Planned Giving options allow a donor a way to make gifts directly to NASS as the present time (Present Gifts) or at a later date (Deferred Gifts).
Present Gifts
Gifts of Securities (stocks, bonds and mutual funds) entitle the donor to a tax deduction for the market value of the donated stock relative to the cost basis. Donating securities that have increased in value may offer the donor tax saving with dual benefits. First, they will avoid paying any capital gains tax on the increase in value of the asset. In addition, they will also receive a tax deduction for the full fair-market value of the stock or bond on the date of the gift if it has been owned for over one year. For income tax purposes, gifts of qualified assets are deductible in amounts up to 30 percent of the donor’s adjusted gross income, with an additional five-year carry forward. If these investments have decreased in value, donors may want to consider selling them and making a charitable gift of the cash proceeds to NASS. The sale and donation would create a loss that may be eligible to be deducted from other taxable income in addition to the amount of the cash contribution.
Another way in which donors can make an immediate contribution to NASS is through a Charitable Gift Annuity. A charitable gift annuity is a simple contract between a donor and NASS. In exchange for an irrevocable gift of cash or securities worth $5,000 or more, NASS will agree to pay the donor a fixed sum monthly, quarterly, semiannually or annually for life. Donors may claim an income tax deduction for the portion of the gift annuity that represents the charitable gift. The amount of the deduction is determined by an IRS formula and should be claimed in the year the gift is made. Please consult a tax professional to create a plan that will best suit your individual needs.
A gift of Life Insurance allows a donor to leave a significant donation in their name to NASS for a relatively small aftertax cost. This gift has very little impact on the donor’s estate, thereby leaving it intact for their heirs. For donors that own an existing policy, they can transfer ownership of the policy directly to NASS. If the existing policy has a cash value, the cash value represents a present gift, which entitles the donor to receive a receipt for tax purposes that is equal to the amount of the cash value.
For example, if a donor purchased a life insurance policy to provide for their children or other family members and it is no longer needed, they may want to consider donating the policy to NASS. By naming NASS as owner and beneficiary of the policy, the donor can take a charitable tax deduction for the present market value of the policy and may remove it from their estate for income tax purposes. If annual premiums are still required, the donor may continue to pay them, thereby making those premiums tax deductible each subsequent year. An insurance agent can assist you in completing this simple transaction.
Deferred Gifts
Gifts of Bequests are the easiest and most effective means by which a donor can ensure that their assets are distributed according to their wishes. A donor may leave a specified amount to NASS in their will or they may also choose to leave a percentage of their estate. There are three different types of bequests and with each the entire value of the bequest is eligible for an estate tax charitable deduction. The specifics surrounding gifts of bequest can be described in greater depth by a tax professional. The three types of bequests are as follows:
- Specific Bequest: The donor designates a specific percentage of their total net worth, a specific dollar amount, or percentage of their estate to be transferred to NASS.
- Residual Bequest: After the donor’s estate has paid out all debts, taxes, expenses and specific bequests, the amount that remains will be paid directly to NASS.
- Contingent Bequest: The donor may designate that NASS should receive all or a portion of their estate under certain circumstances. For example, a donor may choose to name NASS as a beneficiary of their estate if there are no surviving close family members.
Charitable Remainder Trust is a legal agreement that specifies how the assets placed in a trust will be managed. The donor can transfer cash, an IRA, stock or pension benefits to NASS, thereby establishing a “charitable remainder trust” that will serve to provide them with annual income for life. Through a trust arrangement, the income would be paid to either the donor or a designated beneficiary for life, after which the remaining assets would then be given to NASS. The donor would be entitled to an immediate income tax deduction upon giving the gift and would also avoid paying capital gains tax if the trust is funded by appreciated securities. This provides the donor with the possibility of reducing their estate tax while having the satisfaction of making a charitable gift that will support NASS’ work.
Retirement Fund Gifts are another option. As a general rule, assets that have been set aside in retirement plans may be heavily taxed before they are passed on to the donor’s heirs. In addition to estate taxes, retirement plan assets are subject to income taxes that may result in as much as 75% of the assets going to the IRS. Once the donor has provided for their family, NASS would like to ask that they consider using the remainder of their retirement plan assets to fulfill philanthropic objectives by naming NASS as an alternate beneficiary on the account. Any dollar amount that is designated for NASS will be given to the organization free of both estate and income taxes. If you would like further information about using your retirement plan to make a gift to NASS, please contact a legal or financial professional.