Gifts
of Appreciated Securities and Other Assets
How
does a gift of Appreciated Securities benefit me?
In giving appreciated stock or bonds held longer than
one year to JAPA, you can deduct their full fair market value at the
time of the gift regardless of what you originally paid for them. In
addition, you pay no capital gains tax. Your total deduction is
limited to 30% of your adjusted gross income in any year, but you can
take any unused deduction over five succeeding tax years. These
tax savings make the actual cost of your gift less than a cash gift.
What
steps do I need to take to make this kind of gift?
Donors should contact the JAPA Executive Director,
Linda Belle, by phone at 212-682-8830 or by email: japa@igc.org.
Gifts
of other tangible assets
JAPA will review offers of tangible assets such as real estate or
art work on a case-by-case basis, and may accept these assets as
gifts if it is determined that the benefit of the gift outweighs the
cost of handling its sale.
Bequests
What
is a bequest?
A bequest simply involves including JAPA in your will or revocable
trust. You may identify a percentage of your remaining estate
or a specific amount of cash, securities, retirement plan balances,
or insurance as your gift. The value of your bequest will
be deducted from your estate for estate tax purposes. Also,
your heirs avoid capital gains or federal income taxes that would
be due if the asset(s) had been passed to them.
Language, samples of which follow below for an unrestricted
and restricted bequest, would need to be inserted into your will
to establish the bequest. It is helpful, but not necessary,
to inform JAPA of your decision.
Unrestricted Bequest:
"I hereby give the Jane Addams Peace Association, an
Illinois non-profit corporation located at 777 United Nations
Plaza, New York, NY 10017 (the sum of $______), (a specific
asset), (______shares of_____________), or (______% of the rest,
residue, and remainder of my estate) to be used for its general
purposes."
Restricted Bequest:
"I hereby give the Jane Addams Peace Association, an Illinois non-profit
corporation located at 777 United Nations Plaza, New York, NY 10017 (the
sum of $______), (a specific asset), (______shares of_____________), or (______%
of the rest, residue, and remainder of my estate) to be used for (insert
purpose(s) for which the gift is to be used here)." If,
in the opinion of the Board of the JAPA or their successors, the
need for funds for the purpose described above no longer exists,
at some future date the Board, or their successors, are authorized
to use these funds in the best interest of the Association in
a manner that will most nearly accomplish my wishes."
top
Life
Insurance
There are two ways you can put your life insurance
policy to work for peace and for you.
1. Designate JAPA as the beneficiary of a new or existing policy. After
your lifetime, the proceeds are removed from your estate for tax purposes
and given to JAPA. This is known as a revocable gift because you continue
to own the policy and can change the beneficiary at any time.
2. Make
an outright gift of the policy. If you no longer need life insurance
to provide for dependents, you might consider an outright gift of the policy
to JAPA, which would receive the proceeds after your lifetime. This
is known as an irrevocable gift because you transfer ownership of the policy
to JAPA at the time of the gift. In exchange, you receive an immediate charitable
deduction for the cash surrender value of the policy. Also, for any
additional premiums paid towards the policy you would receive a charitable
income tax deduction assuming you itemize your deductions.
top
Qualified
Retirements Plans
If you have accumulated significant assets
in a qualified retirement plan or IRA due to capital gains,
you might want to consider making JAPA the beneficiary of
your plan or IRA in order to reduce estate and income taxes
that would otherwise be owed by your heirs. These taxes
can be significant since the income that accumulates in these
retirement plans is tax-deferred, NOT tax free.
top
Charitable
Gift Annuities
What
is a Charitible Gift Annuity (CGA)?
In setting up a Charitable Gift Annuity (CGA), the donor agrees
to make an irrevocable donation of cash or stock to JAPA. The
minimum gift is $10,000 for those over age 60, or $20,000 if you
are less than 60 years of age. (Younger donors may wish
to read about a Deferred Gift Annuity.)
How
does a CGA benefit the donor?
In exchange for your donation, you:
- Get an immediate income tax charitable deduction for the year
in which the gift is made;
- Receive a fixed lifetime income for one or two individuals
(one of whom may be yourself), part of which is federal income
tax-free;
- Have the security of knowing that the income payout is backed
by all of JAPA’s assets;
- Avoid capital gains taxes on gifts of appreciated securities;
- Remove the amount of the gift from your estate thus reducing
estate taxes for your heirs.
