Giving Plans

Capital gains, the profit you realize from the sale of assets, are currently taxed at a rate as high as 33 percent. You can avoid the capital gains tax by giving property to Chileda. When that charitable gift is made, your deduction is based on the gift’s value.

You can also increase your retirement income by making a charitable contribution. For instance, if you have property with a high value that provides you with very little income, you can use that property to increase your income while making a charitable donation.

In this way, many people can increase the income from certain assets more than 50 percent and know that they have helped us achieve our mission of serving our clients.

As you consider your long-term plans and the needs of Chileda, it is important to consider the ramifications of possible federal estate taxes on those you love. By using one of the charitable giving plans outlined here, it is possible that you can ease the tax burden on those that survive you by leaving property to Chileda. In this way, your loved ones can still realize income from your gift without the burden of federal estate taxes.

This is the simplest and least expensive form of planned giving to Chileda. Simply stated, you may transfer the title of your residence or farm to Chileda and still retain the right to live in the residence or use the farm for the rest of your life. Any income produced from the property is taxable and is yours to keep. However, you are responsible for the upkeep of the property.

A tax deduction is available the year you make your Life Estate Agreement gift, and is equal to the value of the remaining interest given to Chileda. Upon your death, Chileda receives the property to use as needed or as you direct it to be used.

Under this plan, you may make a gift to Chileda and receive annual payments for life. The size of the payment is based on your age at the time the gift is given; the older you are, the larger your payment. Contributions are made annual or more frequently to you or others named in the agreement. Only part of your annuity is taxed to you or to another person named by you. The remainder is tax-free income. The basis for tax deduction is the value of the gift. The value of the gift is the difference between the fair market value of the property transferred to Chileda and the value of the annuity that you receive in exchange for that property.

When you purchase an annuity from Chileda, you receive an immediate tax deduction. The annual payments that you receive from the annuity are partially tax exempt.

The benefits to Chileda are substantial. Although the tax advantages are significant, major gifts come from the heart. Second, any excess interest over the amount of the annuity will benefit Chileda.

These plans are irrevocable trusts and provide the persons named in the trust with an income that’s based on the value of the property given as a gift to Chileda. Income is reported for tax purposes in the same way as it is earned in the trust.

The funds in both planned gifts are invested in conservative, long-term growth assets. Annual payments from the Charitable Remainder Annuity Trusts are equal to at least five percent of the initial value of the assets put in the trust. Annual payments from the Charitable Remainder Unitrust are equal to at least five percent of the value of the assets as determined each year.

For you, an additional income tax deduction may be claimed and a savings on capital gains tax may be realized at the time the trust is created. Your heirs may also benefit from a federal estate tax savings because the trust assets are not subject to an estate tax. Chileda will receive the assets after the last income beneficiary dies.

The Revocable Trust allows you to provide a gift of real estate, property or cash while providing you with the security of knowing that all or part of your contribution will be returned at your request.

Whatever amount you determine is paid to you, loved ones, or to Chileda if you request it. The income the trust earns is taxable unless the trust consists of tax exempt securities. If any income is paid to Chileda, it is deductible on your federal and state tax returns as a charitable contribution. You control the investment of the trust funds and all trust assets are returned to you at your request.

Since the Revocable Charitable Trust allows you the contingency of having all funds returned to you, there is no tax deduction for the contribution itself. However, there are possible savings in probate costs if the trust is not revoked. In addition, an estate tax deduction can be claimed for the amount given to Chileda.
Under this agreement, Chileda would receive whatever portion of the trust assets remain at the death of the last income beneficiary that you designate.

A Charitable Lead Trust permits you to provide income for Chileda for a specified period of time, most often five, 10 or 15 years. This type of trust can provide significant income or estate tax benefits.

In the Charitable Lead Trust, all income payments are in the form of a guaranteed annuity or fixed percentage of the fair market value of the property given to Chileda. The income of the trust is taxed to you annually. At the time this trust is funded, you will receive a tax deduction for the present value of the income that will be given to Chileda over the term of the trust.

At the end of the trust term, all principal is returned to you or another non-charitable trust beneficiary in accordance with your wishes. You may name Chileda as the beneficiary of the principal balance in the event of your death.

Chileda offers another planned giving program for smaller donations, with immediate tax deductions available to those who contribute. This Pooled Income Fund is invested by a trustee through whom you receive your share of earnings each year. Earnings are based on the net income of the fund and may vary from year to year. Payments to you are made at least annually and are taxable. However, the present value of the charitable remainder interest can be taken as an income tax deduction at the time the funds are contributed to the Pooled Income Fund. Your estate will also benefit because the remainder interest is not subject to federal estate taxes.

As in the purchase of an annuity from Chileda, the amount of your tax deduction is based on the value of your gift. In its final disposition, the number of units of the pooled fund that you have donated is given to Chileda at the death of the last designated beneficiary.

NOTE: The Chileda Foundation, Inc. is not in the business of providing legal or financial advice. To determine what advantages, if any, you can obtain from making a planned gift to Chileda, please consult with an attorney or financial planner. Chileda Foundation assumes no liability for the correctness of the statements of law contained within.

1. The Capital Gains Deduction

2. Retirement Income and More

3. Easing the Tax Burden on Your Beneficiaries

4. Gift with Retained Life Estate

5. Purchase of Annuity from Chileda

6. Charitable Remainder Annuity Trust and Charitable Remainder Unitrust

7. The Revocable Charitable Trust

8. Charitable Lead Trust

9. The Pooled Income Fund