A Wide Range of Giving Options
A brief overview of the primary planned giving vehicles and related tax rules is provided below. This summary is for informational purposes and does not provide specific legal advice. While KBFUS will be happy to help you identify the legal and tax issues relating to your gift, we encourage you to consult with your own legal or financial advisor as to how the tax rules described below apply to your specific circumstances.
If you decide to contribute to your fund during your lifetime, please note that, for income tax purposes, gifts of cash are ordinarily tax deductible up to 60% of your adjusted gross income in the year of your contribution, with a five-year carryover for the excess not used. If you contribute long-term securities or other appreciated property, capital gain taxes are usually eliminated, and you can take a charitable deduction for the full, fair market value of the gift, up to 30% of your adjusted gross income.
We can provide you with sample language to include in your last will and testament to make a charitable bequest to your existing legacy fund, or for the purpose of establishing a new legacy fund at KBFUS. You can bequeath a specific dollar amount, property to be sold, or a percentage of your residual estate (that is, what is left after your other gifts have been made). Your estate will receive an estate tax charitable deduction for the entire amount of the gift.
Life Insurance Policies
You can name your legacy fund at KBFUS as the beneficiary of an existing life insurance policy that is no longer needed to provide for dependents. This offers a simple way to support your charitable interests. Since you are the policy owner, you retain the flexibility to change your beneficiary designation later if your circumstances were to change. While the value of the policy will be included in your estate, an offsetting estate tax charitable deduction will generally be allowed.
Retirement Plan Assets
Retirement plans may represent a large portion of your total assets and therefore may be an important factor in planning testamentary charitable gifts. Left to family members or friends, these assets are subject to income tax, in addition to estate tax and generation-skipping transfer tax. However, if you name your legacy fund as a beneficiary of all or a specified percentage of a retirement plan upon your death, the portion of the plan payable to KBFUS will not be liable for estate taxes, and we will not be required to pay income tax on the distributions.
Charitable Remainder Trusts
With a charitable remainder trust, you make an irrevocable contribution of cash, securities, or other property. This is placed in trust and payments are annually made by the trust to one or more named beneficiaries from either the contributed assets or earnings from their investment, for life or for a set number of years. When the trust terminates, the remaining assets are transferred to your legacy fund held by KBFUS. A charitable remainder trust generally allows you to claim an immediate income tax charitable deduction and may help you eliminate capital gains and gift and estate taxes.
Charitable Lead Trusts
A charitable lead trust is the reverse of a charitable remainder trust: your legacy fund receives annual payments from either the assets placed in trust or earnings from their investment, not the remainder. A charitable lead trust enables you to provide income to your fund immediately, for a set number of years or for a term measured by one or more lifetimes. When the trust terminates, the trust assets pass to you, your estate, or your heirs, who may benefit from significantly reduced gift and estate taxes.
Return to Legacy Funds
Read more about Thinking Ahead – Establishing a Legacy Fund with KBFUS
Any further questions? Please contact us at firstname.lastname@example.org or (212) 713-7660.
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