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You have many different options when it comes to giving charitably, whether it is making a quick and easy gift right now, creating an income stream for you and your family while ensuring a gift to your favorite charity for the future, or reducing the taxes your heirs will have to pay after your death. According to your personal goals, various philanthropic vehicles may work for you. A brief description of your options is found below: |
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Your Goal |
Your Gift |
How to Make the Gift to Triangle Community Foundation |
Your Benefits |
| Make an effortless gift to the charity or charities of your choice |
Direct gift |
Donate cash, securities or personal property |
Current income tax deduction; avoidance of any capital gains on appreciated property donated |
| Make a gift after your death |
Will bequest |
Name Triangle Community Foundation in your will |
Reduction in estate value and possible estate tax savings |
| Make a large gift to the charity of your choice at a low cost to you |
Life insurance gift |
Transfer an existing policy to Triangle Community Foundation, naming us as owner and beneficiary |
Current tax deduction and possible future deductions for additional premiums if donor pays |
| Avoid income tax and estate tax on retirement assets |
Retirement plan gift |
Name Triangle Community Foundation as a beneficiary of your retirement plan |
Avoid reduction of charitable gift through taxes, while giving more tax efficient assets to heirs |
| Avoid capital gains tax on the sale of real estate |
Real estate gift |
Donate all or a portion of the property to Triangle Community Foundation |
Current tax deduction and avoidance of capital gain tax |
| Provide a gift of your residence or farm while continuing to use the property |
Retained life estate real estate gift |
Donate a life estate |
Current tax deduction, estate value reduction and lifetime use of your home or farm |
| Create a fixed stream of income for your lifetime or other time period |
Charitable remainder annuity trust |
Create charitable trust that pays fixed annual payments |
Immediate income tax deduction and fixed income stream |
| Create stream of income that accounts for inflation for your lifetime or other time period |
Charitable remainder unitrust |
Create charitable trust that pays percentage of trust assets annually |
Immediate income tax deduction and inflation-sensitive income stream |
| Reduce gift and estate tax on assets passing to heirs |
Charitable lead trust |
Create charitable trust that pays income to Triangle Community Foundation for a period of years and then goes to heirs |
Reduction in estate value and possible estate and gift tax savings |
Charitable bequests can take a variety of forms - a percentage of the estate, a specific sum of money or a specific asset, such as a certain piece of property. Triangle Community Foundation also can be named the "residuary beneficiary" of all or part of the estate after other bequests, or a "contingent beneficiary" in the event other named beneficiaries do not outlive the donor. Click here for sample bequest language.
A donor can make a gift to Triangle Community Foundation by irrevocably designating Triangle Community Foundation as the owner and beneficiary of a paid-up insurance policy. The donor will receive an income tax charitable deduction equal to the lesser of the replacement value or cost basis of the policy.
The donor can also use life insurance as a wealth replacement asset by replacing the dollar value of an asset transferred to Triangle Community Foundation with a life insurance policy of which family members or other individuals are the beneficiaries. The income tax and other tax savings from the gift to Triangle Community Foundation are often more than enough to cover the cost of the insurance premiums.
When retirement assets pass to heirs, the assets may be subject to both estate and income taxes which can total more than 70 percent. Donors can avoid these taxes by designating Triangle Community Foundation as the beneficiary of their retirement accounts while leaving other assets (such as appreciated stock with a stepped-up cost basis) to their heirs.
Triangle Community Foundation can help with retirement assets in two ways. First, the donor may designate Triangle Community Foundation to receive the qualified retirement plan assets, including 401(k) and 403b plans and individual retirement accounts (IRAs). The donor's estate will pay no income tax and the estate tax liability will be reduced.
A second strategy is to name a charitable remainder trust as the beneficiary of the retirement plan. The trust benefits the family for a period of time as specified in the trust instrument. No income tax will be due on the assets at the donor's death, and the estate will receive a charitable estate tax deduction for the value of the charitable gift. When the trust term expires, the remainder of the trust's assets will be used to create a permanent charitable fund for the family at Triangle Community Foundation.
