Turn Hidden Treasures into Gifts

Turn Hidden Treasures into Gifts

A few months ago, on the first big snowstorm of the year here in Chicago, I discovered a hidden treasure.

I needed to walk to the corner store to pick up a few essentials before the city shut down. So I opened the closet and dug out my trusty old winter coat.

I bundled up, walked in our new winter wonderland to the store, shoved my gloves in my pocket, and started putting items in my cart. When I finished shopping and went to check out, I noticed a problem: I had left my wallet at home.

I apologized to the shopkeeper and said I’d be right back. But when I pulled my gloves from my coat pocket, something fell to the ground: a $20 bill that I’d apparently left there last winter. I looked at the total on the cash register: $18.65. I was saved! I paid using my newly discovered treasure, trudged back home in the snow, and was on the couch eating chocolate chip cookies in no time.

You’ve likely had a similar feeling of excitement if you’ve ever stumbled upon a long-lost treasure. Whether it’s finding money in an old coat or a forgotten valuable in your attic, the feelings are the same: joy, followed by questions about what to do with your newfound wealth.

Example: Savings Bonds

It’s currently estimated that more than 75 million matured savings bonds, issued as far back as 1935, remain unredeemed. The total value of these unredeemed savings bonds is approximately $27 billion. By law, savings bonds never expire, and there is no deadline for owners to redeem them.

If you suspect that there may be some old savings bonds listed in your name, I have good news for you. The U.S. Department of the Treasury created an online tool to find unclaimed assets. Go to www. treasuryhunt.gov to learn more.

If you discover any long-lost savings bonds, chances are good that they are no longer paying interest. Savings bonds cannot be transferred to another person or charity outright while you’re alive. You will have to cash them in and pay the taxes when you do.

In light of this, here’s a simple strategy to put your savings bonds to work and avoid a hefty tax bill. Consider redeeming them, and, yes, paying the taxes. But then take the next step and invest the proceeds in a product that will help you and others—like a charitable gift annuity.

If you go this route, your charitable deduction may offset the taxes owed on the redemption of your bonds. This will also allow you to convert an asset that was paying no interest into one that pays an income for the rest of your life. It’s a win-win!

Alternatively, you can hold the bonds and name Mercy Home as a beneficiary upon your passing. Although you cannot transfer these assets to other people or charities while you’re alive, you can name beneficiaries to receive them when you die. Savings bonds make great estate gifts to charities, because we do not pay tax upon the redemption. For your children or heirs, choose to pass on other assets instead, like cash or stocks, where their tax liability is limited.

Many of us have hidden treasures of a different type—some of tremendous worth. For example, remember the savings bonds your grandmother used to give you for your birthday each year? What about that life insurance policy purchased and paid off years ago? Other assets may lie sleeping as well: shares of stock or mutual funds in a long-lost brokerage account, a retirement fund from an old job, or undeveloped real estate.

In some cases, converting these assets into cash would trigger a hefty tax bill. However, critically reviewing your “hidden treasures” may well be worth the time, and could benefit you and others along the way. The sidebar on the previous page takes a look at one of the most common forgotten assets in America, and some strategies for how to put this hidden treasure to good use.

Taking inventory of all that you own may help you unearth a real gem. If you’d like to learn more about how to find your long-lost savings bonds—or what to do with them or other unexpected assets once you do—please contact me at (800) 378-8266 or phizie@mercyhome.org.

This guest post was written by Phil Zielinski, Director of Philanthropy.

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