Please consider this as a resource to help you meet your philanthropic goals. The information provided is for illustrative purposes only and should not be considered investment, legal, accounting, tax or other professional advice.
Gifts to Marion-Polk Food Share made during your life:
Cash Gifts of currency, checks or money orders made payable to Marion-Polk Food Share are deductible up to 50% of your adjusted gross income with a five-year carryover for any excess.
Gifts of Appreciated Property(securities or real estate) may allow you to make a substantial contribution to Marion-Polk Food Share and obtain a significant income tax deduction. Because Marion-Polk Food Share is a tax-exempt charity, it can sell your appreciated asset without incurring any capital gains tax consequences thereby maximizing the value of your gift. Generally, a donor may deduct the fair market value of the gift up to 30% of their adjusted gross income with a five year carryover for any excess.
Gifts of Life Insurance Policies which no longer critical to your personal financial plan can be made Marion-Polk Food Share in several different ways.
You can make Marion-Polk Food Share (MPFS) the owner and beneficiary of an already existing paid-up life insurance policy. Because Marion-Polk Food Share becomes the owner of the policy, the proceeds that otherwise would have been included in your taxable estate, are not taxed. You may also be able to deduct the amount of the cash value of the policy in the year that you make the gift.
You can make MPFS a beneficiary of an already existing life insurance policy. Upon your death, the full face value amount of the policy will go to MPFS. This provision will not provide any current tax advantages but could result in reduced estate taxes.
You can make MPFS owner and beneficiary of a policy on which you are still paying premiums. As with donating an already existing paid-up policy, you may be able to deduct an amount equal to the cash value of the policy in the year that it is made. You may also be able to deduct any future premium payments, and the proceeds from the policy will not be included in your estate for tax purposes.
You can purchase a new policy and make MPFS the owner and beneficiary. Since MPFS is the owner, you may be able to deduct the premiums you pay as charitable contributions. In addition, the proceeds from the policy will not be included in your estate for tax purposes.
Income-Producing Plans:
Charitable Gift Annuity allows you to make a charitable gift to MPFS and supplement your income with fixed payments for life or for a specified term. How it works: In exchange for your gift on behalf of Marion-Polk Food Share, you may be paid a specified fixed amount to you (and your spouse) on a monthly, quarterly, semiannual or annual basis. You receive an immediate income tax deduction for a portion of your gift. A charitable gift annuity can be easily established with a gift of a minimum of $25,000 in cash or securities
Deferred Charitable Gift Annuity offers an opportunity during your high earning years to obtain a significant tax deduction now and an additional source of income later. Payment can begin when you want it to – at your retirement for example.
Charitable Remainder Trust allows you to avoid or defer capital gains on appreciated assets, provide a lifetime income and obtain a charitable tax deduction. How it works: You transfer securities, real estate or other appreciated property into an irrevocable trust. You receive an immediate income tax deduction for a portion of your gift The trustee sells the asset and pays no capital gains, allowing 100% (rather than the "after tax" amount) of the proceeds to be reinvested on your behalf. You (and your spouse) receive a fixed percentage of the fair market value of the trust for life or a term of years. At the end of the term of the trust, the remaining property passes to your designated charity.
Unlike a gift annuity, you retain the right to choose and change the trustee who is managing your assets. The trust can provide for multiple charities. In addition, you retain the power to add or delete charitable remainder beneficiaries or change the amounts they ultimately will receive.
There are two types of Charitable Remainder Trusts:
Charitable Annuity Trust: Income payments are fixed, and determined when the gift is made (dependant upon your age and your contribution to the trust). You or your designated income beneficiaries receive stable, predictable payments for life or for a term of years.
Charitable Unitrust: Income payments to you or your designated beneficiaries are based on a fixed percentage of the trust’s fair market value, computed annually, Actual payments will vary from year to year and can go down. However, if the trust assets are prudently invested, and the fixed percentage amount is not excessive, a unitrust can provide an increasing flow of income over time, thereby providing a hedge against inflation. You can also make additions to a unitrust.
In addition, you may consider adding a "Wealth Replacement Trust": Despite all the benefits of a Charitable Remainder Trust, some people are concerned that their family may not be receiving sufficient assets as the remainder interest is paid to charity. A good solution is the creation of the Wealth Replacement Trust. Take part of the tax savings and extra income generated by the Charitable Trust and make an additional gift to a special life insurance trust. The trustee will then buy insurance on your life. At your death, the proceeds flow to the family beneficiaries income and estate tax free, thereby "replacing" the bequest to Marion-Polk Food Share.
Charitable Lead Trust is most often used to lower taxable income during peak earning years. Your gift to Marion-Polk Food Share is invested and, unlike a Charitable Remainder Trust, provides an immediate stream of annual payments to benefit Marion-Polk Food Share for a set number of years. At the end of the term of the trust, the remaining trust property passes to the non-charitable remainder person or persons. Although this party is often children or grandchildren, it can be anyone.
You can receive an immediate and substantial income tax deduction. While you must report the income earned by the trust in years two and on, even though it is actually paid to the charity, it is good planning to have a very high deduction in a high bracket year even if you have to report that income in lower bracket years.
Another big advantage of the Charitable Lead Trust is that it allows a "discounted" gift to family members. When the gift is made, the donor must file a gift tax return based on the value of the future gift to the family. Because the family must wait for the charity’s income term to end, the value of the gift is discounted. In short, this technique can significantly reduce the tax costs of transferring assets to your family.
Gifts to Marion-Polk Food Share upon your death:
Specific Bequest in your Will or Trust: After providing for your loved ones, a bequest in your will can designate a gift to MPFS. It is not payable until death, so a bequest to MPFS does not affect your assets or cash flow during your lifetime.
Charitable Lead Trust in your Will or Trust: People with large estates can set up a Charitable Lead Trust at death. The present value of the income stream to charity is deductible for death tax purposes. Since your heirs do not pay estate taxes on the charity’s portion, the money that otherwise would have been paid in estate taxes can be invested. To the extent there is surplus earning over and above what is paid to the charity, that extra income can be compounded for your heirs and pass to them gift tax free-when the trust ends.
Bequest of Retirement Plan Assets: In larger estates, Retirement Plan proceeds (IRA, 401(k), Keogh, or other such accounts) may be subject to double taxes – first estate taxes and then income taxes on your non-spouse beneficiaries, potentially consuming up to 75% of the value of your retirement plan before your child, relative, or friend receives them.
An alternative is to name Marion-Polk Food Share as the beneficiary of your retirement plan, and then use other assets to provide for your heirs. Retirement assets passing to charity are both death and income tax free.