Planned Giving

Perhaps the easiest and most common way of making a planned gift is through your will. Yet over 50% of Americans do not have one. If you die without a will, the state will divide your assets among your spouse and children (regardless of their age); appoint an administrator that may cost the estate large fees; and appoint guardians, who may or may not have been your choice, for your dependents. The state makes no charitable contributions, and it will ensure that your estate pays as much tax as possible.

By making a will, you appoint your own administrator; you name the guardian of your dependents; you control applicable taxes; you can create a family or charitable trust; and you can share your resources with your family, church, or other institutions as you choose.

A bequest in a will can take the form of a set amount of money, a percentage of an estate, a specific asset, a trust, or the naming of a church-related organization as a contingent beneficiary.

Sample language for including the church in your will might be: "I give, devise, and bequeath (state amount, asset, or percentage of the estate) to (name and address of your church) to be used (describe use) or as the church's governing board or vestry deems appropriate."

Life income gifts provide you or your designated beneficiary income for life in exchange for your gift. The three most common types of life income gifts are a pooled income fund, a charitable gift annuity, and a charitable remainder trust. In the Pooled Income Fund, gifts ($2,500 gift minimum) are "pooled" with other gifts and invested in a professionally managed investment portfolio. The donor receives the following benefits:

• A guaranteed income for life. The amount of the income depends on the rate of return on the fund's investments. The income can also flow to another designated beneficiary
• An immediate federal income tax deduction. The amount of the deduction is usually based on the age of the donor and/or beneficiaries
• The elimination of capital gains taxes, if funded through appreciated securities such as stocks, bonds, or mutual funds
• A possible reduction in estate taxes

At the death of the final beneficiary, the property goes to the church or church-related beneficiary that you named. The benefits of establishing a Charitable Gift Annuity are similar to that of the pooled income fund with the following differences:

• The minimum gift is $5,000.
• The income for life is guaranteed at a fixed amount.
• A portion of the gift is deductible.
• A portion of the income received is tax exempt.

A Charitable Remainder Trust is available to table gift annuity, the charitable remainder trust provides income for life, an income tax deduction, relief from capital gains taxes (if funded through appreciated property), and a possible reduction in estate taxes. The income fluctuates based on the performance of the portfolio. If you are seeking fixed income annually, a charitable remainder annuity trust is an option to consider.

The Charitable Lead Trust, another estate planning tool, enables you to transfer assets to a trust that pays its income to the church or church-related organization for a set period of time. At the end of the term, the principal and all capital appreciation returns to you or others that you name.

Real estate or securities can be the source of your gift to the church. Using a Charitable Life Estate Contract, for example, you can deed your home, vacation home, farm, ranch, or condominium to the church and retain the right to live on the property and/or receive income from the property for as long as you live. You receive an income tax deduction when the property is deeded to the church and normally avoid any capital gains taxes when making the transfer. Your inheritance and estate taxes may be reduced at the time of your death.

Gifts of appreciated real estate or securities allow you to avoid capital gains taxes. It is important to transfer the stock or real estate to the church prior to selling it. However, if the securities or real estate have decreased in value, you should sell the assets before making the gift, thus establishing a capital loss and a potential tax deduction.

Gifts of tangible personal property, such as jewelry, coins, works of art, automobiles, etc. may also be given to the church. You are responsible for setting an appraised value on the gift. Any gift over $5,000 must be independently appraised.

Life Insurance is another way to make a sizeable gift to the church. For example:

You can purchase a new policy and make the church the owner and beneficiary of the policy. This enables you to "leverage" your gift, ultimately making a much larger gift than otherwise possible. Contributions to your church to pay the ongoing premiums become tax deductible.

You can make the church the owner and beneficiary of an existing policy. The current value of the policy is tax deductible, as are future premium payments. You can make the church a contingent beneficiary of an existing policy, or name the church to receive the proceeds of the policy if the designated beneficiaries predecease the insured.

Also, the remainder value of many retirement accounts can be heavily taxed when left to friends and family, but pass tax-free to your church upon your death. Review with your attorney or financial  advisor to learn if this is an appropriate gift for you.

Required minimum distributions (RMDs) are the minimum amounts you must withdraw from your retirement accounts each year. You generally must start taking withdrawals from your traditional IRA, SEP IRA, SIMPLE IRA, and retirement plan accounts when you reach age 73.

Participants in a workplace retirement plan (for example, 401(k) or profit-sharing plan) can delay taking their RMDs until the year they retire, unless they're a 5% owner of the business sponsoring the plan.

• You can withdraw more than the minimum required amount.
• Your withdrawals are included in taxable income except for any part that was already taxed (your basis) or that can be received tax-free (such as qualified distributions from designated Roth accounts).

Withdrawals from Roth IRAs and Designated Roth accounts (401(k) or 403(b)) are not required until after the death of the account owner. However, beneficiaries of Roth IRAs and Designated Roth accounts are subject to RMD rules.

If you reach age 73 in 2024:

• Your first RMD is due by April 1, 2025, based on your account balance on December 31, 2023, and
• Your second RMD is due by December 31, 2025, based on your account balance on December 31, 2024.

For defined contribution plan participants or IRA owners who die after December 31, 2019, (with a delayed effective date for certain collectively bargained plans), the entire balance of the deceased participant's account must be distributed within ten years. There's an exception for a surviving spouse, a child who has not reached the age of majority, a disabled or chronically ill person, or a person not more than ten years younger than the employee or IRA account owner.

The new 10-year rule applies regardless of whether the participant dies before, on, or after the required beginning date. The required beginning date is the date an account owner must make take their first RMD.