Remember BCFO in your planned giving.
Talk to the following professionals to establish your planned gifts:
- Accountant / CPA
- Estate Planner
- Financial Advisor
- Insurance Agent
Through the years, many individuals have found planned gifts to be excellent vehicles for benefiting their favorite charitable organizations. In addition to personal satisfaction, such gifts offer major planning opportunities to minimize federal and state taxes, increasing the possibilities for effective distribution of assets. The wide degree of flexibility permitted in arranging a planned gift while still obtaining favorable tax benefits has contributed significantly to making such gifts popular and potent estate-planning tools.
- Life-Payment Plans – A life-payment plan can allow you to make a substantial gift to charity while still providing for your personal financial needs. There are several types of such plans, all of which combine life payments for one or more beneficiaries designated by the donor with a gift to charity. These plans are attractive to many donors because they offer substantial tax benefits and may increase cash flow to the donor or other beneficiary, depending on the asset contributed.
- Charitable Remainder Trust – Introduced by the Tax Reform Act of 1969, the charitable remainder trust is a popular plan because of the financial and estate-planning flexibility it offers. This trust is similar to other types of trusts, except that a charitable beneficiary receives the remainder interest. A donor transfers property under a trust agreement that specifies how trust income and principal are to be distributed, and the trust may be created to become effective during life or at death.
- Gift Annuities – The charitable gift annuity is among the oldest, simplest, and most popular of the charitable life-payment plans. In exchange for a transfer of cash, marketable securities or, in some circumstances real estate, the charity contractually guarantees to make specified annuity payments to the donor and/or another beneficiary. (State law may restrict the type property that may be exchanged for a charitable gift annuity.) The payout rate depends on the age and number of beneficiaries.
- Bequests– Each year thousands of individuals designate a portion of their assets by bequest to benefit charitable organizations. Gifts under wills have become an important part of the American philanthropic tradition because they enable individuals to make significant gifts that they may not have been able to make during life. Bequests may take various forms:
- A specific bequest – directs that a charitable organization is to receive a specific piece of property.
- A general bequest – directs that the charity receive a specified dollar amount.
- A residual bequest designates all or a portion of whatever remains after all debts, taxes, expenses and all other bequests have been paid.
- A contingent bequest takes effect only if the primary intention cannot be met.
- Gifts of Real Estate with Retained Life Interest – A gift of a remainder interest in a personal residence or farm provides the donor with a charitable deduction for the present value of the remainder interest and permits the donor to escape any potential capital-gain tax on the built-in appreciation. What may be more important from the donor’s point of view is that he or she can continue to occupy the residence or operate the farm without disruption.
The term personal residence is broadly defined to include any property used by the taxpayer as a personal residence even though it is not the donor’s principle residence. A personal residence may include a single-family dwelling or stock owned by the donor as a tenant-stockholder in a cooperative housing corporation, condominium, or vacation home. The term farm includes any land used by the donor or his or her tenant for producing agricultural products or raising livestock.Life
- Insurance – While most people own some form of life insurance because of its unique ability to meet a variety of needs for financial protection, its role in planned charitable giving is frequently overlooked. Paid up life insurance can be gifted to charity or a policy taken out to benefit charity, permitting the donor to make a substantial gift for a relatively modest annual outlay.
Charitable Gift Annuity
Information provided by the Community Foundation of the Ozarks
A Charitable Gift Annuity (CGA) provides a means for donors to make charitable gifts and receive life incomes. The donors can even choose to benefit someone else during their life and designate successor beneficiaries. CGA’s are an outstanding development tool for building organizational endowments.
At the time of the gift a contract is established between the Foundation and the donor. The Foundation agrees to pay the donor an income for the donor’s lifetime based on the age of the donor and the size of the gift. Besides the life income, the donor’s contribution will provide a gift that will be placed in an existing or new endowment, as specified by the donor.
During these times of low interest rates, this type of giving is particularly attractive, due to CGA’s typically higher annuity rates. The payment amount is guaranteed for life, regardless of what happens to the economy or stock market. If an immediate gift annuity is chosen, the annuitant starts receiving the payments within one year of the signing of the annuity contract. A deferred gift annuity allows the annuitant to start receiving payments at a future time, which must be more than one year after the date of the contribution. The rate of the gift is then calculated based on the age of the donor at the time the payments will begin, which will be a higher rate.
The many benefits of charitable gift annuities include:
- Guaranteed life income – CGA’s pay relatively high rates
- Immediate income tax deduction at the time the gift annuity is created.
- A portion of the annual payment received is tax exempt.
- Significant relief form capital gains taxes on gifts of appreciated securities.
- Roll over (reinvest) existing tax-deferred savings, like pension plans.
- Removal of the asset from estate tax liability as estate taxes and probate costs are not paid on the amount of the gift.