We often think of charitable giving only in terms of an outright gift of cash. However, planning for the future now entails many vehicles ranging from bequests, to deferred gifts that pay benefits today, to trusts that assist the IUS now while helping you and your heirs in the future.
Planned gifts offer many of the same benefits that an outright gift to a charity provides, such as:
- Leaving a lasting and meaningful legacy
- Charitable tax deduction
- Avoidance of capital gains tax on appreciated property, securities and collectibles
- Perpetuating your personal philanthropic values
- Removal of assets from potential estate taxation
- Control of where the estate’s “social capital” is used
- Personal satisfaction in supporting a worthy cause
- Recognition for your charitable support while living
A planned gift sometimes enables you to give more than you thought was possible.
Wills and Bequests
Making a bequest through your will is one of the easiest ways to support the organizations and
values you care about the most.
Charitable Gift Annuities
Looking for a fixed life income with no market risk? A charitable gift annuity may be the answer. A
charitable gift annuity is a contract whereby the donor transfers property (cash or publicly traded
securities) to the IUS in exchange for fixed payments for life for themselves or a third party. This
type of gift is used by donors who want to make a meaningful commitment to the IUS, but who
also want to make sure they have enough funds for their own financial security.
A living trust is an excellent way to plan your estate in place of a will. Your estate avoids probate
and your assets pass anonymously, unlike with a will. Gifts through a trust can be made, like
through a will, in a fixed amount, as a percentage of your estate, or as a residue after gifts to loved
Gifts of Securities
Appreciated securities – particularly those that do not pay high dividends -- are an excellent way
to give to the IUS, bypass capital gains taxes, and increase your charitable deduction. Shares of C, S,
and limited liability corporations can also be donated through a trust at a considerable tax
Did you know that depreciated securities can be sold and the proceeds donated? The donor is
entitled to a tax deduction for both the capital loss and a charitable deduction for the donated
proceeds. A charitable contribution of mutual fund shares can provide the same tax advantages as
a gift of appreciated stock.
In order to preserve tax advantages, it is vital that you transfer securities directly to the IUS rather
than selling the stock outright.
Charitable Remainder Trusts
You can increase your retirement income, receive a tax deduction, and reduce capital gains tax by
transferring cash, appreciated property or other assets to a charitable remainder trust. This is also
a great way to convert a low-yield investment. The trust normally generates lifetime income for
you or others. The remainder stays with the IUS after the donor’s lifetime. A charitable remainder
unitrust pays you a variable income. An annuity trust pays you a fixed income.
Charitable Lead Trusts
This is essentially the reverse of a remainder trust. If you want to use assets to make a gift to the
IUS and retain the asset to pass on to heirs, consider a charitable lead trust. You provide
immediate support for the IUS and your heirs ultimately receive the donated assets.
You can simply name the IUS as the primary beneficiary of the policy. Your charitable deduction
depends on the status of the policy, whether it is paid in full or if premiums are still due. Life
insurance coupled with a charitable remainder trust creates a wealth replacement trust, which can
pass assets to your heirs while avoiding estate tax.
Making a gift of a retirement plan – such as a 401k, 403b, IRA, or Keogh plan – is becoming a
popular way to make a charitable gift. When arranged properly, a gift of a retirement plan may
help you or your estate avoid taxes while you help support the IUS’s mission.
Gifts of Real Estate
Real estate can either be donated outright or arrangements can be made for a deferred gift,
allowing the donor’s use of the property for their lifetime. Both approaches have tax advantages.
If you own a property that is not subject to a mortgage and has appreciated in value, you can claim
an income tax deduction based on the fair market value of the property, avoid all capital gains
taxes and remove that asset from your taxable estate with an outright donation.
Donor-advised funds have become a popular way to contribute to charitable organizations and
maintain a continuing active role in how contributions are used. A donor-advised fund is a
specially designated donation to the IUS where the donor has a substantial advisory role in what
programs are funded.
For more information, visit www.iusafs.org or contact email@example.com. Please consult your tax
advisor for specific advice on your financial planning.