Ways to Reduce Taxes and Make a Gift
- GIFT OF CASH
Cash gifts may be deducted for one year or over six years, up to 50% of adjusted gross income. For example, on a $100,000 cash gift in a 39.6% bracket, you may save $35,000 in taxes. Our Family Orphan Communities (O.F.O.C.) invites cash pledges payable over a period of years.
- GIFT OF APPRECIATED STOCK
Appreciated stock (held more than one year) makes an excellent gift. You may avoid capital gain taxes and receive a charitable tax deduction for up to 30% of your adjusted gross income.
- BEQUEST THROUGH A WILL
One of the most simple and popular ways to make a gift is through your will. You may make a bequest by providing a dollar amount, specific property, a percentage of your estate, or what is left (remainder) to Our Family Orphan Communities (O.F.O.C.). Such a designation may reduce your estate taxes. In many cases a simple codicil to the will can add Our Family Orphan Communities and does not require rewriting your most recent will.
- CHARITABLE REMAINDER TRUST
(Annuity and Unitrusts) Donors and spouses may benefit from lifelong payments from such a trust. The donor selects the rate of return from these income arrangements and may choose a fixed or fluctuating annual payment to be made to the designated parties as long as they live. Capital gain taxes may be minimized, and you may receive a tax deduction based on the age of the income recipient and the rate of return.
- CHARITABLE LEAD TRUST
In a charitable lead trust, assets (generally cash or securities) are transferred to a trust which pays income to Our Family Orphan Communities for the number of years you determine. At the end of the designated time period, the trust terminates and the assets revert to you or are given to the person you name. This trust helps lower estate and gift taxes that would otherwise/be due on the value of the assets. This charitable vehicle is especially attractive if a donor wishes to leave assets to children or grandchildren in the future.
- CHARITABLE GIFT ANNUITY
In exchange for a gift of cash, marketable stock, or securities, Our Family Orphan Communities will pay you, or you and your spouse, income for life. In addition, you may receive a substantial income tax deduction in the year of the gift, and a portion of the annual payment you receive is not taxed. Upon the death of the beneficiaries, the remainder goes to Our Family Orphan Communities.
- DEFERRED CHARITABLE GIFT ANNUITY
A deferred charitable gift annuity is similar to a charitable gift annuity, but payments begin at some future date. Your tax deduction and annual rate of return on your annuity increase the longer you wait to start payments. This can be an excellent retirement planning vehicle to implement during prime income producing years.
- GIFT OF LIFE INSURANCE
Life insurance can be another way to make a substantial future charitable gift. Gifts of life insurance can be made either by designating Our Family Orphan Communities as beneficiary or by irrevocably assigning ownership of the policy to O.F.O.C.. Beneficiary designations alone produce no income tax deductions but may remove the proceeds from the donor’s taxable estate upon death. Assignment of the policy to O.F.O.C. may create a current income tax deduction for the present value of the policy. In addition, annual income tax deductions may be allowed for any premiums the donor voluntarily continues to pay.
- GIFT OF RETIREMENT ACCOUNTS AND PENSION PLANS
Retirement plan assets may be subject to taxation levels that minimize their benefit to heirs if tax-wise planning is not arranged. Retirement plans (IRAs or company plans) that go beyond the comfortable support of yourself or loved ones may be given to Our Family Orphan Communities with proper beneficiary designation and planning.
- GIFT OF REAL ESTATE
For some individuals, a gift of land, a house, or a vacation home is a preferred way to make a gift. You may receive a tax deduction for the full fair market value, minimize capital gain taxes, and remove the asset from future estate taxes. One option to an outright gift is to give real estate and retain a life tenancy. This may provide a current income tax benefit. You continue to live there, maintain the property as usual, and receive any income it generates. Upon your death the property reverts to Our Family Orphan Communities.
- CREATIVE COMBINATIONS
In planned giving one size does not fit all. Depending upon your unique circumstances and gift objectives, you may use one or even several planned giving vehicles to achieve the goals best suited for you. There are other planned giving strategies, beyond those mentioned, which may be right for you.
Many of the above gifting possibilities may be complex and require the consultation of professional advisors. Our Family Orphan Communities is prepared to work with you and your advisors. It is important that your advisors explain the benefits of the above plans and how they can fit into your estate and financial planning.
Contact your advisor today.