What is Planned Giving?
Simply, it is a systematic and structured method of planning a legacy through giving for the future. After making arrangements to pay tithe to the local church, an individual or family should include a planned method of giving when preparing for their financial and estate planning, so that they may…
- Leave a gift to their favorite charity, Tupelo Children’s Mansion, after death, and
- Reduce the possibility of estate taxes that their family could have to pay, and
- Reduce current income taxes through a planned means of giving while living.
Leaving a gift through planned giving is a great benefit for Tupelo Children’s Mansion by insuring an income for the Mansion’s future. It is also a way for an individual or family to leave a legacy behind that would assist Tupelo Children’s Mansion to continue fulfilling its mission of helping children who greatly need spiritual, physical and emotional help.
In the Planned Giving Process, What is Allowed by Law?
If a person itemized their deductions, a gift of cash will reduce their tax liability for the current tax year and future years if necessary. Gifts of cash are deductible up to the 50% maximum of adjusted gross income. Any amount not allowed beyond the 50% maximum may be carried forward to future years as an itemized deduction.
2. Life Insurance
A life insurance policy can be purchased to donate to Tupelo Children’s Mansion or a person can donate a policy that is no longer needed. Making the Mansion the owner and beneficiary will allow an individual to receive a tax deduction and therefore, providing a future source of income to TCM.
3. Real Estate
A residence, vacation home, land, or other types of real estate can be donated. If the property has appreciated in value and an individual does not want to sell it and pay “capital gain” taxes on the gain, a gift of the property can be made. This will allow an individual to deduct the “fair-market” value on their tax return up to the maximums allowed. It is also possible that a home or vacation home can be given as a gift and the donor still live in it during their lifetime.
Usually, stocks and bonds have appreciated in value so a gift would be a great tax write-off. A person would receive a deduction for the full fair-market value of the stocks or bonds.
5. Other methods:
a. Gifts of income for life (varied means available)
c. Unused retirement fund
Tupelo Children’s Mansion can provide additional information as to which planned giving method can best benefit a person.
What are Some Options for Planned Giving?
1.Charitable Remainder Trusts
This will allow an individual to make a gift and yet continue receiving income from the contribution. This becomes a great benefit by allowing income to be earned from the asset, yet the asset given is a tax deduction when the trust is established and the gift is placed in the trust.
2. Charitable Remainder Annuity Trusts
These type trusts allow the donor to receive a ‘fixed’ dollar amount of income from the trust. This gift would insure a constant amount of annual income for the life of the trust or until the funds were depleted. Any funds remaining after the death of the donor would go to Tupelo Children’s Mansion.
3. Charitable Lead Trusts
These type trusts allow a person to transfer assets to a trustee who would make annual payments to the charity for a specific time. At the end of that time, the assets remaining could go to Tupelo Children’s Mansion.
To avoid or reduce federal estate taxes, a gift through an individual will can significantly reduce those taxes. There are many ways a person can leave gifts through their will which will be of great tax benefit and also provide a living legacy for Tupelo Children’s Mansion.
To find out more as to how planned giving can benefit a person individually
and how Tupelo Children’s Mansion can receive an on-going legacy, please contact:
Aubrey L. Jayroe,
TCM Vice President & CFO,
Accredited Tax Advisor,
Enrolled Agent with the IRS
Tupelo Children’s Mansion
P.O. Box 167
Tupelo, MS 38802-167