Planned Giving

Nothing could be easier than making a gift of cash to a charitable organization. It is the most common gift and the one you probably think of first All cash donations are deductible. if you itemize in the year of contribution, up to 50 percent of your adjusted gross income. Any excess deductions can be carried forward for the next five years. There are several types of cash contributions you can make:

• Annual or year-end gifts. Many people make once-a-year charitable donations. frequently near the end of the year.
• “In memory of” gifts. You can make a gift in memory of a friend or loved one. This can be done at the time of death or on the anniversary of a significant date, such as a birthday or a holiday.
• “In honor of’ gifts. A cash donation can be made in honor of anyone you choose on the occasion of his or her birthday, graduation. anniversary. or other opportunities. It is the perfect gift for someone who has everything.
• Gifts “in lieu of flowers.” You may decide to make a gift to us in lieu of flowers when someone you know has passed away, because that person appreciated our work or had some connection to us. Sometimes. the family of a donor requests that donations be made to us instead of sending floral arrangements.

Do you have life insurance policies that are no longer needed? You may either donate the life insurance policy to us. or simply name us as the beneficiary of a life insurance policy.

For the gift of a “paid-up” policy, you will be entitled to an income tax deduction equal to the lesser of the replacement cost of the policy or the cost basis. To qualify for the federal charitable deduction on a gift of an existing policy, you must name the charitable organization owner and beneficiary. Even if you are still paying premiums on your policy you can give it away, and future gifts to us to pay the premiums will be tax deductible.

Of course. the easiest way to use life insurance for charitable giving is to simply name us as the beneficiary of a policy There are no current tax benefits to this arrangement because you are not giving away the policy ownership: it provides. however. a very generous gift with attractive tax benefits upon your death.

Stocks and publicly traded securities are easy to give and offer great tax advantages. You can transfer the stock to us electronically through your broker or mail to us the stock certificate and a signed stock power for each certificate. To protect against possible fraud. the certificates and the stock powers should be mailed separately.

The best stocks to use for charitable giving are those that have increased greatly in value, particularly those producing a low yield. Even if it is stock you wish to keep in your portfolio, by giving us the stock and using cash to buy the same stock through your broker, you will have received the same income tax deduction but will have a new, higher basis in the stock.

Appreciated securities that have risen in value and that you’ve held for more than one year are best given by transferring them. If you do that. you will pay no capital gains tax on this transaction. and you can deduct the full fair market value. Fair market value is calculated using the average of the high and low share price on the gift date.

If you are holding securities that have lost value. sell the stock yourself to realize the loss and take the deduction for tax purposes. Then generate a charitable deduction by donating the cash proceeds of the sale to us.

Have you made provisions in your will to benefit us? Bequests are the most popular type of planned gifts. Anything you leave to a charitable organization will reduce the size of your taxable estate while helping a good cause. You can leave a specific bequest of a specified sum of money or a particular piece of property to us. Other options are to leave a percentage of your estate or a percentage of the residue to us after making provisions for family and friends. For instance. you could leave us a specific bequest of $10.000. or you could leave us 10 percent of the residue of your estate.

This is a simple contract between you and a charitable organization that pays you a fixed dollar amount (an annuity) for your lifetime and that of another individual. if desired. based upon your age(s) at the time of your gift. The older you are. the higher the annuity. If you use appreciated property. such as stocks. to fund the gift annuity. you will escape the capital gains tax on the gift portion of the transaction and the remaining gain will be apportioned over your lifetime. This is a wonderful way to increase income from stocks that pay small dividends and carry heavy capital gains.

This type of annuity offers current tax benefits but delays the payout until you reach a specified age. In exchange for agreeing to defer your payments for a period of time. you will receive a higher interest rate. depending on your age and the length of the deferral period. If you are considering a gift annuity but do not need immediate payments. you may wish to compare the benefits of a deferred gift annuity to determine which method is the most advantageous.

With this plan. you do not have to choose in advance a date to begin payments. You can elect to wait a period no sooner than 10 years. but no more than 20 years. With this plan. however. the charitable deduction is determined by the payout’s earliest possible starting date. which would be a minimum of 10 years.

