Planned Giving
MAKE AN IMPACT TODAY. LIGHT THE WORLD OF TOMORROW.
What is Planned Giving?
Donors often believe the only way to support a charity is to make an outright gift of cash. To be sure, this is a generous and very helpful way to contribute, but it’s not the only way. Planned Giving is a process of charitable and legal planning that allows you to maximize your philanthropy in a way that takes advantage of the tax, financial, and estate planning benefits of your generosity.
A planned gift can be made with almost anything: cash, stocks, bonds, mutual funds, real estate, and property such as artwork or royalties. Planned gifts include:
· Life income plans (pooled income funds, annuities, remainder trusts)
· Lead trusts
· Bequests
· Real Estate
· Tangible Personal Property
· Closely Held Stock
· Life Insurance
· Gifts of a Remainder Interest in a Home
Why Should I Make a Planned Gift to LGA?
Planned giving allows donors to make a sustained meaningful difference and bring to life a vision they believe in and hold dear.
By making a planned gift to LGA, you’ll be partnering with people you trust to ensure that your priorities remain important for decades to come; it’s an ideal way to leave a legacy of your own mission and values for the next generation. And when you give to LGA, you can trust that your gift will be managed carefully in order to maximize its lasting effects on future generations.
How Do My Loves Ones and I Benefit From Planned Giving?
Planned giving yields a number of benefits. It gives you the ability to make a significant gift to LGA and to a mission you hold dear. It’s also a way to unite with others who share your values and priorities to safeguard them for the future.
Additionally, planned giving offers a number of significant financial advantages for you and your heirs. Whether you’re looking to increase your annual income or reduce taxable income, your objective can be accomplished through planned giving. It works to your benefit in many different life stages: from prime earning and saving for your children’s college, to retirement and making preparations for adequate life-long health and well being.
You can design a gift that pays income for life to you and your spouse. You can also tailor your gift to provide a reliable income to other loved ones, such as your children and grandchildren.
Planned gifts can also generate savings on income and capital gains taxes, as well as gift and estate taxes. The assets you transfer to LGA remain outside your taxable estate.
How Will LGA Benefit from My Planned Gift?
Your gift will ensure that LGA is able to educate students for lives of eternal purpose for generations to come.
You can direct that your gift be used to support a specific ministry or particular project. This allows you to make an impact on LGA in whatever way you find most important.
Finally, the benefactors of today allow us to teach the young people of tomorrow the values of philanthropy and charity: By impressing upon them that the LGA they love has come to them as a gift from past generations, we can impart to them a similar spirit of generosity towards others.
What Kind of Gift Plan Might I Make?
Life Income Gift: Life income gifts pay you an income stream for life or a term of years and your gift ultimately supports the school. This kind of planned giving can offer you and your heirs other benefits beyond income, including: the ability to convert low- or non-income producing assets into a gift with an attractive income stream; savings on income, capital gains, and state taxes; charitable or gift and estate tax deductions; professional management and investment diversification through LGA at no cost to you or your beneficiaries.
Bequests: There are a variety of different bequests you may make to LGA. Bequests can be made through gifts of cash, securities, real estate, and tangible personal property.
Residuary Bequest: You may leave LGA all or part of the remainder of your estate after the payment of any specific bequests and all estate-related expenses
Specific Bequest: LGA receives a specific dollar amount
Bequest of Property: LGA receives designated assets, such as securities, an interest in real estate, or tangible personal property (for example works of art or antiques)
Testamentary Trust: The trust provides income for life to one or more heirs, after which the assets pass to LGA
Retirement Plan: You may designate LGA as a beneficiary of the remainder of your retirement plan (e.g. IRA, Keogh, tax-sheltered annuity, qualifying pension, or profit-sharing plan)
Testamentary QTIP Trust: The trust provides income and necessary principal to your spouse for life, after which the assets pass to LGA
Contingent Bequest: LGA receives a bequest only in the event that certain contingencies specified in your will are satisfied
To name LGA in your will, you can use the following language:
I give (__ dollars/___ percentage or all of the residue of my estate) to Lumen Gentium Academy, an independent classical liberal arts high school in the Catholic tradition, located in Boonton, New Jersey.
Retirement Plans: Under current tax law, you must report distributions of qualified retirement plans – e.g., IRAs, Keoghs, qualified pension or profit-sharing plans, tax-deferred annuities, and some TIAA-CREF plans – as taxable income. Additionally, distributions to designated beneficiaries can be subject to estate taxes. By naming LGA as the beneficiary of the remainder of your retirement plan, 100% of the plan’s balance would be available for LGA’s use because the distribution would avoid both income and estate taxes. Leaving your retirement plan (or a portion of it) to LGA, therefore, is a tax-wise gift: naming LGA as the recipient after your lifetime (or the death of the survivor of you and your spouse) avoids all estate and income taxes on the plan assets.
