Secrets of Giving Wisely

Charitable gift annuities (CGA) are split interest gifts that provide one or two people with fixed income for life, and afterwards benefit charity. Many seniors utilize gift annuities for retirement purposes as it provides secure lifetime payments at attractive rates. For more information, (click here), Younger individuals often utilize deferred annuities for the same reason, obtaining considerably greater payout rates by deferring any income payments until their retirement years. For more information, (click here).

When you fund a gift annuity, you can take the charitable deduction in the year you make the gift for a portion of the amount funded. A portion of the payments you receive each year may also be exempt from certain income taxes. You can even reduce your capital gains tax by using long-term appreciated securities to make your gift. For more information, (click here).

Your gift annuity can also help provide for others while creating a charitable donation to Broadmoor Baptist Church. You may request a two-life annuity and provide lifetime fixed payments not only for yourself, but for your spouse, child or other loved one.

The charitable remainder trust (CRT) is an efficient charitable planning tool often utilized by individuals holding assets that have experienced significant appreciation like stocks, real estate, or a business. It is an irrevocable trust designed to convert such assets into a lifetime income stream without generating capital gains taxes.

When you establish a CRT, you and/or another beneficiary, such as your spouse or another family member, receive income from the trust for life or for a term of up to 20 years. In addition, you receive an immediate income tax charitable deduction for your gift. Any capital gain from the asset utilized to fund the trust is averted, and the asset is eliminated from your estate for estate tax purposes. When the trust ends, the remaining assets pass to the qualified charity or charities of your choice. More on charitable remainder trusts, (click here).

A charitable lead trust (CLT) is often described as the reverse of a charitable remainder trust because the interests going to the charitable and non-charitable beneficiaries in a CLT are the opposite of a CRT.

With a CLT, you transfer assets to the trust, which pays one or more charities an income stream for a period of time. When the period of time you specify ends, the remaining trust property returns to you or goes to other non-charitable beneficiaries, such as your spouse, children, grandchildren, or anyone else you name in the trust. The lead trust is an excellent means for transferring principal to family members at a future time and avoiding substantial estate or gift taxes while affecting this transfer. Utilizing this tool in conjunction with a family limited partnership can provide even more dramatic benefits.

We often think of making outright gifts to charity in the form of cash - simply write a check as a means of our support. However, a significant tax advantage can be realized by making gifts of appreciated securities.

Your gift(s) of stocks, bonds, or other publicly traded securities held longer than one year entitles you to a charitable deduction for the full fair market value of the appreciated asset. In addition, you avoid the capital gains tax by transferring the securities directly to the ministry of your choice. Learn more, (click here).

Alternatively, if you would like to make the gift and avoid the capital gains tax, but need to retain some benefit during your lifetime, you can choose to create a charitable gift annuity. Here, your gift produces a worry-free lifetime income stream and a significant immediate charitable deduction, as well as ultimately benefiting Broadmoor Baptist Church in a very meaningful way. Learn more, (click here).

There are several ways in which real estate can be gifted to benefit Broadmoor Baptist Church. First, if you no longer need any benefit from the real estate, it can be gifted outright to Broadmoor Baptist Church. Here, you would receive a charitable deduction for the full market value of the property and avoid capital gains tax on the appreciation of the real estate.

Alternatively, real estate could be gifted in a way that provides a benefit to you during your lifetime and ultimately benefits Broadmoor Baptist Church. This could be accomplished through a charitable remainder trust. Typically, the property is gifted to the charitable remainder trust and then sold; the trust makes payments to you or other beneficiaries for a period of years or a lifetime, and afterward, the remainder interest goes to Broadmoor Baptist Church. More on charitable remainder trusts, (click here).

Another way to give real estate and obtain a charitable deduction, but still retain a benefit, is through a retained life estate. With a retained life estate, you can donate your residence, vacation home, or farm to Broadmoor Baptist Church and retain full lifetime use of the property. You will receive an immediate income tax deduction for a portion of the fair market value of your property. You will continue to be responsible for insuring and maintaining the property and for paying property taxes. More on retained life estates, (click here).

When real estate is income bearing, such as rental properties, and the ultimate objective is to transfer these properties to children without estate taxes, a charitable lead trust can accomplish this and also increase overall giving to ministries. The charitable lead trust utilized in conjunction with a family limited partnership can further enhance the overall outcome.

Tax-deferred retirement plan benefits are excellent sources of retirement income, but are not always the best choice for making gifts to heirs. Consider using them to make a significant gift to Broadmoor Baptist Church. Because retirement plan benefits are subject to both estate and income taxes, the cost of the gift to your estate is often relatively small. Learn more, (click here).

The value of an individual’s business often appreciates dramatically over time. The ultimate sale of such a business presents tremendous gifting opportunities for the owner, but must be accomplished before the sale. Thorough planning and the utilization of available charitable tools prior to the sale of these assets can be expected to provide outstanding results.

On December 18, 2015, the Protecting Americans from Tax Hikes (PATH) Act, was signed into law.  Among the Act’s many provisions is the permanent provision allowing charitable gifts from Individual Retirement Accounts.

This “charitable IRA rollover” allows individuals age 70½ or older to transfer up to $100,000 annually from their IRA accounts directly to charity without first having to recognize the distribution as income.

Any IRA administrator can help accomplish this type of giving.  For a sample letter of instruction to your administrator, click: sample letter.  The recipient of the gift must be a church or other qualified charity—a donor advised fund or supporting organization is not eligible.

This opens up dependable flexibility in planning and making your charitable gifts each year:

• Special gifts, up to $100,000 annually, can be paid to the church for projects, missions or other Gospel opportunities.
• The Required Minimum Distribution (RMD) can now regularly be paid to the church as you tithe or as a special gift.
• Only an Individual Retirement Account is eligible to provide such charitable gifts.  In some instances, it may be possible to roll other retirement plan assets into an IRA and still take advantage of this giving opportunity—check with your plan administrator to find out for sure.

Why give the RMD or other gifts directly from an IRA?  The charitable IRA rollover sends pre-tax dollars directly to the church.  You never pay tax on the withdrawal and the church never pays tax on it either.

The dollars in your checking or savings account are already taxed.  It is very often more tax-wise to give IRA funds directly to charity rather than an equal amount from your checking account.  Since most seniors do not have enough deductions to itemize on their federal tax return, charitable giving from the IRA makes sense for many—check with your professional advisor to be sure.

Making a gift through the IRA charitable rollover provision is simple. If you have questions or need help, please submit the form below and our partners at PhilanthroCorp (a Christ-centered estate planning firm) will call.

Thank you for your faithfulness to Broadmoor Baptist Church in so many ways.