This common trust fund is established and maintained by a charitable organization to receive contributions from many individual donors. The donors to the fund retain an income interest in the fund for their lifetimes. The payout to income beneficiaries is determined by the interest and dividends earned by the fund each year.

A CRAT is a trust that will pay the donor (and one or more other named beneficiaries. if desired) a specified annuity income either for life or a period of time not to exceed 20 years. The amount of the annuity is a fixed amount chosen by the donor at the time the trust is established and is paid at least annually The annual payments cannot be less than 5 percent of the initial fair market value of the trust.

The CRUT has many of the same attributes as a CRAT. but with more flexibility and planning opportunities. The primary difference is that the payout is variable from year to year. The CRUT pays a fixed percentage (not less than 5 percent) of the market value of the trust assets as determined annually. While the percentage cannot be changed. the amount paid out will vary from year to year and may increase (or decrease) over time. Additional contributions can be made to a CRUT over time. and there are several income variations that can be used with creative planning possibilities. such as to save for retirement or to educate grandchildren in college.

This type of charitable trust pays income to one or more charitable organizations. typically for a period of years. and then the remaining assets of the trust pass to noncharitable beneficiaries. such as family members. Based upon the circumstances. the type of property used and the intended beneficiaries. lead trusts can have significant estate and gift tax benefits and can be used in a wide variety of ways. It usually does not provide a current income tax deduction. depending on whether the donor wishes to be taxed on the trust’s income. but it can effectively pass property to family members at reduced estate and gift tax costs.

A gift of real estate offers you the opportunity to make a significant charitable contribution with a tax-friendly outcome. There are several ways to donate real estate depending on your situation.

• Outright gift. If you own property that is fully paid off. has appreciated in value and that you no longer need or use. such as a second home or vacation property. an outright gift may be the simplest solution. You can deduct the fair market value of your gift and avoid all capital gains taxes. Plus. you no longer have to worry about the carrying costs of continued ownership, and you have removed that asset from your taxable estate.
• Retained Life estate. Did you know that you can transfer the deed of your personal residence or farm to us now and keep the right to use the property for your lifetime and that of your spouse? You will receive a current charitable deduction in an amount that is based on your and your spouse’s life expectancy and the value of the property
• Bargain sale. A bargain sale can generate a gift that is less than the full fair market value of the property In this scenario you agree to sell the property to a charitable organization at less than its fair market value. With this type of charitable gift the difference between the sale price and the fair market value is the amount that determines your charitable deduction. While the tax rules relating to a bargain sale are somewhat complex, the net result is often more favorable than selling the property at fair market value and making a charitable contribution from the realized capital gain.
• Vacation time-shares. Some charitable organizations may accept time-share units as outright gifts. but most lack the resources to sell the units and convert the gift to cash. In that case. you still have several options. If there is a ready market for your particular time-share. you can sell it yourself and donate the proceeds to a charitable organization. If your time-share sells at a loss. you can deduct the loss and take a charitable deduction for gifting the proceeds.

Many items of tangible personal property make suitable charitable gifts. The available tax deduction depends on whether the organization will use the property in a way that is related to its tax-exempt purpose.

Related use personal property is deductible at the full fair market value. Example: A piece of artwork is donated to an art museum (other than for sale by the museum) The deduction for non-related use personal property is limited to the lesser of fair market value or the donor’s tax basis in the property.

Are you aware that you can name us as the “payable-on­death beneficiary” of your bank accounts (savings or checking) or on any Certificates of Deposit? You own the assets for your lifetime and have them available for your use. Upon your death, the assets pass directly to us without going through probate. Simply visit your bank and request to name a beneficiary on your accounts or CDs. You will be asked to fill out a form You can change beneficiary designations any time you wish.

Because our tax laws often subject retirement plan assets to the highest combined income and estate taxes. charitable donations of these assets may be the most efficient estate planning option. Many of the techniques discussed in this brochure can be used to create generous charitable gifts. usually at your death. from retirement plan assets that could otherwise be subject to tax rates of nearly 65 percent At the same time. you can pass more tax-favored assets to your family. Due to the variety and complexity of retirement plans. you should consult an attorney or tax specialist for a strategy best suited to your situation.