Generally speaking, during your lifetime you can make an outright gift of cash, securities or other property (e.g., real estate, personal property). Through your will or with a distribution from a retirement plan or life insurance policy, your gift can be designated to Thomas House in accordance with your wishes.
Your tax benefits will depend on several factors: the type of gift, the time at which it is made, whether it is outright or deferred or has any income payments. In general, though, here are some guidelines:
•Outright gifts to Thomas House generate a full income-tax charitable deduction. Outright gifts of appreciated securities are deductible at fair market value, with no recognition of capital gains — a great tax benefit!
•Gifts of personal property, like art, books and collectibles, are fully deductible so long as they are relevant to our mission. We can advise you on this point.
•Bequests do not generate a lifetime income tax deduction. They are exempt from estate tax.
•Similarly, life insurance distributions to Thomas House are not income-tax deductible, but are exempt from estate tax. If you have made us the irrevocable owner and beneficiary of a policy during your lifetime, you may deduct annual gifts that offset premium payments (for more details on this point, see Question 4 below).
•The charitable deduction for a gift that returns income to you, such as a charitable gift annuity or a charitable remainder trust, is the fair market value of the gift asset minus the present value of the income interest you retain.
No. The IRS would not consider that a “completed gift” – they’d say that, as the owner of the policy, you could change the beneficiary designation to a friend or family member. We must be made the irrevocable owner of the policy for gifts offsetting premium payments to be deductible.
Qualified retirement plans such as IRAs, 401(k), 403(b), and Keoghs allow individuals to defer paying taxes on a portion of their income until the assets are withdrawn during retirement years. However, after a person’s death, these accounts are often exposed to income and estate taxes, at a combined rate that could rise to 75% or even higher on large taxable estates. The tax will be paid at some point—by your estate and your heirs unless contributed to charity. In other words, by giving retirement assets to charity you receive double benefits. Your estate and heirs will not be taxed on the portion that goes to charity and you will support Thomas House!
The IRS requires that donors of artwork and collectibles secure an independent appraisal of the items to establish fair market value. The appraisal has to be related to the gift, too – an insurance appraisal won’t suffice. We can assist you on this point.
Your charitable gift annuity will be treated as a general obligation of Thomas House, backed by all of our assets. We have an unbroken record in making timely payments to our annuitants, and that ongoing responsibility is a key element in our financial policies.
Your planned gift is a significant addition to our long-term financial strength and our ability to meet the challenges and opportunities the future will bring. However, today’s efforts are supported through annual gifts and we greatly appreciate and encourage any annual support you may want to consider.
For more information about estate planning, anninuities, and other planned giving, call Scott Shubert, CFP, AT 949-230-1416 or contact Thomas House Treasurer Darin Simonian at Darin@NewportAdvisory.com.