In planning for the future financial well being of yourself or your loved ones, you may wish to begin with your Will. A living trust may be used in place of, or in combination with, a Will. Rely on your attorney and other advisors to guide you through the estate planning process.
There are many ways to make a charitable gift to EPAC. In addition to the fact that your gift will provide for the continuing operation of EPAC, your gift may have significant favorable tax benefits. We have outlined for you several methods for charitable giving. However, you should consult your own tax counsel to determine how the rules regarding charitable giving apply to you.
One of the simplest methods for giving is to make a current gift of property to EPAC. This gift can consist of money, stock, bonds, life insurance and real estate. A gift of property that has appreciated in value may be especially attractive as discussed under "Tax Considerations".
Gifts By Will
There are numerous options for making gifts in your Will such as:
A specific gift of money or other property such as stock or real estate.
A gift of a certain percentage of your real estate.
A residuary gift transferring the remaining balance of your estate to EPAC.
Charitable Lead Trusts
A charitable lead trust would provide a current income for EPAC for a period of time that you determine; 5, 10, 15 years or more. At the end of the trust term, the trust assets would be distributed to the loved ones you have designated. With the use of a charitable lead trust, it may be possible to transfer assets with little or no estate taxes.
Charitable Remainder Trusts
Charitable remainder trusts allow you to contribute cash, appreciated securities or real estate to a trust that will provide an income to you or loved ones, while making a significant gift to EPAC. You will also receive a charitable tax deduction and avoid capital gains on contribution of appreciated assets.
There are two types of charitable remainder trusts: unitrusts and annuity trusts. Both can be funded with cash and marketable securities. When a trust is established, a trustee makes varying payments each year (in case of unitrust)or fixed payments (in the case of an annuity trust). At the death of the last income beneficiary, or when the predetermined term of years has elapsed, the proceeds are distributed to EPAC for its endowment and memorial fund to perpetuate it's work.
Gifts of Insurance Policies
Many people have insurance policies that have outlived their initial purpose. For example, policies covering the cost of a child's education or to provide financial support can make a wonderful gift to EPAC.
You can make a significant gift by purchasing a new policy and naming EPAC as the beneficiary or as the owner and beneficiary. You may also designate a percentage of your life insurance to EPAC.
While most charitable gifts are made in the form of cash, important advantages are possible when gifts are made using non-cash property that has increased in value.
When stocks, bonds, mutual funds, or other appreciated assets are sold, tax is due on any capital gain.
One way to avoid or delay the capital gains tax is to make a charitable gift of the property. When you give appreciated property that has been held long-term, you may take a deduction based on the current value of the property, rather than the cost.
The combination of bypassing tax on capital gains, receiving an income tax deduction, and making a charitable gift can be beneficial to you and EPAC.
Increasing Your Retirement Income
If you have property that has increased in value, but yields little income, using it to fund a charitable trust, or gift annuity can be of real benefit to enhance your retirement income. The income you receive from the gift will be based on the full value of the property contributed, without reduction for the capital gains tax. You will also enjoy tax savings from the charitable deduction received when you create the gift. The amount may be invested for greater income.
Through careful planning, it may be possible to increase your income from investment assets, while receiving the satisfaction of making a very meaningful gift to EPAC.
This information is intended to help guide you through the gift planning process. More information is available to you on request. Please contact EPAC's Executive Director at 717-632-9356 ex. 306 or e-mail at DAdler@theeich.org.
Neither the author nor the Eichelberger Performing Arts Center is engaged in rendering legal services or tax advisory services. For advice and assistance regarding these issues including gifting, Wills and trusts, the services of an attorney, accountant or other professional advisors should be obtained. The purpose of this communication is to provide information of a general character only. Also the information is subject to change as the tax law may change.