If you have publicly traded stock that has appreciated in value, it is most advantageous to give the stock rather than cash. Why? Because any capital gain tax that you would have incurred if you sold the stock will be avoided when you give it to the College instead. If you happen to like that particular stock, you can then use your available cash to repurchase the stock at a new, higher cost basis.
While cash, CDs, and marketable securities are thought of most often when making a gift to a charitable organization, real estate is sometimes the best gift of all. Many people reach a stage in life where they simply don’t want the management responsibility that accompanies property ownership.
For those who have rental apartments or commercial buildings, not only can they avoid capital gain tax, but they can avoid depreciation recapture tax as well. For those people with farms or vacation homes, life-income arrangements such as CRTs or Gift Annuities can be equally rewarding.
Call the College and a representative will be happy to discuss a gift of real estate with you.
The College is able to receive life insurance gifts in two ways. First, people often have what is called a “paid up” policy. In other words, they have owned the life insurance for so long, that cash value has grown inside the contract. Sometimes the cash is significant enough that the earnings on that cash are enough to pay the premiums.
In those instances, the life insurance is deemed to be “paid up.” So, whether a person someone 1) has a “paid up” policy or 2) has a policy with significant cash surrender value, the College is pleased to receive these kind of life insurance gifts.
NOTE: The College does not participate in start up life insurance programs, in any form, where the goal is to have donors make donations with the expectation that the College will use those proceeds to pay insurance premiums.
Recently Congress changed the rules on retirement plans. Today, the payout
rate requirement after age 70.5 is much lower than they used to be. Consequently, as people get into their 80s and 90s its more likely that their IRA, KEOGH, or 401k balances will remain higher. That is good news for most older Americans!
However there is a looming…and often large…tax on retirement plans that people often don’t consider while doing their estate planning. Here’s how it works:
Congress allows each of us to put money into a retirement account during our working years tax-free. In other words, we don’t have to pay income tax on the amount of money we place in IRAs, KEOGHs, or 401ks. Additionally, our retirement accounts get to compound in value tax-free as well in order that they can grow as quickly as possible to support us during our retirement years.
However, the IRS doesn’t forget that those very same retirement plans have never been subject to tax! So, if a person passes away while holding the retirement plan in their estate, income tax to your heirs AND possibly estate taxes will be due.
To avoid this scenario, it’s often advisable for people simply to name their favorite charitable organization(s) as the remainder beneficiary of their retirement plan. This can be easily done by calling the retirement plan administrator and filling out a new beneficiary designation form. Charitable organizations are not subject to estate or income tax, so the full value of the retirement plan can become a gift.
Often referred to as “bequests” a person or couple can name the College as a beneficiary in their estate documents, regardless whether they use a will or living trust. This is one of the most meaningful ways a charitable organization can be supported by those who have been touched in some way by the work the College is doing. And, it’s easy to do! You can call our offices at 503.517.1220 and our staff will be happy to provide language you can give your attorney as you update, or complete, your estate plan.