Secure the FutureMake a Difference
Newspapers and electronic media regularly profile major donors to various organizations when the gifts are millions of dollars. Some are given during the individual's lifetime and other gifts are completed at death. Most of us can only dream of making that type of impact with the organizations we support; but almost all of us can make a difference.
Creatively designed, tax advantaged gifts are within almost everyone's ability. Major gifts during your lifetime or at death will secure the long term vision of ICF's work around the world. Building and securing the future creates incredible possibilities. Would you like to consider making a major impact? Here are some options.
Gifts by Bequest
Gifts that are made through provisions of your last will and testament are very easy to accomplish and can be made for a specific amount, such as $10,000, or as a percentage of the residual estate ( "I give the International Crane Foundation, Inc. 10% of my residual estate").
Retirement Plan Beneficiary
Few people realize that retirement plan benefits (IRA, 401(k), 403(b)) are taxed substantially when transferred to anyone other than a spouse. Since income taxes have not been collected on these plans, transferring benefits can trigger a taxable event that creates an income tax liability. If the deceased's estate is large enough to be subject to estate taxes, an additional tax may be generated which, when added to the income tax, could total 60-70% of the retirement plan assets. Most professional advisors suggest that if you want to leave estate assets to charity, using retirement plan dollars is a wise choice. Retirement plan assets left to charity avoid both estate and income taxes.
The second advantage to this type of gift is the ease with which the charitable designation can be made. A simple change of beneficiary form filed with the plan administrator designating ICF as a primary or secondary beneficiary is accomplished with your signature. As with your will, the designated amount can be stated as a percentage of the plan assets.
Example: Mary Jones has $500,000 in an IRA account that she needs to provide income to her and her husband. They have two children and plan to leave other assets from their estate such as the home, life insurance, mutual funds, and personal property to their children. Mary requests a beneficiary change form from her IRA administrator and designates her husband as the primary beneficiary and the International Crane Foundation, Inc. as the secondary beneficiary. If Mary felt that she wanted to leave the children part of the IRA assets, she could name ICF as a secondary beneficiary for a percentage (10, 25, 50%), with the balance divided equally between her children.
Life insurance policies that once may have been purchased to cover a debt in the event of a premature death may no longer be needed for the intended purpose. Polices to cover a mortgage that is paid, children's education, or other needs can now be donated to provide a substantial gift in the future. A charitable deduction is available if the policy is irrevocably assigned to the International Crane Foundation, and future premiums, if necessary, are also possible charitable deductions.
Example: Ben Forbes bought a $100,000 life insurance policy 25 years ago to provide funds for his children's education if he had died prematurely. Now with grown children and a desire to support the long term work of ICF, Ben has decided to donate the policy to the foundation and benefit the ICF Endowment Fund. Future premiums can be paid from policy dividends requiring no additional payments from Ben.
Charitable Remainder Trust
Creation of a qualified charitable trust by an individual will provide income to the beneficiaries designated by the creator of the trust. The income can be paid for the lifetime of the beneficiary or for a specific number of years. At the end of the trust term, the remaining assets pass to the International Crane Foundation.
Example: George and Sharon Carlson purchased growth stock for $20,000 ten years ago. It is now valued at $100,000, but the annual dividends are only $1,500. At their current age of 65, they would like to increase their retirement income. To do this they transfer the stock to the charitable remainder unitrust with a payout rate of 6%.
In the first year they receive $6,000 in income, which is four times greater than their previous dividend income. If the value of the trust increases over time, the income amount will be increased proportionally. They also avoid capital gain on the transfer of the stock and receive a tax deduction for making a future gift to ICF.
Remainder Interest in a Residence or Farm
An individual may give property to ICF while retaining the right to occupy the property for life. This type of gift provides the donor with a current tax deduction for the present value of the remainder interest. This will provide additional spendable income without causing a disruption in their lifestyle. Transfer of the property also avoids any potential capital gain tax.
Example: Sandy Jones, 75 and a recent widow, has lived in her home for 25 years and has no plans to move. To obtain present tax relief without changing her lifestyle, she has decided to donate her home to ICF while retaining the right to live there for the rest of her life.
At the time of the donation, the residence is appraised at $250,000. This gift arrangement will provide a current income tax charitable reduction of $147,884. Since Sandy is in a 28% tax bracket her total savings will be $41,408 (28% of $147,884). This is the amount by which her income tax will be reduced over the period she reports the deduction. If she is unable to use the full deduction in the year of the gift, she can carry the deduction forward over the next five years if necessary.
In the event she decides to move, she has several options: rent the property, give her life interest in the home to ICF in exchange for annuity payments for life, or donate the remaining interest and receive another tax deduction.