Planned giving is a method of supporting a charity that allows you to make larger gifts than you would be able to make from your income alone. It can bring a number of advantages: income tax savings, reduced estate tax, avoidance of gift and capital gains tax, and income opportunities for you and/or family members. Just as everyone can make an annual gift to Marshall at a level that's right for them, so are there a variety of planned gift options to fit each individual and family.
Most planned giving starts with a discussion about including a charity in your will. While bequests are a wonderful planned giving tool, and will be discussed below, many donors overlook both the ease and benefits available in using retirement assets in their charitable gifting.
Retirement assets (IRAs, employee retirement plan, or other qualified plan) contain income that has not yet been taxed. When this income passes to a beneficiary upon your death, it will be subject to income tax of as much as 39.6%. It may also be subject to estate and generation-skipping tax, leaving your heirs with little of the original asset.
This makes retirement assets particularly attractive for charitable gifting. When given to charity such as Marshall, these assets are subject to none of the taxes listed above, allowing you to do more with your money. These gifts are also both easy to make and flexible--the beneficiary designation on your retirement plan is simply changed to include Marshall School, and the percentage of your plan left to Marshall can be as much or little as you choose.
Name Marshall as a Beneficiary in Your Will
Naming Marshall as a beneficiary of a part of your estate in your will ensures that your support of Marshall will continue for years to come. Depending on the size of your estate, this type of gift can also provide estate tax benefits.
You may either name Marshall as the beneficiary of your life insurance policy, or both name Marshall as beneficiary and transfer ownership of the policy to the school. Choosing the latter option qualifies you for an income tax charitable deduction (in most cases), and potentially reduces future estate tax liability. In most states, you can also purchase a new insurance policy and name Marshall as the beneficiary and owner of the policy. Rather than paying premiums to the insurance company, you make tax-deductible cash gifts to Marshall to cover the annual premiums.
A gift of appreciated real estate that you've owned for more than one year, whether outright or to fund a planned gift vehicle, can qualify you for a number of benefits. You receive an income tax charitable deduction equal to the property's full fair market value. You avoid capital gains tax on any appreciation on the property. Depending on your situation, you may avoid gift and estate tax liability.
Charitable Remainder Trusts
A charitable remainder trust provides an opportunity to make a gift to Marshall and provide you or other named individuals with income each year for life or a period not exceeding 20 years. You contribute assets to a trust you create. Payments can be either variable or a fixed amount. After the life of the named individuals or the set period of years, the balance in the trust passes to Marshall. Benefits include: a partial charitable income tax deduction, creation of a stream of income, and potential capital gains and estate tax avoidance. Marshall's Advancement Office can provide illustrations to demonstrate how charitable remainder trusts could work in your situation.
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Each individual and family situation is unique. This brief discussion of planned giving options is by no means exhaustive, nor is it intended as legal or tax advice. Always consult your professional advisors when making financial and giving decisions.