How to Give
There are many different ways to give. Some can even be completed without the help of an advisor, although you are always encouraged to consult a professional to insure that your charitable plans are consistent with your plans for other loved ones.
Everyone has a unique family and financial situation. Your legacy gift of any size can be designed to match your personal circumstances. Options include:
- A simple charitable bequest
- An outright gift using appreciated assets or cash
- An IRA or pension plan
- A life insurance policy
- A charitable gift annuity
- A charitable remainder trust
Charitable Bequests You can create a permanent legacy by leaving a bequest of a specific amount of cash, a percentage of your estate or the remainder of your estate. There’s no limit on the amount you may set aside from your estate–you can make a gift as large or small as you’d like. (Some agencies may have minimum requirements for establishing an endowment.)
You may choose to make a gift of cash, securities or other property–and your estate will receive a tax deduction in the amount of your charitable bequest. A charitable bequest allows you to retain use and control over your assets during your lifetime.
A bequest is a legacy gift, distributed from the donor’s estate after the end of his or her life. If not designated, it can be spent in the year that it matures. An endowment is a fund that is held in perpetuity, distributing a specified percentage annually to the designated purpose.
An outright gift using appreciated assets or cash When you create a legacy with a current gift of cash or other property, your fund may be used to pay an annual gift to the charity of your choice. If you donate appreciated securities held for more than one year, you can avoid capital gains taxes and receive a tax receipt for the full value of your gift in the current year.
An IRA or pension plan If you have accumulated substantial amounts in your retirement account and you are in the highest brackets for paying income and estate taxes, those taxes can exceed 70% of the amount in the plan. These are not ideal assets to bequeath to your heirs. Naming one or more charities as the after-death beneficiaries of your IRA pension fund (by designating specific amounts or percentages) can save these taxes while supporting the causes closest to your heart.
A life insurance policy Life insurance is an advantageous and inexpensive way to create a legacy. When you purchase a new policy naming a charity as owner and beneficiary, you will receive a tax receipt for the full value of the annual premium payments.
You could also transfer an existing policy and name the charity as owner. At the time of transfer you are entitled to a current deduction equal to the net cash value of the policy. All future premium payments, when paid, would be a current tax deduction. The reasonable cost and tax benefit make life insurance a particularly appealing approach for some donors.
A charitable gift annuity A charitable gift annuity is a contract between you and your foundation that provides you and/or another person with an income for life. In exchange for your irrevocable transfer of cash or marketable securities, you or the beneficiary will be paid a fixed sum each year for life. At the expiration of benefits, you have left a permanent legacy as a link to our Jewish traditions of tzedakah and klal Yisrael.
What are the benefits to you?
- Provides a fixed annual income stream
- Offers a tax deduction for the gift portion
- Can be used to establish an unrestricted gift or a designated gift
The assets can be used after your lifetime by the charity you designate. A charitable gift annuity is a simple planned giving instrument.
A charitable remainder trust A charitable remainder trust is a creative way to establish a lasting legacy in your name and receive income from the trust for life or for a specified number of years. Upon expiration of that term, the remainder of the trust goes towards the philanthropic purpose you established at its creation. Your charitable remainder trust can be designed as either an Annuity Trust, with a fixed annual payment to you, or as a Unitrust, in which case you are paid a percentage of the value of the assets. What are the benefits to you?
- You, your spouse, or someone you designate receives an annual income
- You receive an immediate tax deduction at the time the trust is created
- You incur no immediate capital gains tax on the transfer of appreciated assets
- You save estate taxes when these assets are removed from your taxable estate
- You achieve your long-term charitable objectives through the creation of a permanent legacy
Charitable Remainder Annuity Trust A Charitable Remainder Annuity Trust provides a way to avoid fluctuations in interest rates and ensures that you or someone you designate receives a fixed income. You may make a gift of cash, appreciated securities or property to set up the trust either during your lifetime or through your will.
Charitable Remainder Unitrusts A Charitable Remainder Unitrust provides an income for life that can grow as the funds invested in the trust grow. This trust agreement fixes a unitrust rate, and donors or their designated beneficiaries receive regular payments of income for life or joint lives, or for a period of time.
This information is intended as an educational tool. The information presented is to provide general information only and should not be construed as legal or accounting advice. Because tax and financial consequences involved with any gifting program depend on personal financial circumstances, individuals should consult with their own financial, legal and accounting advisors to review any charitable estate planning options.