As you consider your financial and estate planning, we hope that you will consider us. Not only can we put your gifts to good use, we can also save you tax dollars through the charitable deduction and the avoidance of capital gains.

Gifts of Cash

If you itemize, you can lower your income taxes simply by writing a check.
Gifts of cash are fully deductible – up to a maximum of 50% of your adjusted gross income. For example, if your adjusted gross income for this year is $50,000, up to $25,000 of charitable gifts may be deducted this year. Any excess can generally be carried forward and deducted over as many as five subsequent years.

Gifts Through Your Will or Trust

If your estate is subject to the federal estate tax, a charitable bequest can save significant tax dollars. We can be named as a beneficiary in your will in any one of a number of ways:

  • Outright bequest: You can specify an outright gift of cash, securities, real estate or tangible personal property. If you bequeath dollars, you may wish to bequeath a certain fraction or percentage of your estate to the LOA, rather than a fixed sum; this serves as a hedge against both inflation and unforeseen shrinkage – and assures your heirs their proportionate share.
  • Residual bequest: A residual bequest provides that, after specific bequests are made to named individuals, the LOA receives the “residue” or the amount remaining in the estate.
  • Contingent bequest: A contingent bequest means that the LOA will receive certain assets only if a named individual does not survive you. For example, you could provide for us to receive a bequest only if your spouse does not survive you. Such a provision recognizes the need to provide first for the security of others.
  • Testamentary trust: Such a trust can provide income for another person or persons for life, with the principal ultimately passing to us.
  • Codicil or Amendment: If you already have a valid, up-to-date estate plan, you can have your attorney prepare a codicil or amendment to your plan naming the LOA as a beneficiary without having to rewrite your entire estate plan.

Gifts of Stock

If you own stock, it is often more tax-wise to contribute stock than cash. This is because a gift of appreciated stock generally offers a two-fold tax savings. First, you avoid paying any capital gains tax on the increase in value of the stock. Second, you receive an income tax deduction for the full fair market value of the stock.

For example, if you purchased stock years ago for only $1,000, and it is now worth $10,000, an outright gift of the stock to us would result in a charitable contribution deduction of $10,000. In addition, there is no tax on the $9,000 of appreciation.

To qualify for these significant tax advantages, you will need to ensure you have owned the stock for a “long-term” period of time. This generally means that you have held the stock for more than one year.

Gifts of appreciated stock are fully deductible – up to a maximum of 30% of your adjusted gross income. For example, if your adjusted gross income is $100,000, up to $30,000 of long-term, appreciated stock and other property gifts may generally be deducted this year. Any excess can usually be carried forward and deducted over as many as five subsequent years.

Gifts of Real Estate

A gift of real estate can also be tax wise. A residence, vacation home, farm, acreage, or vacant lot may have appreciated in value through the years and its sale would mean a sizable capital gains tax. By making a gift of this property instead, you would avoid the capital gains tax, and, at the same time, receive a charitable deduction for the full fair market value of the property.

It is also possible to make a gift of your residence, farm, or vacation home so that you and your spouse can continue to use it for your lifetimes, while you receive a current income tax deduction. For example, The Smiths own a vacation home in the mountains that they would like to continue using. Its fair market value is $100,000. By contributing the home to the LOA right now, but retaining the exclusive right to use it for the rest of their lifetimes, the Smiths are able to achieve a current income tax charitable contribution deduction of approximately $25,000. The precise amount depends upon their ages, the useful life of the house as well as other factors.

Gifts of Life Insurance

A gift of life insurance can provide a significant charitable deduction. You could purchase a new policy or donate a policy that you currently own but no longer need. To receive a deduction, designate the LOA as both the owner and beneficiary of the life insurance policy. Check with your insurance agent for the details.

For More Information

We cannot tell you everything you need to know about planned giving and which method would be the most advantageous for your particular financial and estate planning situation. Check with your attorney, accountant, or other tax adviser for additional information on how these general rules apply to your situation.

We appreciate your interest and support and would be pleased to provide you with additional information on the advantages of planned giving.