Your planned gift for your church through United Methodist Foundation will support the ministry through your church and encourage giving from others. Gifts can be current or deferred. Both may qualify for a federal income tax deduction.
A gift for your church planned through your United Methodist Foundation will...
There are many ways to give. The wise steward looks at that which God has entrusted with him or her and decides what will constitute a worthy gift, remembering that “God’s Grace shown to us must flow through us.”. It therefore follows that one needs to decide:
The cash gift is always a welcome gift to any charitable cause. More people give cash (usually in the form of a check) than any other type of gift. Cash gifts may be deductible on your income tax return if you itemize deductions (limited to 50% of adjusted gross income). However, the cash gift is sometimes smaller than you, as the donor, would like to give because of limited cash available at the time of the gift. The cash gift may also cost you more to give than a gift of some other kind of property. Thus, it is important to be aware of the variety of other kinds of gifts.
A gift of appreciated securities may enable you, as donor, to give at a lower cost. In addition to benefiting from a charitable tax deduction for the full value of the securities on the day they are given, capital gains tax may also be avoided on gifted long-term securities. Many who own appreciated securities paying minimal dividends have chosen not to sell due to the capital gains consequences. (If the owner sells these securities, capital gains tax must be paid on the difference between their tax basis, i.e., the value of the securities when they receive them and the value at the time the securities are sold.)
When giving appreciated securities, you can satisfy a desire to make a charitable gift and also take advantage of making the gift at a reduced cost. If the proper procedures are followed, donors can avoid paying any capital gains tax. And, the church which receives the appreciated securities can sell them without paying any capital gains tax.
Read more about how UM Foundation can help with the stock sale transaction
Some of the largest charitable gifts made each year are gifts of real estate. Gifts of real estate can be made in a variety of ways:
An outright gift. Many of the same advantages indicated earlier for gifts of securities apply to gifts of real estate. Thus, highly appreciated real estate makes a very cost-effective gift since a charitable income tax deduction may be realized along with the avoidance of capital gains taxes. If the income tax deduction is larger than you can take the year of the gift, the excess may be carried over for up to five additional years. (Some special benefits may also exist for donating depreciated property.)
Reserving a life estate. You can deed your home or family farm to your church while reserving the right to use the property for life. By doing so, you will benefit from a significant income tax deduction in the year of the gift arrangement is made for the present value of the gift to the church. This removes your property from the reach of estate settlement expenses.
Funding a life income gift. There are a number of life income plans which can be funded with real estate. Each plan has unique benefits for donors and churches. You can benefit from life income and may also benefit from significant income tax deductions, avoidance of capital gains tax, and a reduction of estate taxes.
Personal property such as automobiles, works of art, antiques, coin or stamp collections, jewelry, and other items can make generous gifts to the church. There are some tax benefits which depend upon the value of the property given and how the gift is to be used by the church.
There are many ways to make charitable gifts through life insurance – each with significant benefits for the church and for the donor.
Remember, the fact that one is uninsurable does not always rule out using life insurance to make charitable gifts since the policy can be written on the life of another family member.
There are times when people want to give an asset they own to the church, but they need (or want) to retain the lifetime income from that same asset. For these people life income gifts provide excellent opportunities to make a gift while retaining the income for a specified number of years, for their lifetime, or for their and their spouse’s lifetime. Life income gift plans offer opportunities to plan for educational expenses, retirement needs, and other present and future needs of family members along with significant income tax and estate tax advantages. The income can be fixed or variable, depending on the needs and desire of the donor. Examples of life income gift plans are:
United Methodist Foundation can assist donors with life income gift plans. It may serve as trustee and administer such plans which benefit local churches and other causes of the Church which the donors have designated, or if it does not serve as trustee it may assist the donor in securing a trustee. United Methodist Foundation has expertise and technical support to work together with the local church and the donor to accomplish the needs and wishes of both the donor and the church.
The charitable lead trust has been called the reverse of a life income trust. You, as donor, assign the income to the church with the remainder (at a specified time) being returned to you or passed on to other family members. There can be significant tax benefits to donors since a charitable tax deduction is available when the charitable lead trust is first created.
Often, you can include the church as a beneficiary of an IRA, profit sharing plan, Keogh Plan, tax sheltered annuity, or other pension plan. The charitable gift thus comes from the remainder in the plan following the death of the donor and/or all other named beneficiaries. Not all retirement plans allow this to be done; but with plans that do, you will need to complete the necessary documents through the plan administrator to name their church as a beneficiary. The church may receive part or all of the remainder as a secondary beneficiary of the remainder in the plan, only after the death of the donor and spouse as the final beneficiary to receive any remainder in the plan when all other beneficiaries are deceased.
“E,” “EE,” and “H” bonds may be used to make outright gifts. They may also make very meaningful gifts through your will. These bonds are also useful in funding life income plans with some distinct advantages for the donor. Unlike other types of gifts with increased value, government bonds must be cashed by the owner. Through careful planning, a large portion, if not all, of the taxes on the earnings of the bonds may be offset. When government bonds are transferred to the Church through your will, income and estate taxes may be avoided.
This document provides general information. United Methodist Foundation is not engaged in rendering legal or tax advisory services. For advice or assistance in specific cases, the services of an attorney, CPA, bank trust office, or other professional financial or tax advisor should be obtained.
Talk with your pastor, an officer of your church, or call United Methodist Foundation, Inc. at 800-555-4718 for further information or assistance.
Two phrases – ‘Will you help?’ and ‘Yes I will’ – comprise the most beautiful duet in American history.
- David S. Ketchum