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The Episcopal Diocese
of New York

1047 Amsterdam Avenue
New York, NY 10025
Tel: (212) 316-7400
[email protected]
 

Making a Planned Gift to a Church

The diocesan office responsible for helping you think about and, if you desire, to make a gift to a church is the Stewardship Office. We can talk to you about using your gift in a way that fulfills your goals and accomplishes your objectives. And, we can talk about the financial and spiritual benefits a gift can provide you.

Why Should You Make a Planned Gift?

  • Support something important to you
  • Make a larger gift than you thought possible
  • Teach those you love about the importance of giving, how to give, and the place of the Church in your life
  • Use assets other than cash
  • Avoid paying capital gains taxes on your gift
  • Pass sizable assets to your children and grandchildren, free of estate and gift taxes.
  • Pay you income for life and even to another person for life using the gift
  • Make a gift that does not cost you anything now and that can be revoked at any time

What Planned Giving Can do for You

A Planned Gift can:

  • Pay you a stream of income for your life and/or the life of another
  • Increase the income you may be receiving from an investment
  • Provide a charitable income tax deduction
  • Reduce or eliminate capital gains taxes or estate taxes.
  • Help your church
  • Enable you to leave a legacy for the next generation

Can I See What the Gift Will Look Like?

YES. We can provide projections to you and your financial advisors using the best software available. Based on certain information you give us and economic assumptions, we can describe the expected financial consequences to you and your church, including tax deductions and income. All you need to do is provide us with the following information:

Name
Address
Phone numbers (work and home)
Name of spouse
Type of gift(s) you are considering
Your Age and Age of Spouse

FAX it to the Stewardship Officer at 212-316-7570, or email it.

If you are uncertain of the gift you want analyzed, we'll be happy to make a suggestion. The projection will tell you the amount of income you could receive, the tax deductions, the savings you receive compared with selling the asset, the expected gift to the church, and more.

 

What Assets Can I Use to Make a Planned Gift?

A Check or Cash

Cash or a check is always an acceptable gift to your church. Always request a receipt for your gift. You may need it to receive a tax deduction. You should also ask for year-end written confirmation of a gift of cash or a check from the church. Always make the check payable to the church or other related agency acting as custodian of the funds. Bank accounts can also be made payable upon death (POD) to your church. This will make them pass directly to your church upon your death.

Appreciated Securities

Gifts made with appreciated publicly traded securities such as stocks, mutual funds, and bonds provide attractive benefits. Making a gift of securities held for more than a year can eliminate capital gains taxes and, in most cases, the donor obtains a charitable income tax deduction equal to the market value of the securities. Appreciated securities that are not paying a competitive dividend or are not appreciating significantly might be especially advantageous to you as a gift to your church. Using appreciated securities at year-end is even more beneficial.

An owner of closely held stock may give the stock to their Church and receive important financial benefits. A very attractive feature of this gift is the practice of a company repurchasing the stock from the charity, which allows it to retain its private control and transfers cash to the charity.

Gifts can be made outright or through one of the charitable gift arrangements discussed at this location. The transfer of stock is easy. You can have the stock transferred to a brokerage account opened for the church at your broker, or to the church's existing brokerage account, or by the transfer agent. Remember: the gift doesn't legally occur until the church owns the stock.

Real Estate

Real estate includes vacant land, homes, condominiums, commercial property, rental property, and others. If the property has been owned for at least a year and appreciated significantly, a gift of real estate will eliminate capital gains taxes and broker's commissions if the property were sold. The gift also gives the donor a chance to change investments.

If you are thinking of giving real estate, do not sell it yourself. If you do, you will have to pay any taxes owed on the appreciation. If it is sold by the charity (even if you find the buyer), you can receive a charitable deduction for the entire value without paying any capital gains taxes you might otherwise owe.
Donors can make an outright gift or they may retain some interest in the property, such as the right to live in it for the rest of their lives. You can also place the property in a trust. You can give a fractional interest in the property. Real property may also be given to the church through your Will.

