Before making any charitable contribution, physicians should contact financial planning experts to obtain advice and guidance.

Donald T. Cohen founder and director of Newman and Cohen Financial Management, has more than 20 years of experience in public accounting, advanced financial strategies, and business management for physicians and other high-net-worth individuals. For more information, visit www.newman-cohen.com.