Planned Giving

The NREF offers donors a variety of charitable planning strategies, including planned gifts, bequests, stock transfers, royalties and more. Individuals should talk with their personal tax advisor or financial planner to determine which charitable giving strategy is best.

For more information, contact 847.378.0500 and ask for the NREF or email staff at info@nref.org.

The Benefits of Planned Giving

Commitment to neurosurgery is the most important reason to donate. Once the decision has been made to donate, one should consider the financial benefits of a gift. Some of the financial benefits depend on how you choose to structure your gift, including the following:

» SAVE INCOME TAXES. To encourage private contributions, the U.S. government allows you to deduct charitable gifts on your income tax return, provided you itemize your deductions.

» REDUCE ESTATE TAXES. Gifts to the NREF, either now or after one's lifetime, avoid the federal estate tax by qualifying for an unlimited estate tax deduction.

» RECEIVE INCOME FOR LIFE. In the U.S., when implementing certain planned giving strategies, a gift can be designated now, a current income tax deduction obtained and an income stream for your life received (and the life of one or more survivors, if desired). In addition to the income stream, a “Life Income Plan” (strategies that provide an income stream) can provide several other benefits:

  • Unlock appreciated investments and increase your income yield. You may have assets that have grown substantially in value, but have a low current income yield. If highly appreciated securities are sold and the capital gains taxes paid, there are fewer assets to reinvest to produce income. If, on the other hand, the appreciated assets are given to the NREF, the assets can be sold without incurring capital gains taxes and then the entire sale proceeds reinvested in high yielding assets that can be used to provide an income stream for life (while at the same time supporting neurosurgery’s research and education needs).
  • Secure professional management. With a Life Income Plan, the trustee selected handles the investment responsibilities associated with the assets you contribute.

Philanthropy can be structured to achieve many benefits for both you and the NREF. Taking the time to reap those benefits in a tax-efficient manner is called planned giving. A planned gift is any major gift made during a donor’s lifetime or at time of death that is part of a donor’s overall financial and/or estate plan. As part of a planned gift, one should consider not only what type of assets to give (cash, appreciated securities/stock, partnership interests, life insurance, retirement plan assets, etc.), but also what type of gift makes the most sense in light of your personal circumstances, goals and objectives. The following is a brief summary of planned giving techniques that can be considered:

Outright Contribution

An outright contribution is a donation of cash or other property to the NREF. While cash is certainly a great asset for a foundation to receive, it may not be the best for an individual to give from a tax perspective. Instead, when making an outright gift, consider giving assets that will maximize your wealth by reducing overall exposure to taxes. For example, give retirement plan assets, which have a built-in income tax liability, or assets that have appreciated significantly in value (and have a built in capital gains tax).

Taxpayers who are over the age of 70 1/2 can now exclude up to $100,000 from income per person, per year, for IRA distributions. A contribution of one's IRA distribution to the NREF will not only count towards the minimum required distributions and be excluded from income, but will also avoid the 3.8 percent Medicare tax on investment income.

Assets that have appreciated significantly since purchase – such as securities – are also attractive assets to give to the NREF, because they offer a double benefit when transferred. The benefits are an income tax reduction and avoidance of capital gains taxes on the appreciation.

Deferred Gifts

To keep assets during your lifetime, consider a deferred gift. A bequest to the NREF through a will or other estate planning documents can reduce or eliminate estate taxes.

Alternatively, if one is willing to transfer an interest in some assets, but wants to retain an income interest in the transferred property, one of the following Life Income Plans should be considered: a charitable remainder unitrust, a charitable remainder annuity trust or a charitable gift annuity.

  • Charitable Remainder Trusts. Acharitable remainder trust (CRT) is an irrevocable transfer of assets to a charity, such as the NREF, while retaining an interest in the donated assets or providing another individual or entity with an interest in the donated assets for a specified period of time (which must be either for the life of the non-charitable beneficiary, the lives of two or more non-charitable beneficiaries or for a specific term of years not to exceed 20 years). The non-charitable beneficiary of the CRT will receive a stream of payments for the specified period of time. At the expiration of that period, the remaining assets will be transferred to the charitable beneficiary. CRTs can be structured as either a charitable remainder annuity trust (CRAT) or a charitable remainder unitrust (CRUT). A CRAT pays a defined annuity, at least annually, to the non-charitable beneficiary regardless of the value of the trust assets or the income generated by the trust. The defined annuity is based on the initial fair market value of the trust assets. A CRUT, on the other hand, pays a defined percentage of the net fair market value of the assets of the trust, valued as of a certain day each year, to the non-charitable beneficiary. Thus, the annuity payment from a CRAT does not change, while the annual annuity payment of a CRUT will increase or decrease each year depending on the investment performance of the underlying assets. Upon termination of the CRT, the remaining assets pass to the NREF (or any other named charity).
  • Charitable Gift Annuity. A charitable gift annuity is another way to ensure lifetime payments from property. A charitable gift annuity is a contract, rather than a trust, under which one makes an irrevocable gift of money or securities to the NREF and receives a fixed dollar amount annually for life. The annual payments are determined by age at the time of the gift. Unlike a CRT, a charitable gift annuity has no limited group of funds or trust principal from which future annuity payments are to be made. Instead, the annuity payments become a general obligation of the issuing charity, backed by all of its assets.

