Planned Gifts
Planned giving is the process — some would say the art — of making a generous charitable donation that satisfies both the donor and the recipient. Like all art, philanthropic giving requires a good design to achieve the desired result.
Because tax laws encourage charitable giving by providing substantial deductions, the way you design your gift will help determine its benefits to you and to Rivermont.
Planned gifts can be made in three ways: outright gifts, gifts which provide a life income, and gifts through a will or bequest. Described below are some of the common options for those gifts, with a brief description of possible tax advantages. Contact Tina Fulcher, Business Manager, at fulcher@rvmt.org, who can give you a suggestion tailored to your situation, and of course, also talk to your own legal advisor.
- Outright Gift: An outright gift of cash is the simplest form of giving and the method chosen by most people who donate to Rivermont. A gift of cash is not subject to gift or estate taxes, and is deductible for income tax purposes to the extent of 50% of your adjusted gross income. Amounts exceeding this limit can be carried forward for tax purposes for five years.
- Other Assets: Other assets can be donated as well, including securities, real estate, closely held stock, life insurance policies, and tangible personal property such as books, artwork and stamp collections. These gifts provide a charitable tax deduction equal to the asset’s fair market value of up to 30% of adjusted gross income with a five-year carry forward.
- Appreciated Assets: Gifts of appreciated assets — such as common stocks, bonds, or real estate — provide you with an income tax deduction of the fair market value of the gift while avoiding capital gains taxes and gift/estate taxes. You may donate real estate and maintain life use of the property.
- Stock: Shares of stock in a closely held corporation can be contributed and subsequently redeemed in cash by the corporation, generating substantial tax benefits.
- Life Insurance: By naming Rivermont owner and beneficiary of a new or paid life insurance policy, you receive a tax deduction for up to the face value of the policy.
- Bequests: You may feel you can make a larger giftto Rivermont through your will than during your lifetime. Your bequest may be in the form of a specific amount of cash or property, or a percentage of the estate. (Your IRA or other retirement plan makes a particularly tax-advantaged charitable bequest).In either case, the gift is deductible for estate tax purposes.
- Life Income Gifts: If you wish to make a gift to Rivermont but require the income your assets earn, you may make a gift that increases your income, saves on income taxes, and avoids capital gains and gift/estate taxes. Some examples of life income gifts include:
- Charitable Gift Annuity. The charitable gift annuity is among the simplest and most popular methods of making a charitable gift. In exchange for cash or marketable securities, Rivermont will contractually guarantee to pay a specific amount per year for life to a donor and/or other beneficiary. The payments may begin immediately or be deferred as directed by the donor.
- Charitable Remainder Trust. You make an irrevocable gift to a trust, which pays you, you and/or your spouse, or any other beneficiary, an income for life. Upon your death, or the death of the income beneficiary, the trust’s assets go to the school. You receive an outright tax deduction in the year of the gift, increase your income, and avoid capital gains and gift/estate taxes.
Summary
A donor's prime motive for giving to Rivermont is to further the work of educating young people. Having decided to contribute, however, you will want to plan your gift for maximum tax benefits. The effect of the charitable deduction on income taxes, capital gains taxes, and gift/estate taxes not only reduces the out-of-pocket cost of your gift but, in many cases, allows you to give more than you originally thought possible.
For more information about planned giving, e-mail Tina Fulcher, Business Manager at
fulcher@rvmt.org