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| Planned Giving to Trinity | ||
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What is the secret to making a gift
that will provide the greatest benefit to you and Planned gifts create opportunities
for both Trinity and you as a donor. Determining what gift(s) is
right for you is just as important as making the gift. There are
a myriad of easy giving options from which you can choose,
including naming Trinity as the beneficiary or co-beneficiary in
your will, donating appreciated assets (stocks, bonds, mutual
funds, real estate, antiques, art, jewelry, etc), naming Trinity
as a beneficiary in your IRA and/or 401(K) and gifts of life
insurance. Ultimately the best plan for you will balance what
you wish to accomplish for yourself, your family, and your
charitable interests in your overall estate and other financial
plans. Following you will find additional information pertaining to the different giving alternatives: NAMING TRINITY AS A
BENEFICIARY IN YOUR WILL Making a gift or tithing to Trinity
through your will is as simple, and inexpensive to you, as
executing a codicil to your will, or executing a new will. The
gift to Trinity through your will would be deductible as a
charitable contribution for federal estate tax purposes and have
the potential for reducing (or even eliminating) any estate tax
that might be due. For example, before any other dispositive
provisions in your will, you might prepare a codicil saying: “Should my spouse not survive me,
or should she/he and I die in a common accident or disaster, I
give, devise and bequeath to Trinity Methodist Church, Inc. of
Huntsville, Alabama, doing the ministry of Christ as Trinity
United Methodist Church, 10% (or more) of my gross estate as the
same is finally determined for federal estate tax purposes”. If you have chosen to utilize a revocable trust (sometimes referred to as a “living trust”) in your estate plan, you may amend it to provide for a similar disposition. Of course, each spouse’s will or trust should contain the same provision to insure the same disposition upon the death of the surviving spouse. DONATING
APPRECIATED ASSETS In general, the greatest tax
benefits from lifetime gifts come from gifts of stock and real
estate that have increased or appreciated in value. The reasons
are economic. Whereas a gift of cash only produces ONE income
tax benefit (a charitable deduction), a gift of appreciated
stock or real estate produces TWO: a charitable deduction for
the full fair market value of the stock or real estate plus
avoidance of capital gain tax that would have been paid had the
stock or real estate been sold. This is the case even though the
donor may be satisfying a legally binding pledge. Thus, a single
charitable gift of $10,000 of stock can reduce a person’s
taxable income by up to $20,000. Congress passed a series of laws
that limit these double benefits to only a few types of assets,
principally appreciated stock and real estate. Donors receive
reduced tax benefits from gifts of other types of appreciated
property, such as inventory and equipment and tangible personal
property (paintings, diamonds, etc.). Note that the opposite strategy
applies to a gift of investment or business property (including
stock or real estate) that is worth less than its adjusted
basis. The donor will usually be better off selling such
property for a loss and contributing the sales proceeds. This
will permit the donor to recognize a tax loss which would NOT be
deductible if the property had been given directly to Trinity. Even if a donor has made a completed
gift to Trinity, the IRS can disallow a charitable tax deduction
if certain procedural requirements have not been met. Generally,
the donor must receive a certain type of receipt for every gift of $250 or more, and gifts of property valued at over $5,000 (except marketable stocks and other securities) must be substantiated with a qualified appraisal. NAMING TRINITY AS A
BENEFICIARY IN YOUR IRA AND/OR 401K Another great and wonderful way to
help your Church financially at your death is to name Trinity as
a beneficiary in your Individual Retirement Account (IRA) and/or 401(K). This process is very simple
and is explained in greater detail below. The first step is to
contact your IRA Financial Advisor and ask for a “Change of
Beneficiary” form. On the document designate The document may ask for your
relationship to your beneficiary, if so, write in
“organization” or “charity”. There is no need to list a
tax identification number or date of birth. Your IRA Financial
Advisor can assist you with the specifics about their needed
information. If it is a 401(K) Plan you are updating, ask your
Human Resource Director for a “Change of Beneficiary” form
and follow the same instructions as described above. Remember to keep a copy of the
beneficiary change form on file with your personal estate
planning records. And if you deem appropriate, give a copy to
the Church for their records. GIFTS OF LIFE
INSURANCE Making a gift of life insurance to
the Church is an appealing planning strategy as it is flexible,
cost effective, and in many cases, a TAX-EFFICIENT way of
leaving a legacy that will benefit the Church after your death.
