Donating appreciated securities avoids capital gains tax. When you donate securities directly, TMS credits you for your gift, and you receive an income tax deduction for your gift’s full market value. This avoids capital gains taxes on the securities’ appreciated valuation. If you instead sold the securities and donated the proceeds, you would be liable to capital gains taxes. Do you own securities in a brokerage account? These shares can be electronically transferred to TMS with ease. The general practice of TMS is to promptly sell publicly-traded gifted securities, then apply the cash proceeds toward your designated purpose.
RETIREMENT PLAN ASSETS
A donation of retirement plan assets to TMS transfers tax-free. Retirement accounts—such as 401(k)s, 403(b)s, and IRAs—can be subject to double taxation at your death. Both ordinary income tax and estate tax apply. This means that, if your estate is simply left to your heirs, up to 60% of it may disappear to taxes. In contrast, retirement plan assets left to TMS upon your death transfer tax-free.As you plan your estate, consider leaving your retirement plan assets to TMS. Leave your more favorably-taxed assets to your family.Your retirement accounts likely allow you to name beneficiaries who will receive assets remaining after your death. Would you like to designate TMS as a beneficiary? Simply contact your plan administrator.
LIFE INCOME GIFTS
Life income gifts provide regular income to the donor for a fixed term or for life.TMS then uses the remaining amount. Two kinds of donations to TMS supply you with income. Charitable Remainder Unitrusts (CRUT). You can give appreciated assets through a CRUT. Once you establish the CRUT, it regularly distributes a percentage of its assets’ value to a non-charitable beneficiary (normally yourself). This distribution continues for the beneficiary’s lifespan, or for a fixed term of up to 20 years. What happens when the lifespan or fixed term ends? The CRUT distributes its remaining assets to TMS. Charitable Gift Annuities. How does a charitable gift annuity work? You transfer cash or assets to TMS. In exchange for the gifted sum, TMS pledges to make regular payments to one or two people for life. Afterward, TMS uses the remaining balance for your designated purpose.
You can donate real estate yet retain the right to use the property while you live. Did you know that you can transfer the title of your personal residence to TMS now, but still live there for the rest of your life? You can even guarantee your spouse’s right to the home as well. This is called a “retained life estate gift.” When you initiate this gift by transferring title to TMS, you receive an immediate income tax deduction (based upon the property’s fair market value).
You continue to handle property taxes, insurance, maintenance, and upkeep for your lifetime. Afterward, TMS receives full property rights, sells the property, and applies the proceeds to your designated purpose. An alternative arrangement is an outright gift of real property. How does this work? You donate property to TMS, effective immediately. You receive a charitable income tax deduction for the property’s full fair market value and avoid capital gains on any appreciation. (You will likely need an appraisal to substantiate the tax deduction.)
CHARITABLE LEAD TRUST
A charitable lead trust (CLT) can reduce the taxes your beneficiaries will owe. Once you set up a CLT, it distributes annual payments to TMS. After a designated period, the CLT distributes the remaining amount to your family members or other beneficiaries. Why is this helpful? Because the distributions from the CLT lower its value. This can reduce the amount of gift or estate taxes your beneficiaries owe when they receive the final amount. CLTs are a tax-advantaged way to support TMS for a set number of years while potentially reducing the taxes your heirs will owe. Since a CLT is rather complex, you should consult your financial advisor and ensure its compatibility with the rest of your estate plan.
You can donate life insurance policies by naming TMS as the owner or a beneficiary. Why donate life insurance? Because you can leverage your resources while providing TMS with a potentially extraordinary gift. When you name TMS as the owner of your policy, you receive an income tax deduction for its value.
Alternatively, you can maintain ownership of your policy, but name TMS as a sole or partial beneficiary. This method retains control of the policy for life. TMS prefers to receive term policies. If you desire to donate another type of policy, contact us. We are glad to confer with you on the best design for such a gift.
You can leave TMS a bequest of your retirement plan, bank account, brokerage account, or life insurance policy. Since TMS may not receive your bequest for many years, you should place only minimal restrictions its use. This gives TMS the flexibility to employ your gift for current programs and priorities. Why should you consider leaving TMS a gift from your estate? Because such a gift impacts future generations of pastors and church leaders, promoting global gospel advancement.
NOTE: To assure the maximum impact of a gift from your will or trust to TMS, please call upon us for the essential elements you should assure to include in your beneficiary language.