Downloadable Charitable Giving (PDF 1,760KB) pamphlet.
Charitable giving has always been encouraged by our tax laws. In fact, charitable gifts that you make during your lifetime provide you with significant income tax benefits and remove assets from your taxable estate. Charitable gifts in your Will or Trust that take place upon you death can provide a significant estate tax savings.
A lifetime gift to a charitable organization is one in which the donor completely parts with the asset and the charitable organization receives it immediately many assets can be used as outright gifts, including:
- Stocks and bonds.
- A home, land, or other real property.
- Personal property (such as art or jewelry)
- And, of course, cash.
The most dramatic tax advantage for donors of outright gifts is that they receive an income tax deduction. Normally, the amount of the deduction is equal to the value of the asset or the amount of the check. With stocks and bonds, the value is equal to the average of the high and low prices during the day the gift is made. With almost everything else, non-cash gifts that are not marketable securities require an appraisal to determine the asset's value. Gifts of appreciated property have the additional benefit of the donor avoiding the taxable gain that would result from the sale of the asset.
A planned gift is a gift that (as you can tell from its name) requires planning, usually tax planning. The term "planned gift" often means one in which the donor receives income from the assets, most commonly after it is put into a charitable trust, and then someday, not immediately, the charitable organization receives the asset. Although the term can also mean many out right gifts that require tax planning, when describing the advantages of planned gifts, we often use the term "planned" synonymously with "deferred". By "deferred" we mean, that the donor parts with the asset today to receive income and tax benefits, while the actual giving of the asset to a charitable organization is deferred for a period of time often the lifetime of the donor. The advantages of this type of gift include income tax deductions, avoidance of capital gains tax, retention of income and estate tax avoidance.
Another way Donors leverage their gift dollars is to purchase a life insurance policy naming the charity as the owner and beneficiary of the policy. The life insurance can be paid for up front or over a number of years. The donor receives an income tax deduction for payment of premiums and the charity receives the policy proceeds at the insured's death. A donor can also assign an existing policy to the charity and receive an income tax deduction based on the cash surrender value of the policy.
Gifts under a Will or Trust
Wills and Trusts offer many donors a way to make charitable gifts which might not have been possible during their lifetime. There are a number of ways a gift can be structured under your Will or Trust including:
Specific Bequests: An outright bequest in your estate planning documents can be a specific dollar amount or a gift of specific stocks or property.
Percentage Bequest: A charitable bequest can be designated as a percentage of the Donor's estate. Giving a percentage of the Donor's estate ensures the gift remains in proportion to other bequests. This is especially convenient if you are uncertain of what your estate will be valued and wish to avoid naming a specific sum.
Residual Gift: The gift to charity can also be designated as the residue (what is left) after making specific bequests to heirs or other beneficiaries.
Retirement Plan or Bank/Brokerage Account
This process is fairly straightforward and does not usually require any complicated documentation. To name Woodlake High School Foundation as the beneficiary of your retirement plan [e.g., IRA, 401(k), 403(b), KEOGH, SEP] at your death, you will need to obtain a beneficiary designation form from the administrator of the retirement plan.
To name Woodlake High School Foundation as the beneficiary of a bank or brokerage account at your death, you will need to contact the institution and indicate that you wish your account to include a POD (Pay on Death) feature. To create a POD designation, you will simply name Woodlake High School Foundation on the ownership document (such as the registration card for a bank account) to have the Foundation inherit the account assets at your death.
In each of the above case, you retain complete control of your plan, asset or account while you are alive and you can change the beneficiary at any time. At your death, the property s transferred directly to Woodlake High School Foundation, free of all tax and outside of any probate process. The tax savings are especially significant for gifts of retirement plans, which are usually subject to both estate and income taxes when left to your heirs. If you would like to designate your gift for a particular purpose at Woodlake High School Foundation, the easiest way to accomplish this is through a written agreement kept on file with the Foundation.
If you are interested in pursuing any of the above topics, please contact the Woodlake High School Foundation for more information.
Your Current Will or Trust
It is wise to review your Will or Trust every few years to insure that your Will or Trust contains your current plan for your family and others. It is especially important to review your planning documents if changes have occurred during the past year in your family or financial situation.
The Foundations Purpose
The purpose of the Woodlake High School Foundation is to provide assistance to the High School for programs and projects not adequately funded by State and Local school funds and to provide scholarship assistance for Woodlake students desiring to pursue a higher education. The Foundation is a charitable 501(c)(3) entity and gifts to the Foundation are tax deductible.
For more information or if you wish to be contacted please write to:Woodlake High School Foundation
P.O. Box 475
Woodlake, CA 93286
Call Woodlake High School and ask to leave a message for a Foundation Board Member at 559 564-3307
This information is not intended as specific legal advice. Consult your attorney when considering any legal matter. State laws which govern wills and contracts vary and are subject to change.