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Possible Tax Advantages When you make a Lasting Gift, there are certain tax advantages that may be applicable. To determine the specific tax benefit to you, please consult your professional advisor, your accountant or your attorney. The examples shown here are general. Make a Gift of Appreciated Stock 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. A
Bequest Through Your Will 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. Create
a Charitable Remainde 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. Establish
a Charitable Lead Trust 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. Design
a Gift Annuity 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. Consider
a Deferred Gift Annuity 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. Your Life Insurance
As Your Lasting Gift 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). Gift Opportunities from Retirement Accounts
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. Plan
a Gift of Real Estate 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. Please
consult your
professional financial advisor to see how these ideas and perhaps other
planned giving opportunities may apply to you.
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