Also known as deferred gifts, these plans often provide opportunities for substantial tax benefits, and in many cases, enable a donor to retain an income for life. The Central Baptist College Development Office offers confidential information without fee or obligation.
The following are descriptions of some of the most common planned gifts:
Charitable Gift Annuities
With this option, the individual transfers assets to Central Baptist College. In exchange, CBC agrees to pay a specified annuity amount for the individual's life. The individual's charitable gift is calculated by taking the value of the transferred property, less the value of the annuity. Unlike the Charitable Remainder Trust, some capital gain may be recognized upon the transfer of appreciated property, but the gain may be spread over the individual's lifetime.
Charitable Lead Trust
A Charitable Lead Trust provides qualified charities with income for a term of years, or for the lives of the donors, with a remainder interest passing to non-charitable beneficiaries, such as members of the donors family. A donor transfers assets to a trust and instructs the trustee to pay a designated amount to Central Baptist College for a term of years of for the donor's lifetime. At the termination of the trust, the assets are returned to the donor or non-charitable beneficiary, such as a family member.
- Income tax advantages
- Highly appreciated assets are removed from the estate
- Gift and estate taxes may be minimized
Charitable Remainder Trust and Charitable Remainder Unitrust
These two trusts are very popular with individuals who hold highly appreciated assets such as real estate or securities producing little or no income. The individual makes a charitable gift but retains for life, or for a fixed period, the right to receive payments from the trust.
Two special features are: capital gains are avoided and generally, the trust property is not subject to death taxes. More information...
Life insurance policies also can be used as charitable gifts. If Central Baptist College is named as the owner and beneficiary of an existing or new life insurance policy, you receive an immediate tax deduction, which usually approximates the cash surrender value as well as the right to change the beneficiary.
Perhaps you are not ready to give up ownership of the policy, but you would like to contribute the proceeds of a life insurance policy to Central Baptist College. By naming Central Baptist College only as beneficiary, you retain ownership of the policy and have access to the cash value as well as the right to change the beneficiary.
This type of contribution allows you to give to Central Baptist College after you die, even if you don't have the liquid assets right now. While you retain ownership of the policy, there is no charitable deduction for the value of the policy when you designate Central Baptist College as the beneficiary or for subsequent insurance premiums. However, any proceeds payable to Central Baptist College at your death will not be subject to federal estate taxes.
Retirement Plan Assets
Using IRAs and other retirement plan assets is a far-sighted and thoughtful way to make a charitable contribution. It provides a donor a number of significant financial and tax advantages.
Unlike many assets, retirement plan assets are potentially subject to both income and estate taxes. Naming Central Baptist College as the beneficiary of a retirement plan - including IRAs, 401(k)s and profit-sharing plans - can eliminate estate and income taxes, if the gift is structured properly.
A Bequest by a will or trust can save estate taxes and continue the charitable work you care about. Gifts by will are deductible for federal estate tax purposes. Gifts can be designated for use by Central Baptist College for a special purpose, or for the general charitable purposes. Several options exist:
- Residuary Bequest: Donor leaves remaining property after payment of all debts, taxes, expenses and other bequests.
- Percentage Bequest: Central Baptist College receives a percentage of the residuary estate.
- Specific Bequest: A specific dollar amount or item of property is designated.
- Contingent Bequest: A bequest is made to Central Baptist College upon a certain condition, such as the death of another beneficiary.
To find out how to best utilize any of these giving options to benefit everyone involved, please contact your CPA and/or tax attorney.