Donors can make outright gifts of cash, securities or other property to the NREF during their lifetime. Gifts can also be designated to the foundation through a will or distribution from a retirement plan or insurance policy.
There are a variety of gift plans that will return income to donors, including a charitable gift annuity, charitable remainder unitrust or annuity trust.
Several factors will determine your tax benefits, including the type of gift, the time at which the gift is made, whether it is outright or deferred or has provisions for income payments.
Consider the following guidelines:
- Outright gifts 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, such as art, collectibles or books, are fully deductible as long as they are relevant to the NREF mission. Consult with a financial advisor when donating personal property to the NREF.
- Bequests do not generate a lifetime income tax deduction. They are exempt from estate tax.
- Distributions to the NREF from a life insurance policy are not income-tax deductible. As with bequests, they are exempt from estate tax. If the NREF is the irrevocable owner and beneficiary of a policy during your lifetime, annual gifts may be deducted to offset premium payments. However, if you retain ownership, the IRS would not consider that a “completed gift” as you would have the option of changing the beneficiary to a friend or family member. The NREF must be made the irrevocable owner of the policy for gifts offsetting premium payments to be tax-deductible.
Individuals may defer paying taxes on a portion of their income from qualified retirement plans, such as IRAs, 401(k), 403(b) and Keoghs, until the assets are withdrawn during retirement years.
These accounts can be exposed to income and estate taxes after an individual’s death, and the combined tax rate could rise to 75 percent or higher on large taxable estates. This tax will be paid – either by the estate or the designated heirs – unless the assets are donated to a charity.
The benefits are two-fold: by donating retirement assets, individuals can support the NREF and avoid taxes on the portion designated to the foundation.
To establish fair market value for artwork and/or collectibles, the IRS requires that individuals obtain an independent appraisal of all items. An insurance appraisal will not suffice in this instance. The appraisal will need to be related directly to the gift.
Charitable gift annuities are treated as general obligations of the NREF and are backed by all of the foundation’s assets. The ongoing responsibility of making timely payments to annuitants is a key element of the NREF’s financial policies.
For questions regarding planned gifts, bequests, stock transfers, royalties or general donations, contact 847.378.0500 and ask for the NREF, or email the NREF staff at email@example.com.