Labeled Gifts

IRA and Other Retirement Funds

It makes more sense than ever to consider using IRAs and other retirement funds to make charitable gifts. You will likely save more taxes when you give these assets than you would if you gave securities, real estate or cash investments. If these assets are left to your heirs, as much as 70% may be lost to taxes. The funds from the IRA or qualified retirement plan that you leave to charity qualify for an estate-tax deduction and are not subject to income taxes because the charity is tax-exempt. Thus, using these assets you can make a significant charitable gift at relatively little cost to your heirs.

To do this, name the charity as beneficiary of a portion of your IRA or qualified retirement funds. It could be a percentage or the entire amount if you have no heirs. Following your death, that portion of leftover funds will be paid to the charity in a lump sum, totally tax-free.

Life Insurance

An asset that is frequently overlooked is life insurance. If the original need for which a policy was purchased no longer exists, a gift of the policy can be very rewarding, particularly if it is paid in full. With a gift of your policy to a third party, the proceeds will be removed from your estate if you live more than three years thereafter, eliminating probate costs. If you assign ownership of an existing policy to a charity, you'll be entitled to an immediate deduction and the proceeds will escape the estate tax.

You may also consider using life insurance when you make a gift of another asset (highly appreciated real estate, for example) but wish to replace the value of that asset for your family. By using the tax savings your gift generates to purchase a life insurance policy, you can replace the value of the gift in your estate for the benefit of your family.

Retained Life Estate

A personal residence, a farm or a vacation home is often the subject of a gift. Life gifts of long-term, appreciated securities, gifts of real estate can be very attractive because of the double tax benefit, an immediate charitable deduction and the avoidance of capital-gain tax.

However, family considerations do not always permit the making of an outright gift of a personal residence or farm. Instead, you may want to consider a gift of a remainder interest in such property. You will retain the right to possess and enjoy the property for as long as you (and your spouse) live, and you'll obtain a current income-tax deduction for the value of the remainder interest directed to the charity.

Planned Giving

A planned or deferred gift is a contribution arranged during your lifetime, but may not be received in its entirety until after your death. There are many planned giving options which may result in significant tax savings for you. We recommend you consult with your attorney or financial advisor for details related to individual circumstances.