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What are the kinds of gifts I can give to Tabernacle Baptist Church? |
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Generally speaking, during your lifetime you can make an outright gift of cash, securities, or other property (e.g. real estate).
Upon your death you can make a gift through your will or with a distribution from a retirement plan or life insurance policy.
You also have the option of making a gift that returns lifetime income to you, your spouse, or other individuals, such as a charitable gift annuity or charitable remainder trust. |
2.
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What sort of assets can I use to make a gift? |
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Almost anything: cash, publicly traded securities, life insurance, the balance of your retirement account. Other assets can be very valuable but are more complicated to administer and must be reviewed before they can be accepted: real estate, closely held stock, artwork, collectibles, etc. . |
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What tax deduction will I receive for my gift? |
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It depends on the form your gift takes. Outright gifts to Tabernacle generate a full income tax charitable deduction. Outright gifts of appreciated securities are deductible at fair market value with no recognition of capital gains. Gifts of personal property like art, books, and collectibles are fully deductible so long as they are relevant to our mission.
Bequests do not generate an income tax deduction. They are exempt from estate tax, however. Similarly, life insurance distributions to Tabernacle are not income tax deductible, but are exempt from estate tax. If you have made Tabernacle the irrevocable owner and beneficiary of a policy during your lifetime, you may deduct annual gifts that offset premium payments. For more details on this point, see Question 7 below.
The charitable deduction for a gift that returns income to you, such as a charitable gift annuity or a charitable remainder trust is the fair market value of the gift asset minus the present value of the income interest you retain.
The charitable deduction for a gift that returns income to you, such as a charitable gift annuity or a charitable remainder trust is the fair market value of the gift asset minus the present value of the income interest you retain. |
4.
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Can Tabernacle Baptist Church serve as the Executor of my estate? |
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No. Tabernacle Baptist Church cannot assume such a role in your affairs. |
5.
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If I create a bequest or life-income gift, will Tabernacle continue to ask me for annual contributions? |
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Yes, because these commitments address two different needs. Your planned gift is a significant addition to Tabernacle's long-term financial strength - our ability to meet the challenges and opportunities the future will bring. Today's ministry, however, is supported through your annual contributions. |
6.
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Can I transfer my IRA to Tabernacle to set up a life-income gift, and avoid income tax on the transfer? |
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New legislation gives donors aged 70 1/2 and older an opportunity to direct lifetime distributions from their IRAs to Tabernacle without incurring income tax liability on the withdrawal. The provision will be in effect for the 2006 and 2007 tax years. Distributions can total $100,000 per year, and must be made outright - they cannot fund a life-income gift.
Donors younger than 70 1/2 can make a withdrawal from their IRA or other type of retirement plan, pay income tax on the withdrawal, and donate the proceeds to Tabernacle. These gifts can be made outright or can fund a life-income gift and will generate a charitable deduction for the donor. |
7.
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Can I use insurance to benefit Tabernacle Baptist Church? |
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Yes. You can name Tabernacle Baptist Church as an alternate or as a primary beneficiary. Furthermore, if you no longer need the policy proceeds in your estate,you can irrevocably transfer ownership of the policy to Tabernacle. If the policy has cash loan value, Tabernacle can draw this out and use it. In this case, you not only receive a charitable gift deduction, but any additional premiums you pay are tax deductible. And, on your death, Tabernacle receives the balance of the policy proceeds, and none of it is included in your estate for tax purposes.
In order to deduct the premium payments, you must irrevocably transfer ownership of the policy to Tabernacle Baptist Church. Without an irrevocable transfer, the IRS will not consider it a "completed gift" because you could change the beneficiary designation to a friend or family member. |
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If a trust agreement is established as irrevocable, it means that it can't be revoked (broken) except under unusual circumstances. Why would anyone want an irrevocable trust? |
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There are always specific reasons for making an irrevocable trust agreement. Perhaps it involves a family business where some of the family members are getting on in years and the family wants to make certain that management continues to run smoothly even if hindrances, such as poor health, enter the picture.
Many times the reasons for an irrevocable trust involve estate and/or income tax avoidance. In order to be successful in such avoidance, the trustor must not have any direct or indirect power or control over the trust property or income. The regulations on this subject, set out in the Internal Revenue Code, must be carefully followed. |
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What is the difference between a charitable remainder unitrust and a charitable remainder annuity trust? |
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The major difference is in the valuation of the assets of the trust, which establishes part of the calculation for the determination of the amount of income received by the income beneficiary. The annuity assets are valued at the time they are placed in the trust and are never revalued. Annual annuity payments remain the same whether the assets appreciate or depreciate.
The assets in the unitrust are revalued annually. If the trust assets appreciate, the payment to the income beneficiary will increase. If the trust assets depreciate, the payment will decrease. |
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How can I fund a charitable gift annuity and how is my income calculated? |
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The usual funding sources for a charitable gift annuity are cash and marketable securities. There can be tax benefits associated with the gift of appreciated securities. Because a gift annuity is considered partially a gift and partially an annuity, part of the gift avoids capital gains tax entirely. Real estate and other marketable assets may also be used, but in many cases acceptance of these kinds of assets are often on a case-by-case basis. Generally, Tabernacle will convert the assets to cash to fund the annuity.
The income provided to you by the annuity is determined by your age and the age of any additional beneficiary. It is calculated using tables established and filed with regulatory agencies. |
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I'm interested in establishing a charitable gift annuity. What financial provisions will Tabernacle make for the income payments to me and my husband? |
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Your charitable gift annuity will be treated as a general obligation of Tabernacle Baptist Church, backed by all of her assets. |
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Can I set up a charitable gift annuity and delay the start of the income until I will more likely need it, such as at my retirement, when my income is lower? |
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Yes, the flexibility associated with establishing charitable gift annuities makes them a popular and effective retirement planning vehicle. Using a deferred gift annuity, the annuity earnings accumulate on a tax-deferred basis. Thus the deferred payment annuity accomplishes several things. First, you receives a tax deduction in the year the annuity is established, which would in theory be when you are in a higher tax bracket. Secondly, the gift to Tabernacle becomes larger as the deferred earnings increase the annuity's principal. Finally, since the deferred payment annuity grows in size while income is deferred, the ultimate income will be more per year. |
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I'd like to donate real estate. Will Tabernacle determine its value for my income tax deduction? |
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No. The IRS requires that donors of real estate secure an independent appraisal of the property to establish fair market value. |