Wealth Replacement Trust

If you are reluctant to establish a a charitable gift annuity because it will reduce the wealth available to descendants, then consider establishing a wealth replacement trust (WRT). A WRT is a trust that is used in conjunction with a CRT in order to achieve benefits for both the desired charity and descendants. With a WRT, the income stream from the CRT is used to fund a life insurance policy that is owned by a trust, which is designed to benefit children (or more remote descendants) and is not considered part of a taxable estate for estate tax purposes. At death, the assets in the CRT passes to the NREF and the insurance proceeds are distributed to the WRT for the benefit of your children (or more remote descendants) without being exposed to estate taxes. By combining a WRT with a CRT, the beneficiaries receive the insurance proceeds to replace the assets the charity receives at the end of a CRT’s term. The benefits of this strategy, beyond simply giving such assets to the beneficiaries, include an immediate income tax deduction for the donor, deferral of capital gains tax and estate tax savings.

Charitable Lead Trust

A charitable lead trust is a trust that is a current, annual stream of income to the NREF for a designated period of time. Once the designated period of time has run out, the trust principal reverts to the donor or other beneficiaries named in the trust. This is a giving strategy that is often utilized by wealthy individuals who do not need a current benefit from the assets and want to benefit the NREF while simultaneously creating a structure that will pass assets to their descendants (or other beneficiaries) at a reduced, or eliminated, estate and gift tax cost.

A sound approach to charitable gift planning is to match intended contributions with stage of life, finances and tax considerations. The following chart reviews various gift plans related to age, income level and estate size, as well as explains the benefits of these gifts to both the donor and the NREF:

Type of Gifts

Cash (outright gift)

Suitable Age/Income Level: Any age and any income/estate level
Donor Benefits: Income tax deduction
NREF Benefits: Immediate use for NREF needs

Direct gift from IRA

Suitable Age/Income Level: Account holder is age 70 1/2 or older as of date of distribution (distribution cannot exceed $100,000 per year)
Donor Benefits: Excludes the IRA distribution from income, which lowers a taxpayer’s adjusted gross income (which can have several indirect tax benefits, including avoiding the 3.8 percent Medicare tax on investment income)
NREF Benefits: Immediate use of IRA distribution for NREF needs

Long-term appreciated securities (outright gift)

Suitable Age/Income Level: Any age and any income/estate level
Donor Benefits: Income tax deduction; avoidance of capital gains tax
NREF Benefits: Immediate use of income or sale proceeds

Life insurance policy

Suitable Age/Income Level: Any age and any income/estate level
Donor Benefits: Current and possible future income tax deductions
NREF Benefits: Ultimate use of policy proceeds

Bequest (through your will)

Suitable Age/Income Level: Any age and any income/estate level
Donor Benefits: Estate tax savings
NREF Benefits: Ultimate use of gift

Charitable gift annuity*

Suitable Age/Income Level: Over age 60 and retired, with a modest income/estate
Donor Benefits: Fixed lifetime payments (partially tax- exempt); estate and income tax savings
NREF Benefits: Ultimate use of gift

Deferred payment of gift annuity*

Suitable Age/Income Level: Age 40-60 and employed, with a moderate income/estate
Donor Benefits: Supplemental retirement plan; estate and income tax savings
NREF Benefits: Ultimate use of gift

Charitable remainder annuity trust

Suitable Age/Income Level: Over age 60 and retired, with a high income and sizable estate
Donor Benefits: Fixed lifetime income; estate and income tax savings
NREF Benefits: Ultimate use of gift

Charitable remainder unitrust

Suitable Age/Income Level: Age 60-75 and retired, with a high income and sizable estate
Donor Benefits: Variable lifetime income as inflation hedge; estate and income tax savings
NREF Benefits: Ultimate use of gift

Unitrust with term of 20 years

Suitable Age/Income Level: Over age 80 and retired, with a potentially taxable estate
Donor Benefits: Income for self now and beneficiaries later; estate and income tax savings
NREF Benefits: Ultimate use of gift

Wealth replacementrust

Suitable Age/Income Level: Wealthy individual (facing possible estate taxes) who want to benefit NREF, but not at the expense of the descendant.
Donor Benefits: Provides income stream that can be utilized to fund a life insurance policy, which will pass to one's children free of estate tax and income tax.
NREF Benefits: Ultimate use of property transferred to CRT.

Charitable lead trust

Suitable Age/Income Level: Over age 60 and retired, with a high income and large estate
Donor Benefits: Ability to pass property to others with reduced gift and estate taxes
NREF Benefits: Use of income for term of trust

Gift of home, retaining life use

Suitable Age/Income Level: Over age 70 and retired, with modest income/estate
Donor Benefits: Income tax deduction; retained use of home; estate tax savings
NREF Benefits: Ultimate use of property or its sale proceeds

*Not available in some U.S. states or from some organizations.

To choose the right giving method, one must consider her/his unique financial circumstances and charitable objectives. As detailed above, this depends on a number of factors and the desired financial benefits.

Philanthropy has both tangible and intangible rewards. There are many motives influencing the decision to give, some humanitarian, financial and some based on one's passion. The best plan is the one that satisfies all of these.

Talk with a personal adviser or financial planner to determine which charitable giving strategy is best for you and your family.

The information contained herein is not intended as legal advice. For legal advice, consult an attorney. Figures cited are based on current rates at the time of posting and are subject to change.

NREF is the Philanthropic Arm of the AANS

Contact Us

5550 Meadowbrook Drive
Rolling Meadows, IL 60008-3852
847.378.0500
info@nref.org