Planned Giving Options

A Donor Advised Fund (DAF) is a fund maintained by the Foundation. The donor or an advisory committee of the donor’s choosing may advise the Foundation as to fund’s charitable recipients; however the Foundation has the authority to accept or reject the donor’s advice. A DAF has many of the benefits of a private foundation without the restrictions. When a donor contributes to a DAF, the donor receives an immediate income tax charitable deduction. This allows the donor to take advantage of tax incentives while deferring decisions on the ultimate disbursement to charities over time. The deduction limitations are the 50% public charity rates rather than the lower 30% rates for private foundation. Further, the donor’s deduction for real estate or closely held stock to a private foundation would be limited to the cost basis rather than the fair market value for a DAF. A Donor Advised Fund can be established with a minimum gift of $10,000. Current gifts may be cash, securities or real estate. Deferred gifts may be retirement plan assets, remainder interest of a charitable remainder trust, life insurance or charitable bequests.

IRAs and other retirement plan assets are frequently an individual’s largest and most rapidly growing asset. They are excellent vehicles to defer taxes while you are alive; however, they are an ineffective way to transfer wealth at death. Depending on the size of the estate, the cost of the cumulative income on estate taxes may be shocking. Retirement plan assets, therefore, offer a tremendous gift planning opportunity. Your retirement plan assets may be the most suitable for gifts to charity since these bequests will avoid all estate and income taxes.

Our estate tax laws encourage charitable giving. They do it through the estate tax charitable deduction, which permits you to pass property to charitable beneficiaries free of estate taxes. The estate tax rules are more lenient than the income tax rules. The full fair market value of the property bequeathed to your favorite charities reduces the value of the taxable estate. There are no percentage limitation.

Under the charitable remainder trust (CRT) arrangement, you irrevocably transfer cash or appreciated assets to a trustee. You retain the right to a periodic payment, which cannot be less than 5% of the initial fair market value of the trust assets. This payment is usually for the lifetime of you and your spouse, however, you may make it for a term of years or a combination of lifetime and term of years. Upon the termination of the trust, the remainder interest goes to the charity beneficiary. The CRT has some very favorable tax benefits. You receive an income tax deduction and an estate tax deduction, and avoid tax on appreciated assets used to fund the trust.

You can make a gift of your house or other real property and receive an income tax deduction equal to the present value. One advantage is that you may continue to use it as before. You may retain the right to use your house for one or more lives. In addition to the right to live in your house, you retain the right to rent it or make improvements. You continue to have responsibility for maintenance, insurance, and property taxes. This type of lifetime-deferred gift can provide excellent after-tax results because you gain the income tax deduction without an expenditure of cash or a reduction of income. This same income tax deduction is available for a farm, vacation home or condominium.

Many individuals have life insurance policies which they no longer need for the original purpose of the policy. These policies, which were purchased for a variety of reasons that are no longer relevant or as important now, are excellent means of giving to the church, institutions, and ministries. Depending upon the situation, the gift may provide an income tax deduction.
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