Planned Giving

"You make a living by what you get. You make a life by what you give."
Winston Churchill

There are a variety of ways to support the organizations you believe are vital through a planned gift. As previously stated, this discussion is solely for general information and should not be considered investment, tax, or legal advise. Please consult your individual advisors for specific advice.

This summary chart will give you a quick overview of many of the planned giving options available to you. Another page to consider if you are exploring Planned Giving for the first time is our Planned Giving factors. Please keep in mind that your individual circumstances need to be considered before taking any action. As with all tax and estate planning, please consult your attorney or estate specialist.

A primary question to consider first is have you made out a will?	If you have not yet written a will, regardless of your charitable intent, please consider this.
If your goal is to:	Then you can:	And your benefits may include:
Make a quick and easy gift.	Simply write a check now.	An income tax deduction and immediate impact on us.
Avoid tax on capital gains.	Contribute long-term appreciated stock or other securities.	A charitable deduction plus no capital gains tax.
Defer a gift until after your lifetime.	Put a bequest in your will (give us cash, specific property, or a share of the residue of your estate).	Your donations are fully exempt from federal estate tax.
Receive guaranteed fixed income that is partially tax-free.	Create a charitable gift annuity.	Current and future savings on income taxes, plus fixed, stable payments.
Avoid capital gains tax on the sale of a home or other real estate.	Donate the real estate to us, or sell it to us at a bargain price.	An income tax reduction plus reduction or elimination of capital gains tax.
Avoid the twofold taxation on IRA or other employee benefit plans.	Name us as the beneficiary of the remainder of the retirement assets after your lifetime.	It lets you leave your family other assets that carry less tax liability.
Give your personal residence or farm, but retain life use.	Create a charitable gift of future interest, called a retained life estate.	It gives you tax advantages plus use of the property.
Receive some cash sales proceeds while making charitable gift	Make a bargain sale	Receive income tax deduction for gift portion, receive some cash and avoid capital gain tax on gift portion.
Make a large gift with little cost to you.	Contribute a life insurance policy you no longer need.	Current and possibly future income tax deductions.
Secure, fixed payments for life while avoiding market risks.	Create a charitable remainder annuity trust.	It gives you tax benefits and often boosts your rate of return.
Give income from an asset for a period of years but retain the asset for yourself or your heirs.	Create a charitable lead trust.	Asset is returned to the donor or heirs with federal estate tax savings and income tax deductions for income donated.
Secure, fixed payments for life with a hedge against inflation over the long term.	Create a charitable remainder unitrust.	Variable payments for life plus tax benefits.
Make a revocable gift during your lifetime.	Name us as the beneficiary of assets in a living trust.	Full control of the trust terms for your lifetime.

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Appreciated Assets
Some individuals are able to offer support through outright gifts of cash and other valuable assets. As every organization has operating costs which must be met daily, these gifts are important to “keep the lights on.” Making a gift of appreciated assets, such as stocks or mutual funds, can provide benefits for us and tax savings for the donor. Appreciated assets have a higher market value than their basis or tax purpose value (in most cases, their cost). Such assets would, if sold by an individual or non-charitable organization at a price higher than their basis, potentially generate taxable capital gains (either long-term or short-term depending on the holding period).

By donating appreciated assets to a charitable organization, the donor receives a charitable tax deduction based on the current market value of the gift and avoids tax on any capital gains (certain tax rules apply for gifts of personal assets that are not securities). The charitable recipient sells the asset, realizes the full market value, and avoids any capital gains tax.

Bequests
Some donors, while wanting to help, depend on the income from their assets to live. Or they have valuable property, such as a house or apartment building that they need during their lifetime. Often these donors decide to wait until they no longer need these assets to transfer them through a will or trust. Making a bequest can involve an unrestricted gift to be used as the charity best determines or restricted per the wishes of the donor to a specific fund or program.

Bequests are the simplest and most often used planned gift and offer benefits to the donor. If you do not currently have a will, please consider this. If you have a will and would consider adding a bequest, a codicil may be used to amend an existing will.

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Other Gift Options
Often circumstances in life change and it may be that a life insurance policy is no longer needed later in life. A change in the beneficiary to include a charitable organization can provide significant value and a possible estate tax charitable deduction.

