8 Ways To Make A Planned Gift

by William J. Moran, J.D., M.S.Ed.

1.  Will or Trust

Gifts from one’s will or revocable trusts constitute a majority of planned gifts. A donor can make a charitable bequest by providing a dollar amount, specific property, a percentage of his or her estate, or what is left (remainder). If the donor is subject to estate taxes, a charitable deduction is allowed against those taxes. In many cases the charitable provision may be made by a simple codicil to the will which will not require rewriting the entire estate plan.

2.  Securities

Gifts of appreciated stock (including stock in closely held companies) may also be made. Gifts of long term appreciated stock (held more than one year) avoid capital gain taxes (Currently 15%) and their full fair market value is deductible as a charitable contribution from income taxes.

3.  Retirement Accounts and Pension Plans

Retirement account funds (IRA’s or company plans) may be transferred to a charity at death by proper beneficiary designation. If left to a child or other heir, these funds may be subject to double or triple taxation (federal estate, federal income, state death tax, state income) that may eliminate 70-80% of their benefit. However, a charity will receive 100% of the funds at no tax cost.

These gifts are simple to complete requiring only a change of beneficiary form. Donors should ask their financial advisors for more information.

4.  Life Insurance

Life insurance is another way to make a substantial future gift. The charity is named as the owner and beneficiary to receive the proceeds of an existing life or new insurance policy. The donor receives a tax deduction for approximately the cash surrender value.

An alternative is for the donor to simply add the charity as a beneficiary to a policy. The donor retains the incidents of ownership over the policy including the right to change the beneficiaries. However, the donor receives no income tax deduction.

5.  Charitable Remainder Trusts

Charitable remainder trusts pay lifetime income to donors and/or other named beneficiaries. Cash, appreciated stock, real estate or other property is transferred to the trust. The donor receives income back, a partial income tax deduction in the year of the gift, and avoidance of capital gains tax if long term appreciated property is contributed.

For an Unitrust, the payout is based upon a fixed percentage of the trust assets which are valued annually. Generally the allowed rate of return will be equivalent to reasonable income expected from a fixed income portfolio. (By law, a unitrust can not have more than a 50% maximum payout and not less than a 10% charitable remainder).

For an Annuity trust, the payout is a fixed dollar amount based upon the initial fair market value of the trust.

6.  Gift Annuity

Similar but different vehicle from pooled income fund or charitable remainder trusts.

  • A contract between the charity and the donor, whereby in return for the gift of principal, the charity promises to make fixed annuity payments back to the donor for life.
  • Rates are fixed and based upon age. The National Committee on Gift Annuities reviews these rates periodically.
  • Advantages:
    1. Fixed income, often at high rates
    2. Partial income tax deduction
    3. Payout to the donor is partially non-taxable
    4. Partial capital gains avoidance if funded with appreciated assets
    5. Removes assets from probate and estate taxes

Biggest advantage is that gift annuities are simple to execute and simple to understand.

7.  Real Estate

Gifts of long term appreciated real estate are important in planned giving because the donor gets a double tax benefit.

  1. Income tax deduction at fair market value.
  2. Avoidance of capital gains – (Generally 15%)
    • By contributing the property, the donor is relieved of management, taxes, insurance, and
      maintenance costs.
    • The deduction is limited to 30% of adjusted gross income with a five year carry over for any excess which exceeds the 30% ceiling.
    • It is possible to deed the property over in installments to take full advantage of the tax savings without exceeding the charitable deduction ceiling.

8. Real Estate Retaining Life Estate

This option enables the donor to transfer a gift of real estate, while continuing to live on the property and reap tax advantages:

  • The donor transfers his “remainder interest” of a personal residence or farm, but retains a life estate in the property. The donor continues to live on the property and is responsible for maintenance, taxes, etc. because he maintains a “life estate” in the property. Upon his death the property vests in the charity as “remainderman.”
  • Advantages:
    1. Gift is simple to execute (execution of real estate deed).
    2. Donor obtains a substantial income tax deduction in the year of the gift.

Indian River Charities

McKee Botanical Garden

350 US Hwy 1
Vero Beach, FL 32962

Phone: 772.794.0601

Website: www.mckeegarden.org

Category: Environment

Alzheimer & Parkinson Association of Indian River County, Inc.

