An Overview of Planned Giving

What is “Planned Giving”?

Planned giving provides numerous ways for individuals to make a difference by giving in ways that meet a donor’s needs and capabilities while maximizing advantages (e.g. tax advantages and financial flexibility) in an effective, integrated plan.

Types of Planned Giving

1. Bequest: a gift to charity when one dies.

     Advantages: estate tax deduction and donor flexibility
2. Gift Annuities: a contract between donor and charity in which cash or property is donated in return for fixed payments to the donor.

     Advantages: fixed payments part of which are tax-free, rates adjusted to age, tax deduction for present value of charitable donation.
3. Charitable Remainder Trust: a donor’s assets are placed in a trust benefitting the donor and, upon the death of the donor, the remainder of the trust is distributed to charity.

     Advantages: the trust’s sale of property is tax-free, trust pays a portion of its value to the beneficiary, and donor receives current federal income tax deduction.
4. Charitable Lead Trust: a donor’s assets are placed in a trust and makes regular payment to a charity for certain period of time. When the period ends, the trust’s assets are distributed to the trust’s beneficiary (usually the donor’s family).

     Advantages: Trust’s assets including appreciation pass to family with no additional tax and donor receives current federal gift or estate tax deduction for present value of payments that will go to charity.
5. Life Estate Reserved: a charity accepts a gift real property (residence or farm) and the donor retains the right to use the property for their lifetime.

     Advantages: Donor uses and controls property for life and receives current federal income tax deduction for the remainder value of the property.
6. Pooled Income Fund: A charity accepts a gift of cash or stock that is pooled with similar gifts and the donor receives a proportionate share of earnings from the gift for a lifetime. After death the remaining assets go to the charity.

     Advantages: Donor bypasses gain on sale of appreciated assets, receives current federal income tax deduction and a percentage of income fund earnings annually.
7. Bargain Sale: A property is sold to a charity for less than fair market value or accepts a gift of mortgaged property.

     Advantages: Donor receives cash or debt relief, avoids gain on the value of property gifted, and receives a current federal income tax deduction for the value of charitable donation.

Resources and for implementing planned giving options include your: banker (working with investments, trusts and estates), your attorney, and /or your estate or financial planner.