An outright gift during your lifetime is a wonderful way to express your charitable interests and become involved with the Foundation. You may establish a fund or add to an existing fund, for example, in support the Foundation’s community work and operations or special initiative funds.
Cash is still the most popular way to make a charitable gift. Because the IRS recognizes the contribution nonprofit organizations such as the ORLF make to the community, your gift of cash to the ORLF prior to December 31 could save you money at tax filing time.
Gifts of appreciated securities or stock can be one of the most advantageous methods of giving. If the gift of stock is one you have owned for more than one year, you may deduct the full fair market value of the stock as a charitable contribution. In so doing, you may bypass all capital gains taxes on the appreciated portion of the gift.
Gifts of appreciated real estate is an ideal way to attain a level of giving you might not have consider and could help you avoid capital gains taxes. Gifts of real estate that has been held more than 12 months, can save you from potential capital gains tax; provides an income tax charitable deduction for the property’s full fair-market value up to 30% of adjusted gross income; and offers a carry-over of any excess for up to 5 years.
Life insurance offers a unique opportunity for charitable giving. Your life insurance policy can be used as a charitable gift, providing valuable income and estate tax savings. To qualify, you simply designate the Ottumwa Regional Legacy Foundation as the sole owner and beneficiary of the policy. No incidents of ownership should be retained. If the policy is paid in full, your charitable contribution is generally the replacement value or cost basis of the policy, whichever is less. If you pay ongoing premiums on a gifted life insurance policy, your premiums can also qualify as charitable deductions.
A bequest in your will or trust is a simple way to support your community in perpetuity while also possibly reducing estate taxes. A bequest can be structured as a percentage or a specific amount of your estate, or a residuary amount. The Foundation may also be named the contingent beneficiary should other beneficiaries die first. You can add to an existing fund or create a new fund.
Bequest Language:I give (cash of $_________ or ___% of my estate or specified property) to (legal name of organization and tax ID number) to be used for (designation).
Life Income Gifts
There are several ways that enable you to make a charitable contribution now, receive a current tax deduction and retain a life income for yourself, your spouse or others you designate. The remainder, after the death of the income beneficiary, establishes a charitable fund at the Foundation.
The Foundation administers both charitable gift annuities and a pooled income fund. For contributions over $200,000 you may want to consider either a charitable remainder trust.
Charitable Lead Trusts
Charitable lead trusts are particularly beneficial for donors who have income producing assets and wish to shelter future appreciation from estate taxes. The Foundation receives the income during the life of the trust. The assets revert to other beneficiaries at the termination of the trust at a significantly reduced gift and estate tax.
Qualified Retirement Plans may be the most tax-burdened assets you can own. Consider these assets when you are making a gift to charity. The primary advantage of making a charitable bequest of a retirement plan such as an Individual Retirement Account (IRA) or Pension Plan is that doing so allows you to bypass both the income tax and estate tax. An individual must do this through a beneficiary designation form approved by the plan sponsor. Gifting retirement plan assets to charity during your lifetime may also result in substantial tax savings.
A Charitable Gift Annuity
A Charitable Gift Annuity (CGA) is an agreement between you and the Foundation. In exchange for assets irrevocably transferred to the Foundation and designated to the charities of your choice, you receive regular fixed payments for life backed by the resources of the Foundation. After the beneficiary’s lifetime, the remaining principal in the annuity goes to the named charity or charities.
Charitable Remainder Trust
A Charitable Remainder Trust (CRT) is a trust arrangement between you and a trustee of your choosing. You transfer property, but retain the right to receive income. At the end of the trust’s term, the principal is distributed to the Foundation and used to establish a permanent fund in your name. It may also be added to a family donor advised fund or foundation. There are two types of CRTs:
»A Charitable Remainder Annuity Trust (CRAT) provides a fixed payout
»Charitable Remainder Unit rust (CRUT) provides a variable payout.
In both cases, you may receive an immediate income tax deduction and avoid capital gains tax on the transfer of appreciated assets, while creating a legacy for future generations.
Charitable Lead Trust
A Charitable Lead Trust (CLT) is the reverse of the Charitable Remainder Trust. An organization receives income for a fixed term after which the remaining assets may revert to the donor or other family member.