To make this gift, you can notify your plan’s administrator of your wish to add LGA as a beneficiary to change the beneficiary to LGA. A “change of beneficiary” form will be required. Should you designated that your qualified retirement plan come directly to LGA at the end of your lifetime, your spouse will need to consent in writing to the designation. A written consent is not necessary for an IRA unless you live in a community property state (New Jersey is not a community property state).
If your spouse and children are currently the beneficiaries of your retirement plan, you can add LGA as a beneficiary of a portion of the plan. The plan administrator can “cash out” LGA’s share of the account at the end of your lifetime, without affecting your family’s portion of the account.
Retained Life Estate: You may give a personal residence to LGA, take an immediate tax charitable deduction for a portion of the appraised value, and continue to live in your home for life. You remain responsible for all taxes and upkeep. At the end of the life estate, LGA would sell the property and use the proceeds for its benefit. If at any time during the life estate, you decide you no longer want to own the property, you can either give your remaining income to LGA and receive an additional charitable deduction, or you and LGA can jointly sell your interests to a third party.
To designate a spouse and charity as beneficiaries, you may use language like this sample: The beneficiary is my spouse as long as he/she survives me. The beneficiary of any amount(s) remaining in the plan after the death of my spouse, or of the entire amount in the plan upon my death if my spouse does not survive me, or of any portion thereof which my spouse may disclaim, is Our Lady of Mount Carmel Church, a Roman Catholic parish in the Diocese of Paterson, New Jersey, located in Boonton, New Jersey.
What Kind of Assets Might I Donate?
Cash and Credit Card Gifts: Gifts of cash or by credit card are eligible for a deduction for the full value of the gift. You can utilize this deduction for up to 50% of your Adjusted Gross Income and carry forward any unused portion for up to five additional tax years.
In some instances, cash and credit card gifts can be used to fund life income gifts. In that case, your charitable deduction is reduced by the present value of the anticipated payments to you from the gift.
Securities: If you give stocks or bonds you’ve owned for at least a year, you will be eligible for a deduction for the full mean market value of the security on the date LGA receives it. You can utilize this deduction for up to 30% of your Adjusted Gross Income and carry forward any unused portion for up to five additional tax years.
As with cash, if you use securities to fund a life income gift, your deduction will be reduced by the present value of the anticipated payments to you from the gift. Using securities to fund a life income gift, however, has the added advantage of reducing potential capital gains tax.
Real Estate Gifts: You may give either all or percentage of property you own. A gift of real estate may be able to significantly reduce the amount of income, capital gain, and estate taxes you might otherwise have to pay. You may also be able to earn an income from your gift. Examples of appropriate gifts of real estate include: personal residence, vacation property, commercial property, building lot, undeveloped land, etc.
Art, Antiques, and Other Tangible Personal Property: Property such as art, antiques, stamp and coin collections, and jewelry may be subject to estate taxes. Gifts of this type of property during your lifetime may reduce your tax liability.
If your gift is retained by LGA, you may take an income tax deduction for the full fair market value of the property (as determined by an independent appraisal). If LGA sells your gift, your deduction is the lower of the property’s fair market value or your cost basis.
Life Insurance: There are a number of ways to use your life insurance to make a contribution to LGA. Depending on the type of policy, for example, your gift may allow you to receive an upfront income tax deduction. If the policy is maintained by LGA, any future premium payments you make or contribute to LGA may also be tax deductible.
Important Reminder
No matter what gift you decide on – or whether you decide to participate in planned giving at all – it is very important to create a will. Creating a detailed will is vital to ensuring that your estate will continue to yield benefits to your family and the organizations you care about, and that your testamentary intent will be carried out.
Related Resources
Info for Advisors: LGA’s Tax Identification Number is 84-4750322. If you’d like to send a transfer, please contact a planned giving representative at school@lumengentium.academy.
The American Taxpayer Relief Act of 2012: ATRA contains important information about gifts to charity from IRA assets, individual income tax rates, capital gains tax rates, deduction phase-outs, and estate, gift and generation-skipping transfer taxes. If you’d like a summary of the Act, please contact a planned giving representative at school@lumengentium.academy.
Additional Information About Planned Giving: We have compiled a collection of various sources that can give you more information about planned giving. If you’d like to do further research, you may find these links and organizations helpful. To receive this list, please contact a planned giving representative at school@lumengentium.academy.