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It's never too late to get your plans in order to protect your family and support your favorite organizations. Planned Giving is finding ways to make charitable gifts now or after your lifetime while enjoying financial benefits for yourself. You do not have to be wealthy to participate - even people of modest means can make a difference through gift planning.
The most common planned gift is a bequest in your will or living trust.
Other planned gifts include:
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Individuals who include the APS or APRL in their will or participate in a planned giving program are members of the Legacy Society.
While outright gifts of cash and in-kind materials are essential and always gratefully received, for some donors other options may be more beneficial or practical.
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Pass Assets Bequest Life Insurance Tangible Personal Property Reduce Income Tax Charitable Lead Trust Charitable Remainder Trusts Life Insurance Pooled Income Fund Retained Life Estate Avoid Capital Gains Tax Charitable Remainder Trusts Gift Annuities Pooled Income Fund Securities Generate Income Charitable Remainder Trusts Gift Annuities Pooled Income Fund |
Giving Securities
Why would someone give securities rather than simply write a check? Our nation’s tax laws offer special incentives for gifts of non-cash property — especially when it has increased in value since it was acquired.
If you have owned securities for at least a year and a day, you may deduct the current fair market value of securities given to the APS or APRL and at the same time avoid capital gains taxes. By using appreciated securities to do some of your giving, you can conserve cash for other uses.
Additionally, if you are an employee with stock options, it may be possible for you to use your options as a convenient, cashless method of making a charitable gift.
Life Insurance
When planning your gifts it is wise to consider all your assets. Life insurance, as one form of property, may add flexibility to your financial planning. Ask yourself the following questions:
- Do you have a policy you purchased to provide security for a spouse who no longer needs it or to protect a child who is now grown and a financially independent adult?
- Do you have a policy to protect a business that no longer exists or no longer needs such protection?
- Do you have a policy you bought as added security for retirement? Do personal savings, an Individual Retirement Account (IRA), or other assets now provide the security you originally sought when purchasing the life insurance?
- Do you have life insurance to pay a mortgage that is already paid in full?
- Do you have a policy you bought for your children’s education which has already been paid in full?
- Do you have a small policy your parents purchased when you were a child?
If you answered yes to any of the above questions you may wish to consider how your life insurance may be used to help you meet other goals.
There are many ways you may give life insurance to the APS or APRL. You can name us as a beneficiary for a fully or partially paid up policy. The APS/APRL does not have to be the primary beneficiary to receive all the policy proceeds. We could be named as a primary beneficiary for just a portion of the proceeds or listed as a secondary, final, or remainder beneficiary.
Depending on the options selected you may receive an income tax charitable deduction for the policy’s cash value and or premium payments made, and all or a portion of the value of your policy may escape estate taxation.
Life insurance policies may also be used to fund charitable remainder trusts separately described in the following section.
Charitable Remainder Trusts
Two basic types of charitable remainder trusts qualify for federal tax benefits. In both arrangements, a donor gives stock, cash, or other assets such as real estate to a trust. Those assets are invested, producing income for the donor — or another beneficiary — either for a fixed period of time or until the donor dies.
Donors can get income tax deductions for the estimated portion of the assets that will ultimately go to charity. Making such gifts also avoids capital gains taxes. Many donors find the trusts an appealing way to prepare for retirement. The assets can be invested to earn a lower rate of return when the donor is younger and then shifted to earn a higher rate of return.
Unitrusts: Under a basic unitrust, the donor receives one or more yearly payments equaling a fixed percentage of the value of the asset which is assessed each year. Under a net income unitrust, the donor receives only the income earned by the trust, even if the trust earns less than the payout rate. However, the trust can be set up to include a “make-up provision,” which allows donors to make up the lost income, provided the trust earns more than the payout rate in future years.
Annuity Trusts: The donor receives a yearly fixed payment equal to at least five percent of the value of the asset at the time the deferred-giving agreement was signed.
Gift Annuities
Gift annuities are attractive if you want to receive income from assets that have risen sharply in value, such as stocks. In return for gifts of such assets, you receive a fixed annual income for the rest of your life and avoid capital gains tax. If preferred, the annual payments will not start immediately but will begin at a specified later date such as retirement. You also get an income tax break on a portion of the earnings from an annuity based on your age.
Pooled Income Funds
Obtaining a “unit” in a pooled-income fund is similar to buying a share of a mutual fund. You give cash, securities, or other assets to a non-profit organization, which then invests those assets. You receive income from the fund proportionate to the value of your contribution, as well as an income tax deduction based on the estimated principal that will be left to the charity.
Like gift annuities, pooled-income funds appeal to donors who want to earn income on stock and other assets and escape capital-gains taxes. Unlike the annuities, a donor’s income from a pooled-income fund is tied to fluctuating interest rates. In the long run donors may receive larger earnings than they do from annuities, but they may also do poorer in the short term. As a result, pooled income funds tend to appeal to younger people who are often more willing to take risks with their investments.
Charitable Lead Trusts
In a charitable lead trust a charity receives the income from your asset’s for a specified time, after which the asset is transferred back to the donor or to the donor’s heirs.
Charitable lead trusts are most appealing to wealthy donors who want to pass appreciated assets to their heirs without paying a substantial amount in taxes. You pay a gift tax when the asset(s) are placed into the trust. After that the asset can grow tax-free. At the end of a specified period, the asset is returned to the donor’s heir or heirs, who do not have to pay any additional taxes.
Retained Life Estate
You may make a gift of your house to charity and retain the right to live in the house for the remainder of you (and your spouse’s) life. You receive an immediate income tax deduction for the gift and upon your death(s) the house goes to the charity.