Because retirement funds passing through an estate can be subject to both income and estate taxes, a significant portion of your retirement funds may be taxed away from your heirs. For this reason, under the current tax laws, retirement funds are considered among the best to donate. Should you wish to make a contribution of all or a part of your retirement funds, you can do so by designating us as a beneficiary in your retirement plan account. Changing the distribution of retirement plan assets can be a complicated and confusing process and often, if a mistake is made that has serious negative consequences, it cannot be undone. It is important to consult with a specialist regarding any changes. Pending legislation may make it easier to donate retirement assets.

Depending on the circumstances that are involved, gifts of real estate can be an effective means of planning a gift. Much of the individual wealth in America is invested in real estate. While the first thought often is a home or farm, real estate also can involve a vacation or second home, an apartment or commercial building, a shopping center, or undeveloped land.

Often our real estate holdings, be it our house, a second home or investment property, is a significant part of our net worth. Gifts of real estate, therefore, can enable us to make significant contributions. Each piece of property and its unique circumstances need to be reviewed to determine the suitability of the property as a gift. Generally speaking, a rule of thumb is that an acceptable piece of property is one that can be readily sold.

Also, there are many ways to donate property. It can be an outright gift, a retained life estate, or placed in a trust (such as a charitable remainder trust below). In any case, while we discuss some generalities here about donating real estate, if you are considering such a gift, please contact us to discuss its suitability.

A bargain sale occurs when a donor sells property to a nonprofit organization for less than the property’s fair market value. The amount of fair market value over the sales price is the donor’s charitable contribution, which may be reduced by allocation of tax basis and reduction rules relating to unrealized gain. Almost any type of asset may be sold in a bargain sale, depending on the cash available for purchase and the suitability of the asset.

What are the advantages? The charitable contribution portion qualifies for income tax deduction. It may be carried forward for five years if not fully usable in year of gift and it allows the donor to receive some cash sales proceeds while making a charitable gift. A bargain sale may avoid capital gain tax liability on highly appreciated property.

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Gifts That Provide Income
There are also ways that enable a donor to make a gift now and still receive income for life. This allows the donor the option to see the impact of their gift while they are alive and to have the option to receive the joy and heartfelt thanks of those who are benefiting. Some (but not all) of the possible ways are described as follows:

Charitable Remainder Trust: In this type of agreement, the donor gives cash or valuable assets that are placed in a trust and invested to provide income. In a Charitable Remainder Unitrust, the income is based on a percentage of the value of the assets in the trust. A Charitable Remainder Annuity Trust provides a fixed income as determined when the trust is established. In both cases, the assets remaining in the trust revert to the charity on the death of the donor (or an income beneficiary, if established). This type of gift is often used to convert highly appreciated assets, such as real estate or securities, that provide little or no current income into a higher income for life.

Charitable Lead Trust: This is often referred to as the opposite of a Charitable Remainder Trust. The income from the trust goes to the charity and the assets revert back to the donor or a designated beneficiary after a specified period of time. The organization receives cash annually to use in its operations and the donor can pass the assets on to his or her heirs at a favorable tax basis.

Charitable Gift Annuities: State laws vary regarding the issuance of gift annuities and not all charitable organizations offer Charitable Gift Annuities. It is a contract between the donor who transfers cash or acceptable assets to a charity who promises to pay the donor (and a beneficiary, if desired) a specified rate of return (fixed payment) for the lifetime of the donor(s). The rates of return are specified by the American Council on Gift Annuities (ACGA). There are tax benefits that depend on the donor's age as well as the beneficiary's age.

NOTE: Not all the varieties of giving as described above are available in every state or offered by every organization. Please contact your representative for further information. This section is provided for information purposes only and is not intended as advice in your individual circumstances. Please consult your tax and investment specialist in addition to consulting with your organization representative for specific answers to your circumstances.

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Please note, individual financial circumstances will vary. The information on this site does not constitute, nor is it intended to constitute, legal or tax advice. As with all tax and estate planning, please consult your attorney or estate specialist. This Planned Giving section has been developed by Future Focus. All material is protected by copyright. This information is not to be reproduced in any fashion without the express, written permission of Future Focus. Please report any problems to section webmaster.