Triangle Community Foundation can accept a gift of a home, vacation home, apartment building, commercial property, or undeveloped land. In some cases, the donor may be able to retain a life use of the property and continue living in it after the donation. In those cases, the donor maintains the property during his or her use. The Foundation would sell the property after the donor dies or moves and establish, or supplement an existing, charitable fund with the sales proceeds.
One of the key tax benefits to this type of gift is the current income tax deduction. The Foundation would sell the property after the donor dies or movies, establishing or supplementing a charitable fund with the sales proceeds.
Charitable remainder trusts are flexible vehicles that allow the donor to make a charitable gift but retain an income stream for the donor and/or others for life or a fixed number of years (maximum 20 years). These trusts are particularly well suited for gifts of appreciated securities and other assets such as real estate producing little or no income at the time of the gift. Because the trust is tax-exempt, it can sell the original asset without incurring capital gains tax and reinvest for a higher yield. As a result, the income from the trust may be considerably larger than the net earnings from the original low-yielding assets. This gift planning strategy is best suited for gifts of $100,000 or more, and may be established during life or by will.
There are two types of charitable remainder trusts. A charitable remainder unitrust allows the donor to receive a fixed percentage (minimum 5 percent) of the trusts assets each year. Income payments will fluctuate as the value of the trust changes each year. A charitable remainder annuity trust allows the donor to receive a fixed dollar amount each year. Additional gifts may be made to a charitable remainder unitrust but not to a charitable remainder annuity trust.
Benefits
With a charitable remainder trust, you:
- Receive an immediate income tax charitable deduction in the year the gift is made.
- Receive an income stream that may be larger than the net earnings you had been receiving.
- Avoid capital gains when making a gift of appreciated property to the trust.
- Make a generous gift to a named fund at Triangle Community Foundation.
- Reduce estate tax liability.
A charitable lead trust allows donors to pass wealth on to heirs with reduced estate and gift tax, and make a gift to Triangle Community Foundation in the process. A charitable lead trust reverses the concept of a charitable remainder trust. With a lead trust, the charity’s interest "leads" the individual’s interest. The donor transfers assets to a trust for a designated number of years, the lives of one or more individuals, or a combination of the two. Payments are made annually to one or more charities for the duration of the trust, and then at its termination, the remaining assets are paid to named individuals, frequently the donor’s children or grandchildren.
In addition, the donor receives a federal gift tax deduction for the value of the income interest passing to Triangle Community Foundation. Although the donor will not receive an income tax deduction, the donor is not taxed on any of the income earned by the trust. Taxable income generated by the trust and capital gains realized by the trust are taxed to the trust, but the trust is allowed a charitable deduction each year for the amount of the distributions to Triangle Community Foundation in that year.
Finally, any appreciation that passes to family members is not subject to gift tax. Gift taxes are due when the trust is funded but are based on the value of the gift to family members calculated when the trust is created. A donor may use all or part of his or her lifetime-unified credit to offset or eliminate gift taxes. In addition, the trust assets will be removed from the donor’s estate for estate tax purposes. (Note: Gifts to grandchildren may result in Generation Skipping Transfer Tax.)
With a charitable lead unitrust, the donor’s fund at Triangle Community Foundation will receive a fixed percentage of the trust assets each year. With a charitable lead annuity trust, the fund will receive a fixed dollar amount each year. Additional gifts may be made to a charitable lead unitrust but not to a charitable lead annuity trust. Both types of charitable lead trust may be established during life or by will. Lead trusts function best with gifts of $1,000,000 or more, and offer an attractive way to make current charitable gifts while at the same time transferring assets at substantially reduced gift and estate tax costs.
Benefits
With non-grantor charitable lead trust, you will:
- Receive a federal gift tax deduction.
- Pass all of the remaining trust assets on to heirs. Any growth in the trust will pass tax free to heirs.
- Reduce estate tax liability because the trust assets will be removed from the donor's estate.
- Make a generous gift to a named fund at Triangle Community Foundation.
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