Planned Giving

Planned Giving
By Margaret Heiser Fulton, Certified specialist in estate planning, trust and probate law by the State Bar of California Board of Legal Specialization

There are many ways in which you can make a gift to support the CFT or another favorite charity. Gifts can be made during your lifetime or at your death. Some of the most popular ways to make gifts to charities are listed below. Since gifts to charities may involve legal and tax issues, it is always important to discuss a proposed gift with your legal and tax advisors.

Gifts During Your Lifetime           

You can transfer cash or assets, such as securities or land, to a charity during your lifetime. Such transfers often result in income tax deductions for you. Highly appreciated assets, such as securities or land, make good charitable gifts. While you would have to pay capital gains tax if you sell the asset, since the charity is a nonprofit, it will not pay capital gains tax when the asset is sold. Any time you are contemplating giving an asset to charity rather than cash, you should discuss the contribution with the charity. Many nonprofits, such as CFT, have a gift acceptance policy. By contacting the charity, you can find out whether a particular non-cash gift can be accepted.

Gifts can also be made to charities by using a trust. Funding a charitable remainder trust may be advisable if you have real property that has appreciated substantially since you acquired it and a sale during your lifetime would result in high capital gains tax. Typically, the owner transfers the asset to a charitable remainder trust. The trust sells the asset and the owner receives income from 100 percent of the sale proceeds during his or her lifetime and sometimes during the lifetimes of other family members. This technique is especially good for people who are “land rich and cash poor.” The tradeoff is that the charity, not your family, receives the trust assets when you pass away. Many people who fund a charitable remainder trust also buy life insurance so that there is an insurance death benefit to replace the property contributed to the trust. Charitable remainder trusts are quite complicated and you should definitely consult with legal and tax advisors before going ahead with this technique.

If you are concerned about estate taxes at your death, there are other trusts you can fund during your lifetime which will minimize estate taxes and provide benefits to charities.

Transfer of Assets to Charities at Death

The easiest way to transfer assets to a charity at death is to make a bequest in your will or living trust. You will be able to use the money during your lifetime and leave a legacy for those causes that are important to you. Since you can change your will or trust at any time, you will be able to change the charities if you change your mind.

Another way to make a gift to charity is to designate the charity, such as CFT, as the beneficiary of your IRA. This designation can be made for your entire IRA or a small portion of that account. It should be made on a form provided by the financial institution holding the IRA and the completed form must be delivered back to that institution.

As you probably know, nearly all IRAs, with the exception of Roth IRAs, are funded with pre-tax dollars. When these assets are distributed to you or your beneficiaries, the distributions are treated as ordinary income and are subject to income tax. If you name a charity, such as CFT, as the beneficiary of your IRA, the income tax will not be paid when the funds are distributed to the charity. Of course, you can name your spouse as the primary beneficiary of your IRA and the charity as the secondary beneficiary of the entire IRA or of a percentage of the funds. You can also name a charity as the beneficiary of a life insurance policy.

While most people want to provide for their families when they die, it is important to consider that if everyone made a small charitable contribution, either during life or upon death, charities and the causes they support would benefit immensely. If you make a charitable gift to CFT, your gift will ensure that farmland preserved today remains protected in perpetuity. Again, please contact your legal and tax advisors to make sure that the planned gift you are considering is right for you.

For more information on this article or planned giving please contact: Margaret Heiser Fulton, Robinson & Fulton Law, One California Street, Auburn, CA 95603 or (530) 823-2010.