To donate to the M&M Area Community Foundation, call 906 864 3599.
Almost everyone realizes that contributions to non-profit and charitable institutions are deductible, and afford some measure of tax forgiveness.
Another very popular strategy is to give appreciated stock to a charitable entity like a community foundation or another endowed 501(c)(3) (non-profit) corporation. The foundation sells the stock at its appreciated value and credits the giver with that amount. If the giver had sold the stock, there would have been a capital gains tax liability rather than the substantial tax credit.
There are also a group of tax-friendly charitable contributions known generally as “deferred gifts”.
Charitable Remainder Trusts are very popular deferred gifts. Minimum amount recommended for establishing such a trust is $100,000. They allow the giver to position cash or property which pays partially tax-exempt income to the giver or another beneficiary for life. The giver also can receive a substantial income tax deduction for up to six years. After death, the trust remainder goes to the charitable foundation and estate taxes are reduced. The remainder also can be used to establish a fund which will benefit the giver’s choice of a cause or organization for many years into the future.
A charitable remainder trust can also be established in a will, providing a life income for surviving beneficiaries. Because of the charitable income tax deduction, the beneficiaries could receive a larger income than would otherwise be possible.
There are two types of charitable remainder trusts. A charitable Gift Annuity transfers cash or property to a foundation which provides immediate tax benefits and ensures that the giver or a loved one receives a fixed income, which is partially tax-exempt, for life. A Unitrust is a variable income trust from which the giver or beneficiaries receive a fixed percentage of the trust’s assets. Changes in the asset value of the trust will affect the level of income each year.
Charitable Lead Trusts pay a fixed amount to the charitable foundation for a designated number of years with the remaining assets returned to the giver or continued in trust for other beneficiaries. A charitable lead trust, depending on its exact provisions, also provides substantial tax benefits.
A Bequest written into a will or added as a codicil can provide that some portion of an estate can go to the Foundation. This could be a fixed dollar amount, a percentage of the estate, or remaining assets after providing for everything else.
A Gift Annuity can be established by transferring assets to the Foundation through which the giver and a second beneficiary, if that is the choice, receive income for life. The giver receives an immediate tax deduction and part of the income is exempt from income tax.
Anyone considering a deferred gift to a charitable or non-profit organization should first consult an advisor who is knowledgeable about deferred gifts and familiar with the individual’s financial situation.
