Gifts of Special Assets
When you are thinking about leaving a legacy to Haverford, consider the benefits of giving non-cash assets:
You can name Haverford as the beneficiary of a life insurance policy by filling out a Change of Beneficiary form available from your insurance provider. No immediate tax deduction or gift credit is available for this gift because it is revocable, but you will have the satisfaction of knowing that Haverford will eventually benefit and your estate will receive an estate tax deduction if your policy remains in force. If you no longer need your policy for coverage, you can make Haverford the owner AND beneficiary of your policy and receive a charitable income tax deduction now for the lesser of your cost basis in the policy or its cash surrender value (technically, the “interpolated terminal reserve value”) on the date of transfer. In certain cases, you may arrange to give a partially paid-up policy to Haverford, receive a deduction, and deduct any premiums you continue to pay. Contact us for more information.
HINT: Donate a paid up policy you no longer need and receive a charitable deduction and gift credit for your class reunion.
Qualified retirement plan assets are the most tax-burdened assets you can own. Many people do not realize that if they die with no surviving spouse, any balance remaining in their qualified plan could be subject to multiple levels of taxation before distribution—including federal estate tax (if applicable), income tax, state inheritance tax, and even generation skipping tax--that can claim 70% or more of its value. It is often advantageous, therefore, to donate such assets to charity. This can be done by simply naming Haverford the primary beneficiary of all or a portion of your retirement plan, by gifting any remaining plan assets through your will, or by directing remaining plan assets into a testamentary Charitable Remainder Trust that provides income to your heirs for life or a term of years, after which the principal reverts to Haverford. Contact us to explore the approach that best meets your needs.
HINT: Consider naming Haverford a 25% primary beneficiary with your spouse (spousal waiver of benefits may be required) and 100% secondary beneficiary in the event your spouse predeceases you.
There are many creative ways to donate real estate – including homes, commercial buildings, farms, parcels of land, and mineral rights – that can be very beneficial to you and to Haverford. You may gift your whole property or a percentage of your property (called an “undivided fractional interest”) and take an income tax deduction for the appraised value. You can donate your property and take an income tax deduction, but retain the right to live in it for the rest of your life (called a “Retained Life Estate”). You can use all or a portion of your property to fund a life-income arrangement. You can even sell your property to Haverford at a discount and take a charitable deduction for the difference between the sale price and the appraised value (called a “Charitable Bargain Sale”). Of course, estate-related gifts of real estate through your will or revocable trust are also welcome. Contact us for more information.
HINT: Donate an undivided fractional interest in your home to Haverford before you put it on the market for sale. Your deduction will offset any capital gains tax you owe and Haverford can collect its share of the proceeds when you complete the sale.
Gifts of business interests – such as stock in a closely held corporation, S-corporation stock, shares in a professional corporation, or partnership interests – can make a charitable gift that benefits both you and Haverford. When you make a gift of business interests, you will receive a charitable deduction and may be able to use the assets to fund certain types of life-income gifts, such as a charitable remainder unitrust. Alternately, you may use your business interests to create a charitable lead trust that provides Haverford with income now and returns any remainder to your heirs. In most cases, a gift of business interests will require an independent appraisal. Your interest must be transferrable, not encumbered by debt, and cannot require Haverford to make future contributions to or for the enterprise. Contact us for more information.
Gifts of valuable personal property – such as books, works of art, jewelry, and coin collections – can benefit both you and Haverford. Such gifts, if they qualify under IRS related use rules, can result in an income tax deduction for their full appraised value. Contact us for more information.
Mary-Helen McCulloch, Esq.
Director of Planned Giving