Example: Jane Warstopper, age 70, makes a $20,000 gift
annuity to JAPA and names herself as the sole beneficiary. In
exchange, she would receive an immediate charitable tax deduction
of $8,200 plus annual annuity payments of $1,300 of which approximately
$740 would be tax-free.
Please note that the numbers in the above example change
daily depending upon current interest rates. To determine
a rough estimate of the tax deduction and annual annuity payments
you would receive for a gift annuity taken out today given your
age and planned gift amount, contact JAPA at 212-682-8830.
How
does a CGA benefit JAPA?
JAPA receives any assets that remain at the end of the last designated
annuitant’s lifetime.
What
steps do I need to take to make this kind of gift?
Have
your lawyer or the lawyer of JAPA draw up a simple contract that
will state the amount you will receive annually as well as the tax
benefits to be received.
top
Deferred
Charitable Gift Annuities
What
is a Deferred Charitible Gift Annuity (DGA)?
The benefits for the donor of a deferred charitable gift annuity
are the same as with a Charitable Gift Annuity except
that the fixed income payments are deferred until a date designated
by the donor.
If you have not yet retired, this type of gift may be
of particular interest because it allows you to reduce your current
tax burden while providing a higher annuity rate in the future
when you will need the additional income. This makes
it an ideal option for those who have already contributed the
maximum to available retirement accounts.
Specifically, with a DGA, you:
- Get an income tax charitable deduction for the year in which
the gift is made that is larger than it would be for an
immediate CGA;
- Reduce your current income by the amount of the revenue
currently generated by the investment in exchange for higher
returns in the future when you retire.
Example: Jane Peacemaker, age 55, makes a $20,000 deferred
gift annuity to JAPA. In exchange, she receives an immediate
charitable tax deduction of $9,420. She chooses to defer
annuity payments until her retirement at age 65 at which point
she begins to receive annual annuity payments of $1,940.
Please note that the numbers in the above example change daily
depending upon current interest rates. To determine a rough
estimate of the tax deduction and annual annuity payments you
would receive for a deferred gift annuity taken out today given
your age and planned gift amount, contact JAPA at 212-682-8830.
top
Charitable
Remainder Annuity Trust
What
is a Charitible Remainder Annuity Trust (CRAT)?
A donor setting up a Charitable Remainder Annuity Trust (CRAT)
agrees to make an irrevocable donation of cash or stock to JAPA
in exchange for an immediate tax deduction and a fixed income
for one or more beneficiaries. Unlike the CGA, the CRAT
establishes a trust that is invested separately. A minimum
donation of $50,000 is required to cover the higher costs of setting
up and administering this type of gift.
How
does a CRAT benefit the donor?
You might consider a CRAT over a CGA if you are considering a
large donation, and if you desire the flexibility to be able to:
- Select a fixed payout rate rather than one that is chosen
for you as under a CGA. The payout rate may range from a
minimum of 5% to a maximum of 50%. The lower the payout
rate chosen, the larger the initial charitable tax deduction.
- Choose between receiving income for life or for any term of
years you specify up to 20. The shorter the
length of time, the larger the current tax deduction.
- Name the trustee.
Example: Joan Socialjusticewoman, age 70, opens a $100,000
CRAT. She chooses a payout rate of 5.5% and names herself
as the sole beneficiary. She receives an annual income of
$5,500 and an immediate tax deduction of $50,233.
Please note that the numbers in the above example are subject
to change. To determine a rough estimate of the tax deduction
and annual annuity payments you would receive for a CRAT taken out
today given your age and planned gift amount please contact JAPA’s
Executive Director Linda Belle at 212.682.8830
How
will a CRAT benefit JAPA?
JAPA receives any assets that remain at the end of the last designated
annuitant’s lifetime.
How
does a CRAT compare to a Charitable Gift Annuity?
Both
CRATs and CGAs provide the donor with an immediate tax deduction,
a fixed income to one or more beneficiaries, enable the donor to
avoid capital gains taxes on gifts of appreciated securities when
these are sold by the CRAT or CGA, and the donor’s estate
will receive a charitable deduction equal to the fair market value
of the CRAT at the time of death. Some limitations of
the CRAT as compared to the CGA are:
- The annuity payment is backed by the assets of the trust
rather than the assets of JAPA as a whole;
- Annuity payments may be taxed at a higher rate than CGA
payments.
What
steps do I need to take to make this kind of gift?
You should contact your lawyer to draw up the appropriate documents
or contact Linda Belle at JAPA to have this done for you.
Because the JAPA is a 501(c)3 organization, your donation is
tax-deductible under U.S. I.R.S. code.
top
|