Life Insurance Policies

All insurance policies allow you to name one or more primary, secondary, and contingent beneficiaries. You can give some or all of the proceeds from an insurance policy to a church by naming the church as one of the primary, secondary, or contingent beneficiaries. Naming the church as a contingent beneficiary means the church receives all or part of the proceeds if none of the other beneficiaries survive you.

There are basically two types of life insurance: Term and Whole Life. Term insurance is commonly called pure insurance because the premium is only to insure your life for a term of one year. Whole life is insurance coupled with an investment. Once you have paid your premium in full, you can surrender the policy and receive the cash value.

Retirement Funds (401(k); 403(b); IRAs, Keogh, SEP, Qualified Plans)

All retirement funds allow you to name one or more primary, secondary, and contingent beneficiaries. You can include the church among the named beneficiaries of your retirement plan(s). Retirement funds can be among the best assets to use for a charitable gift. The reason involves the fact that they grow without paying income taxes. If you give them to an individual upon your death, income taxes and estate taxes may dramatically reduce the funds. Your loved ones may only receive a fraction of their present value. Check your situation with your accountant. However, any gifts of retirement funds to a church are made free of any income or estate tax because the gift to a church receives a charitable deduction. You can also make this gift without going to a lawyer or incurring any fee or charge. Check with your accountant or human resources department at your employment.

These funds are also passed by naming a beneficiary. If none is named or all are deceased, the assets become part of your estate and pass according to the Will or laws of intestacy if there is no Will. Retirement funds can be among the most valuable assets you own. They accumulate tax free and thereby grow much faster than taxable assets.

Tangible Personal Property

Tangible personal property is anything you can touch, except real estate. Also, it does not include money or securities of any kind. They are intangible. In order for the owner to take advantage of the largest tax deduction, the charity must use the property for a related use. This means the church uses the gift for a purpose related to its charitable purpose. It the gift is so related, the donor may deduct the full-appraised value of the gift. Otherwise, the donor can only deduct his/her original cost of the gift. Tangible personal property can be delivered to a charity during the donor's lifetime, or it can be given to the charity through the donor's Will. Some states, such as New Jersey, allow testators to leave tangible personal property to people or institutions through a signed list created outside the Will, but referred to in the Will. Trusts can also be used to make the gift.

How to Make a Planned Gift

Wills

A gift through your will (a bequest) can provide significant support to the Church. It also provides the following benefits: (a) the opportunity to make a major gift while preserving assets during life; (b) reduction in federal estate taxes; (c) the opportunity to designate the gift to a specific program at your Church. Remember, your will only passes probate assets. It does not transfer assets that designate a beneficiary, such as life insurance. These are called "non-probate assets."

A gift through your Will can be made in the following ways:

  1. Specific Bequest: Your Church receives a specific dollar amount, a specific piece of property, or a stated percentage of the estate. This is one of the most popular forms of bequests.
  2. Residuary Bequest: The Church will receive all or a stated percentage of an estate after distribution of specific bequests and payment of debts, taxes, and expenses.
  3. Contingent Bequest: The Church will receive part or all of the estate under certain specified circumstances.
  4. Trust Established Under a Will: A trust may be established that provides for both the Church and other beneficiaries.
Life Income Gifts

A donor may make a gift to the Church and receive direct financial benefits. The benefits include an income for life to the donor and/or the donor's spouse and a charitable income tax deduction, in addition to the good feeling that comes from making a gift.

There are several forms of the gifts. They can provide you with an immediate income of a variable or fixed rate, or you may want a gift that will give you a fixed rate of return some time in the future. This last form is especially useful as a retirement planning device. In determining which life income gift is most appropriate, the following questions should be answered:

  • What is the age of the donor and/or the donor's spouse?
  • Will the gift be based on one or two beneficiaries?
  • Will the gift be funded with cash, appreciated securities, or real estate?

