Planned Giving
Giving is as easy as (1) making a charitable gift and (2) saving taxes. We’d like to make it even easier with this primer on some of the best ways to save and give. The tax laws intentionally encourage charitable giving. Because of the income tax charitable deduction, individuals who make their gifts by December 31 and itemize can significantly reduce their income taxes for 2009.
Example: If you make a charitable gift of $10,000 in 2009, you can save $3,300 in taxes if you are in the 33% tax bracket. And the higher your tax bracket, the more money you save with a charitable gift.
Giving is, of course, much more than tax brackets and charitable deductions. Philanthropy provides the meaningful difference in what we can do to better people’s lives and our communities.
This information is only a brief introduction to some of the best tax-advantaged methods of giving to Green Bay Botanical Garden. We would be pleased to provide you with further information. Also, we urge you to discuss your 2009 tax planning with your accountant or other professional advisor.
Bequests
While you’re considering your 2009 income tax savings, this may also be a good time to consider long-term tax savings. The federal estate tax can still take approximately 50% of one’s estate at the time of death. That’s a higher tax bite than the income tax! It definitely pays to do some advance planning with your attorney and other professional advisors.
We hope you will consider a charitable bequest in your will—to benefit Green Bay Botanical Garden while you save estate tax dollars at the same time.
Gifts of Cash
There is no easier way to garner a charitable deduction for 2009—and support us at the same time—than by simply writing a check! Make sure your envelope is postmarked by December 31; if it is, your gift will qualify as a 2009 gift even if it is not received by us until the first week of 2010.
If you itemize, your outright gifts of cash are fully deductible for federal income tax purposes up to 50% of your adjusted gross income. If your total gifts should exceed this limitation, the excess may be carried forward for tax purposes for up to five additional years.
Gifts of Stock
2009 may be an excellent time to consider a gift of stock.
Giving long-term appreciated stock offers you a two-fold tax savings. First, you avoid paying any capital gains tax on the increase in value of your stock. In addition, you receive a tax deduction for the full fair market value of the stock on the date of the gift. For income tax purposes, the value of such gifts may be deducted up to 30% of adjusted gross income, with an additional five-year carry forward.
Example: If you purchased stock many years ago for $1,000, and it is now worth $10,000, an outright gift of that stock to us would result in a charitable deduction of $10,000. In addition, you permanently avoid paying capital gains tax on the $9,000 of appreciation.
Gifts of Real Estate
If you have owned your home, a vacation home, acreage, or a farm for many years, a charitable gift of that real estate can be especially tax-advantageous.
The property may have so appreciated in value over the years that its sale would result in a sizeable capital gains tax. If given to Green Bay Botanical Garden instead, you avoid the tax and, at the same time, realize a charitable deduction for the full fair market value of the real estate.
You may also wish to consider a gift of your personal residence or farm, reserving the right to continue to live in the house or farm the property for life (and, if applicable, the lifetime of your surviving spouse). Through such an arrangement, you will be entitled to a current income tax deduction for a portion of the fair market value of the property.
Gifts of Life Insurance
If you own a life insurance policy that is no longer needed, consider it as the perfect vehicle for a charitable gift!
To receive a charitable deduction, name Green Bay Botanical Garden as both the owner and beneficiary of the policy. If the policy has a cash value, you can take a charitable deduction approximately equal to the cash value at the time of the gift. In addition, if annual premiums are still to be made and you continue to pay them, those premiums will become tax deductible each year. (It’s easy to contribute a life insurance policy to Green Bay Botanical Garden. Just check with your life insurance agent for details on which forms to complete.)
Life Income Gifts
If you are considering a major gift, your gift of cash or stock in the form of a “life income gift” can significantly increase your income!
A life income gift allows you to transfer assets now, and yet continue to receive income from the cash, stock, or other property contributed. A life income gift can allow you to: (1) increase your income for life; (2) receive a generous charitable contribution deduction in 2009; and (3) if you contribute stock, avoid any capital gains tax on appreciation!
A life income gift is often made through a trust arrangement called a “unitrust” or an “annuity trust.” With a unitrust, you and/or your spouse (or another beneficiary) receive annually a fixed percentage of the fair market value of the assets in the trust. The income received will vary from year to year, based upon how the trust’s investments perform. With an annuity trust, you and/or your spouse (or another beneficiary) receive a fixed amount from the trust each year. This amount is agreed upon when you create the trust; it stays constant, no matter what happens with the stock market or interest rates.
If you have already considered a provision for Green Bay Botanical Garden in your will, please note a life income gift can often be preferable. Such a gift allows you to accomplish your goals during your lifetime– and in a tax-advantaged way. Please call or write for the details.
For More Information
No one publication can tell you everything you need to know about 2009 gift opportunities and which method would be the most advantageous for your particular situation. Be sure to check with your accountant, tax attorney, or other tax advisor for additional information on how these general rules apply to your situation.