For a comparatively small premium contribution, the ultimate
gift (the death benefit) is generally many times larger than the
total payments. Life insurance can allow you, the donor, to make
a significant gift without reducing your estate and depriving
your surviving spouse or family of an inheritance. FOUR WAYS TO SUPPORT THE CHURCH
USING LIFE INSURANCE: One: Make a gift of an existing
policy- You may choose to make an outright
gift of an existing policy to the Church. TO GAIN A CURRENT
INCOME TAX CHARITABLE DEDUCTION, you must be certain to transfer
all rights of ownership in the policy to the Church, i. e. the
Church is made the OWNER and POLICY BENEFICIARY. As a general
rule, the value of the tax deductible gift (subject to general
limitations placed on charitable contributions) you make is
equal to the fair market value of the policy at the time of
transfer. If the value of the policy exceeds the premiums paid
to the date of transfer, a donor may only deduct their cost
basis in the policy. Two: Make the Church the beneficiary
of an existing policy- As a donor, you can maintain
ownership of an existing policy and simply change the
beneficiary designation to benefit the Church. The Church can be
named a sole beneficiary or only receive a part of the policy
proceeds. The Church could also be listed as a contingent
beneficiary. Three: Help the Church purchase a
new policy- The Church could purchase a new
policy on your life – subject to state insurable interest
laws. The majority of states now have laws in place that give
charitable organizations an insurable interest in your life as a
donor; however, the laws vary according to the applicable state
statues. Under this approach, the Church purchases the policy,
naming itself as owner and beneficiary and is responsible for
making the premium payments. Of course, the Church would
normally expect you to make cash contributions equal to or
greater than the needed premium dollars as long as the policy is
in force. Four: Gift assets to the Church and
replace family wealth through a wealth replacement trust- Sometimes life insurance is not the
gift, but becomes the solution. As a potential donor, you may be
inclined to make a substantial gift to the Church, but you are
hesitating, wondering if you will deprive family members of
assets they might need in the future. However, by directing your
tax savings generated by your charitable gift to the purchase of
a life insurance policy, you can donate your assets to the
Church and still send a benefit to your heirs. The life
insurance should be owned by your children or be an irrevocable
life insurance trust (ILIT) to ensure that upon your death, the
policy proceeds will not be included in your estate and your
heirs will receive full benefit from the policy proceeds. A gift of life insurance can provide
substantial benefits to both the donor and the Church. A
licensed financial professional can help guide you in choosing
the right life insurance strategy – one that allows you to
achieve your personal goals while helping you to support your
Church in a very significant way. You should also consult your
personal tax advisor and/or legal counsel as to the particular
statutes that apply in your particular situation. ENDOWED GIFTS Trinity’s General Endowment Fund The intended purpose of this general endowment fund is to
provide funds to support the goals and missions of Trinity UMC.
This fund would be used to provide for Trinity’s facility
maintenance, repairs and replacement,( i.e., stain glass window
care, heating/cooling system, carpet/flooring, etc.); missions
project both local or abroad; and current or future programs for
Children, Youth or Adults. The initial fund was created by an
individual gift of $10,000. Future contributions may be made to
this fund. GIVING THROUGH GIFT ANNUITIES The
charitable gift annuity is a wonderful way to make meaningful
gifts while enjoying income and tax benefits that can also help
enhance your future financial well-being. How
does it work? Under the
terms of a gift annuity, you make a charitable gift of cash or
other property. You and/or others, if you desire, then receive
generous fixed payments for life. The frequency and amount of
payments are determined at the time the gift annuity is funded.
The payments will never change and will continue regardless of
how long you and/or other recipients live. Welcomed
tax benefits Because a
portion of your gift annuity will be used for charitable
purposes, under current tax regulations, you are entitled to an
income tax deduction in the year of your gift. In addition, for
a period of time, a portion of each payment may be free of
income tax or taxed at capital gains tax rates that are lower
than tax rates on other income. The
amount used to fund your gift annuity may also be free of gift
and estate taxes. You thus enjoy income and tax benefits today for a gift that you
might otherwise have planned to make in the future through your
will or other long-range plans. Trinity’s
gift annuity program is administered by the North Alabama United
Methodist Foundation. This means that all documentation, legal
matters and the administration of gift payments will be handled
by the Foundation, for the
benefit of Trinity. Hopefully, this page has given you
basic data that is helpful in making decisions on planned giving
techniques for the mutual benefit of yourself and Trinity. FOR MORE INFORMATION, please call the Church office at (256) 883-3200, ext. 209.
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