2300 5th Avenue
Suite 150
Vero Beach, FL 32960

Phone: 772-536-0505

Website: www.alzpark.org

Category: Healthcare

American Cancer Society

321 Clearwater Park Road
West Palm Beach, FL 33401

Phone: (561) 650-0127

Website: www.cancer.org

Category: Healthcare

Cleveland Clinic Foundation, Indian River County

70 Royal Palm Point
Vero Beach, FL 32960

Phone: (772) 226-4960

Website: www.irhf.org

Category: Healthcare

Mental Health Association in Indian River County, Inc.

820 37th Place
Vero Beach, Fl 32960

Phone: (772) 569-9788

Website: www.mhairc.org

Category: Healthcare

Treasure Coast Community Health, Inc.

1555 Indian River Blvd
Suite B-210
Vero Beach, FL 32960

Phone: (772) 257-8224

Website: www.tcchinc.org

Category: Healthcare

VNA & Hospice Foundation

1110 35th Lane
Vero Beach, FL 32960

Phone: (772) 978-5580

Website: www.vnatc.com

Category: Healthcare

SafeSpace, Inc.

P.O. Box 2922
Vero Beach, FL 34961

Phone: (772) 223-2399

Website: www.safespacefl.org

Category: Domestic Abuse

Senior Resource Association

694 14th St.
Vero Beach, FL 32960

Phone: (772) 469-0760

Website: www.seniorresourceassociation.org

Category: Senior Services

St. Francis Manor

1750 20th Street
Vero Beach, FL 32960

Phone: (772) 562-8575

Website: www.stfrancismanor.org

Category: Senior Services

United Way Foundation

836 14th Ave.
Vero Beach, FL 32960

Phone: (772) 567-8900

Website: www.unitedwayirc.org

Category: Community Services

Community Church of Vero Beach

1901 23rd St.
Vero Beach, FL 32960

Phone: (772) 562-3633

Website: www.ccovb.org

Category: Religious

Dogs For Life

1230 16th Ave.
Vero Beach, FL 32960

Phone: (772) 567-8969

Website: www.dogsforlifevb.org

Category: Animals

Humane Society of Vero Beach

6230 77th St,
Vero Beach, FL 3296

Phone: (772) 388-3331

Website: www.hsvb.org

Category: Animals

Gifford Youth Orchestra

4855 43rd Ave,
Vero Beach, FL 32967

Phone: (772) 213-3007

Website: www.gyotigers.org

Category: Arts

Riverside Theater

3250 Riverside Park Drive
Vero Beach, FL 32963

Phone: (772) 231-6990

Website: www.riversidetheatre.com

Category: Arts

Vero Beach Museum of Art

3001 Riverside Park Drive
Vero Beach, FL 32963

Phone (772) 231-0707

Website: www.verobeachmuseum.org

Category: Arts

Big Brothers Big Sisters

403 N. US Hwy 1
Fort Pierce, FL 34950

Phone: (772) 466-8535 x213

Website: www.bbbsbigs.org

Category: Children

Boys & Girls Clubs of Indian River County

1729 17th Ave
Vero Beach, FL 32960

Phone: (772) 299-7449

Website: www.bgcirc.org

Category: Children

Children’s Home Society

650 10th St.
Vero Beach, FL 32960

Phone: (772) 344-4020

Website: www.chsfl.org

Category: Children

Gifford Youth Achievement Center

4875 43rd Ave
Vero Beach, FL 32967

Phone: (772) 794-1005

Website: www.GYAC.net

Category: Children

Education Foundation of Indian River, Inc.

PO Box 7046
Vero Beach, FL 32961

Phone: 7725640034

Website: www.edfoundationirc.org

Category: Education

Literacy Services of Indian River County

1600 21st Street
Vero Beach, FL 32960

Phone: 7727782223

Website: www.literacyservicesirc.org

Category: Education

Indian River State College Foundation

3209 Virginia Avenue
Fort Pierce, FL 34981

Phone: (772) 462-7242

Website: www.irscfoundation.org

Category: Education

Environmental Learning Center

255 Live Oak Dr.
Vero Beach, FL 32963

Phone: (772) 589-5050

Website: www.discoverelc.org

Category: Environment

Indian River Land Trust

80 Royal Palm Poin
Vero Beach, FL 32960

Phone: (772) 794-0701

Website: www.irlt.org

Category: Environment