What is the secret to making a gift that will provide the greatest benefit to you and TCC? The best plans are created by first deciding what your goals are, and then determining how to accomplish your goals.
Determining what gift is right for you is just as important as making the gift. There are a myriad of easy giving options from which you can choose – from naming us as a beneficiary in your will to a more complex trust arrangement. Ultimately the best plan for you will balance what you wish to accomplish for yourself, your family, and your charitable interests in your overall estate and financial plans.
For additional guidance on Planned Gift options, please contact Penelope Leon at 562-933-6631 or This email address is being protected from spambots. You need JavaScript enabled to view it. .
Appreciated stock makes an excellent charitable gift. Under current tax laws, when an appreciated asset (such as stock) is sold, a capital gains tax is due. By making a charitable gift of the appreciated stock, you can avoid or delay the capital gains tax. You can also take an immediate income tax deduction for the current fair market value of the stock, no matter what was originally paid for it.
To take a deduction for gifts of appreciated stock at their current value, you must have owned the stock for more than 12 months. Such gifts are deductible up to 30 percent of your adjusted gross income (AGI) in the year of the gift. Any unused deduction amounts may be used in as many as five subsequent tax years.
One of the most simple and popular ways to make a gift that will live after you is to give through your will. You can make a gift bequest to benefit one or more charitable not-for-profit organizations by providing a dollar amount, specific property, percentage of your estate, or the remainder (what’s left). Such a designation can reduce your estate taxes. In many cases, a simple change to your will can add this bequest and does not require rewriting your most recent will.
Donors and spouses can benefit from lifelong payments from such a trust. The donor selects the rate of return from these income arrangements and also chooses a fixed or fluctuating annual payment to be made to the designated parties as long as they live. Capital gains tax may be completely bypassed and you will receive a tax deduction based on the age of the income recipient and the rate of return chosen.
In a charitable lead trust, assets (generally cash or securities) are transferred to a trust that pays income from the fund to your favorite charity or charities for the number of years you select. At the end of the designated time period, the trust terminates and the assets are given back to the person you name. This trust helps to lower estate and gift taxes that would otherwise be due on the assets. This option is especially attractive if you want to leave your children or grandchildren assets in the future, but not immediately.
In exchange for a gift of cash, stock or securities, your favorite charity or charities will pay you, you and your survivor, or another person named by you, a guaranteed income for life. In addition, you receive a substantial income tax deduction in the year of the gift and part of the annual payment is non-taxable. Your annuity payment and tax deduction are based on the age and income of the recipient.
A deferred gift annuity is similar to a gift annuity except that payments begin for you at a future date of your choice, such as your retirement. Your tax deduction and the annual rate of return on your annuity increase the longer you wait to start payments. This is an excellent retirement planning method to implement during prime income producing years that will benefit you later.
Insurance is another simple way to make a substantial future gift at a level that would not be possible at the same level in cash. Name your favorite charity the owner and beneficiary to receive the proceeds of an existing life insurance policy. You will receive a tax deduction for approximately the cash surrender value, thereby reducing your tax liability in the year of the gift.
An alternative is to purchase a new life insurance policy naming this organization as owner and beneficiary. With this option, you receive an income tax deduction for each premium made and make possible a major gift to your favorite charity with a modest annual payment (or one-time premium payment).
Account funds (IRAs or company plans) beyond the comfortable support of yourself or loved one may be given (like life insurance proceeds) to your favorite charity or charities by proper beneficiary designation. Large pension plan assets can be subject to double or triple taxation (federal estate, federal income, and state death and state income tax) that virtually eliminates the benefits to heirs if tax-wise alternative planning is not arranged.
For some people, a gift of land, primary residence, or vacation home is a preferred way to make a gift. You will receive a tax deduction for the full fair market value, avoid all capital gains tax and remove this asset from future estate taxes. One option is to give real estate while you retain a life tenancy. This provides a substantial income tax deduction by giving (deeding) your home or farm to your favorite charity now. You continue to live there, maintain the property as usual, and even receive any income it generates. At your death the property will be sold by the not-for-profit organization and the proceeds will support the organization’s mission.