Benefits of Life Income Gifts:

  • Income paid to the donor for lifetime and/or spouse's lifetime
  • A charitable income tax deduction
  • Possible avoidance of capital gains taxes on appreciated property
  • A higher yield than from current investments
  • A reduction in federal estate taxes
Charitable Remainder Trust

A charitable remainder trust provides a donor with a lifetime income and a charitable income tax deduction. The donor selects the payout rate, usually between 5% and 7%. The higher the payout rate, the lower the charitable income tax deduction. This gives the donor, and perhaps the donor's spouse, an income every year for life. If the donor funds the trust with appreciated securities, the donor will avoid capital gains taxes.

Donors may choose from two types of charitable remainder trusts: the annuity trust and the unitrust. The annuity trust pays a fixed, guaranteed dollar amount regardless of the trust's investment performance. The unitrust pays the donor a predetermined percentage of the fair market value of the trust's assets as revalued annually.

Benefits:

  • Avoid capital gains taxes on the transfer of appreciated property
  • Increase dividends ranging from 2% to 4% to dividends as much as 6% or more
  • Obtain a charitable income tax deduction
  • Provide income to one or two beneficiaries for life
  • Establish an endowed fund at your Church through the trust
Charitable Lead Trust

A lead trust is the opposite of a charitable remainder trust. The "lead" income is paid first to your Church, and after a number of years (based on a term or a lifetime) the remainder is returned either to the grantor (a grantor lead trust) or to someone other than the grantor, such as the grantor's beneficiaries (a non-grantor lead trust).

It is an extremely tax efficient way of passing assets to future generations while, at the same time, making a large donation to the church. The church is given a stream of dependable annual income to carry out its mission. The donor may be able to pass the asset to heirs at a very low tax cost.

Benefits:

  • Philanthropic satisfaction
  • Principal returns to donor
  • Tax deduction taken in the year of the gift
  • Church receives outright gift for term of trust
  • Church can plan for longer range.
Life Insurance

The need for insurance coverage usually lessens as we age. by that time, insurance has served its original purpose of protecting our families at it can be used for other purposes.

There are two types of insurance: Term insurance protects us for a stated term, usually one year. Whole life buys the policyholder a death benefit and will also pay the holder the cash value of the policy if he/she terminates the policy before death.

A life insurance policy can be given in an outright gift. The donor gives-up all rights of ownership in the policy and thereby receives an income tax deduction. A donor can also name a charity as a total or partial beneficiary of the policy, continue to maintain the policy, and receive a charitable tax deduction for premiums he or she makes to keep the policy in force. You have to change the beneficiary form.

Here are the alternatives in making a gift of life insurance:

  • Make a gift of an existing life insurance policy.
  • Establish a new policy and name your Church as the owner of the policy.
  • Use life insurance to replace the value of gifts to the Church.
  • Change your beneficiary to give a proportion to the church.
Retirement Plans

These plans include IRAs, Section 401(k) and 403(b) Plans, Qualified Pension Plans, and Qualified Profit-Sharing Plans. You can transfer all or part of these assets to a charity. These options include an outright gift, designation of a beneficiary, bequest, and transfer to a charitable remainder trust. The last three options are the most frequently used. An outright gift subjects the funds to certain statutory limitations of charitable tax deductions.

Designation of beneficiary. A donor can designate a charity to receive all or a stated percentage of a retirement account upon death. The donor receives an estate tax charitable deduction. Please note: As regards some retirement plans, your spouse must also sign a statement agreeing to include the church as a beneficiary.

Bequest. In the absence of a beneficiary designation, you can transfer your retirement accounts upon your death through your will. A bequest of a retirement account should be a specific bequest to avoid income taxation of the funds.

Trust. If the plan permits, a donor may transfer the account to a charitable remainder trust. The plan donor will be taxed only on the funds received by him/her. At death, the balance will be paid to a charitable remainder trust, which can pay income to one or more beneficiaries for life, with the remainder going to the charity upon the death of the last beneficiary.

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