Ways to Give
Income taxes and estate taxes can be greatly reduced by choosing the most advantageous type of property, timing, and method of giving to the Virginia Council of Churches. Such tax savings may enable individuals to make larger gifts than ordinarily thought possible. The most practical giving plan depends upon a person’s particular interest and circumstances and should be determined in consultation with a VCC representative as well as with a professional tax advisor. Following are brief descriptions of some of the methods most widely employed. The Council will be glad to provide further information of such plans to prospective donors or their counsels.
Gifts of Cash
Gifts of cash or unappreciated property are deductible up to 50% of an individual’s contribution base. Generally, an individual’s contribution basis for a year is the individual’s adjusted gross income. For spouses filing joint returns, these ceilings apply to the couples’ combined contributions and their combined contribution basis. If a person’s charitable contributions exceed the maximum allowable for a given year, the excess can be carried forward and deducted in the five succeeding tax years (subject to the later year’s ceiling).
Gifts of Appreciated Property
If one makes a direct gift of securities, real estate, or other property that has been held for more than 12 months and has increased in value since acquisition, there will be no tax on the capital gain; yet, the gift is deductible for its full fair market value, subject to the ceiling of 30% of adjusted gross income (and with the five year carryover privilege for any part of the gift that exceeds the ceiling).
Gifts of Personal Property
If one makes a personal property contribution, the contribution deduction may be taken for the amount the donor has paid to acquire the items. This may or may not be the fair market value if you were to sell, rather than donate, the materials. An independent, qualified appraiser must value any gift in the amount of $5,000 or more (including vehicles).
Bequests are entirely free from Federal estate taxes, without limitation on amount. A bequest to the Virginia Council of Churches in one’s will can substantially reduce, and in some cases eliminate, estate taxes. Specific bequests of real estate, valuable collections, or other property may serve to avoid the necessity of paying taxes on the value of such property from the liquid assets of the estate. A bequest may specifically state the amount or describe the property that VCC is to receive, or it may be written to provide that VCC receive a specified share of the remainder of the estate after provisions for other beneficiaries are carried out. Alternatively, VCC may be named as a contingent beneficiary, to receive benefits only if it becomes impossible to carry out other provisions of a will. A bequest may be unrestricted as to purpose or it may be designated for a special purpose within the scope of the Council’s programs.
Gifts of Life Insurance
If a life insurance policy is no longer needed for its original purpose, one may wish to name the Virginia Council of Churches irrevocably as its owner and sole beneficiary. The individual is entitled to an income tax deduction approximating the policy’s cash surrender value; any future premium payments made on the policy are deductible as charitable contributions. The ultimate proceeds of the policy are, of course, excluded from one’s taxable estate.
Life Income Plans
A life income gift allows a person to make substantial gifts to the Council now, while retaining income from the gift for the individual’s lifetime and, if desired, that of a survivor. The gift is used by VCC only after the death of all income beneficiaries. These plans permit one to accomplish this and to receive both immediate and deferred tax benefits as well.
Trusts, such as the Unitrust and the Annuity Trust, are the most commonly used income trusts. The form most suitable will depend upon the donor’s age, resources, and estate objectives. Each plan benefits the Council without sacrificing the donor’s present financial security; provide professional management of the donated assets; bypass capital gains tax on securities or other property transferred to fund the plan; offer a charitable contribution deduction for a portion of the total amount contributed; and provide ultimate estate tax savings.