Details About Gift Types
Learn how to make a gift that provides tax benefits and even life income. Discover how to give the best gift to meet your needs and life situation.
While the Foundation can provide assistance in consultation and planning your gift with you, the donor should always consult their own legal attorney and financial advisors. The purpose of the information included on these pages is to provide accurate and authoritative information of a general character only. The Foundation is not engaged in rendering legal or tax advisory services.
If you desire to contribute to Grace Church Foundation anytime during life, please contact us to discuss your charitable intent. Donors who give during life get to see the benefits of their gifts and realize the tax benefits of giving.
A gift of stock is one of the easiest methods to make a gift. If the stock has appreciated, the donor not only avoids the capital gains tax on the appreciation but also receives a charitable deduction for the full fair market value of the stock at the time of contribution.
You can donate real estate to the Grace Church Foundation. You will get an immediate tax deduction and can avoid capital gains taxes on appreciated real estate.
The IRA Qualified Charitable Deducation (QCD) lets you transfer money from your traditional IRA directly to the Grace Church Foundation without the money being added to your adjusted gross income. You can donate up to $100,000 annually, but you must be 70½ or older to be eligible. An additional benefit of a QCD is the money can count toward your required minimum distribution if the QCD is made before satisfying your RMD for the year.
The QCD can’t be distributed to you first and then donated; instead, the money MUST be transferred directly to the Foundation, and if a check is issued, it must be made payable to the Grace United Methodist Church Foundation.
A retirement plan is one of the best types of assets to transfer to the Grace Church Foundation following death because of the income tax consequence. Most inherited assets are free from income tax. However, an heir will pay income tax on disbursements from a decedent’s retirement plan such as a profit-sharing plan, Section 401(k) plan or IRA. If you are going to make a charitable bequest, it is usually better to transfer assets subject to income tax to a tax-exempt charity – such as the Foundation – and to transfer assets not subject to income tax to heirs.
You may have purchased life insurance when you needed protection for your family, business or estate. In later years, you have found you no longer need that insurance. If you want to achieve immediate tax benefits, you should consider irrevocably assigning an insurance policy to Grace Church Foundation.
Giving life insurance as a gift to charity allows even those with modest means to leave a substantial contribution to the cause most meaningful to them. A gift of life insurance is a deferred gift, which means the proceeds from a commitment made now will be realized in the future. Donors often struggle between their desires to achieve philanthropic goals and their need to preserve their estates for their families. A gift of life insurance can eliminate this conflict.
In addition to gifting an existing life insurance policy, a new life insurance policy can be purchased from your life insurance professional naming Grace Church Foundation as owner and beneficiary. The initial premium payment plus subsequent insurance premium payments made by the donors are deductible as charitable contributions. A gift of insurance will not reduce your current stream of income.
Create a trust that pays a fixed or variable income to the Foundation for a set period of time, then passes to heirs. May reduce the the value of the estate and keeps the property in the family.
Including a charitable bequest as a part of your will is a great way for you to provide long-term support for the Grace Church Foundation while also effectively managing your estate. Making a charitable bequest is easy. If you want to leave a bequest to the Foundation, you must specifically do so in a will or trust. Your will or personal trusts are legal records of your wishes regarding how your assets should be handled at your death. Instructions regarding the dispensation of your assets are called bequests.
General Bequest: With this type of bequest, you simply leave a specified dollar amount (e.g., $25,000) to the Foundation.
Specific Bequest: A bequest of this type involves the designation of specific property (e.g., a home, shares of stock or other assets) that you want the Foundation to receive.
Residuary Bequest: Through a residuary bequest, the Foundation will receive the remainder of your estate after all liabilities and other bequests have been paid. It may augment a general or specific bequest to the Foundation if the size of the estate allows or may ensure that other beneficiaries receive their bequests prior to distribution to the Foundation.
Percentage Bequest: You may direct that the Foundation receive a percentage of your estate or residuary estate. In this case, if the size of your estate changes, the bequest will change proportionately.
Contingent Bequest: It is important to anticipate a situation in which a beneficiary might die before you or choose to disclaim the property. To prepare for such an occurrence, consider naming the Foundation as the contingent beneficiary.
Perhaps a charitable gift sounds attractive, but you are not ready to give up ownership of your life insurance. By naming the Foundation as beneficiary only, you retain ownership of the policy; have access to the cash value and the right to change the beneficiary. If you would prefer that a member of your family remain the primary beneficiary, you can make the Foundation the contingent or successor beneficiary to receive the proceeds if your primary beneficiary dies before you.
Because you retain ownership of the policy, there is no charitable deduction for the value of the policy upon designation of the Foundation as beneficiary or for subsequent premium payments. However, any proceeds payable to the Foundation at your death will not be subject to federal estate tax.
Donor Advised Funds are a convenient option for giving to your favorite charities. By establishing such a fund, you can minimize your taxes by making charitable gifts to your fund but decide later which charities will benefit.
The Benefits of a Donor Advised Fund include:
You can make a gift to your Fund at the time most convenient for you and receive an immediate charitable deduction.
You can decide later which charity(ies) you recommend receiving distribution, how much and when.
Earnings are credited and compounded tax-free so that more money may be available for your favorite charities.
You can pass on important values of service and caring for others by involving children or other family members in charitable gift recommendations.
- You and others may add to your Fund any time.
A charitable gift annuity is a way for you to receive a guaranteed income for life and an immediate income tax deduction, while at the same time leaving a legacy to the Resurrection Foundation.
When you transfer assets to a Charitable Gift Annuity, you receive a fixed stream of income for life. After paying the lifetime annuity to you – and your spouse, if you choose – the remaining principal is transferred to the Grace Church Foundation.
Payments to you are based on your age – the older you are, the higher the rate. If the annuity is for you and your spouse, the calculation is based on your joint ages. You can choose to receive payments quarterly, semi-annually or annually. If you do not need the income now, you can use a deferred plan, receive the income tax deduction now, but begin receiving payments when you reach a specific age. This is an excellent complement to your existing retirement plan.
The tax advantages of both a current and deferred annuity are two-fold. First, you receive an immediate income tax charitable deduction when you create your annuity. The amount of the deduction is based on your age and annuity payout rate. Second, a portion of the payments you receive may be treated either as tax-free return of principal or long-term capital gains. These tax advantages increase the net income you receive.
A charitable remainder trust is an efficient estate planning vehicle. It is a special type of trust that provides for and maintains two sets of beneficiaries. The first set are the income beneficiaries (you and, if married, a spouse). Income beneficiaries receive a set percentage of income for your lifetime or for a fixed term not to exceed 20 years from the trust. The second beneficiary would be the Grace Church Foundation. The Foundation would receive the principal of the trust after the income beneficiaries pass away.
There are two basic types of charitable remainder trusts; one is an annuity, one is a unitrust.
Establishing either trust is simple:.
Cash or property is transferred to the trust.
The income beneficiaries receive annually an amount equal to a fixed percentage of the trust’s fair market value (unitrust) or a fixed dollar amount (annuity trust).
Upon termination of the trust, the assets are transferred to the Grace Church Foundation.
The eventual distribution to the Grace Church Foundation will take effect only at the death of the trust’s income beneficiaries (or at the end of the term of the trust if a fixed term is chosen for the trust).
If you are interested in a Charitable Gift Annuity, the United Methodist Foundation of the Northern Illinois Conference, Inc. issues them. We can work with you and help you get connected with them.