By working together, the Protect Kids FoundationTM, in conjunction with parents, neighbors, students, and educators can make a substantial difference in improving our schools and edifying our culture. This in turn nurtures our children and enhances their future. Your financial support enables us to continue the important programs and services dedicated to these ends.
There are a number of ways you can fulfill your own tax needs and philanthropic desires and simultaneously help perpetuate the work of the Protect Kids FoundationTM. By choosing the right assets for your gifts and exploring the wide range of gift plans available, you can maximize the impact of your gifts as well as optimize your tax and financial benefits.
Many different assets can be used in your gift planning, including cash, stock or mutual funds, real estate, collectibles, life insurance, IRAs, and qualified retirement plans.
Outright gifts are extremely important to Protect Kids. We also offer life income gifting programs that include charitable gift annuities and charitable remainder trusts. These arrangements can help you enhance your income for life while providing you with significant income tax and capital gains tax savings. These plans can also help you save for future retirement.
Bequests and other legacy gifts are also helpful to Protect Kids, assuring our future ability to protect new generations of children and promote improved academic education for years to come. Legacy gifts made through your will, living trust, life insurance policies, IRAs, or qualified retirement plans will all pass to Protect Kids completely free of estate tax.
It is also possible to provide for loved ones and for Protect Kids through arrangements that provide loved ones with income for life, or use of your personal residence or farm. All of these arrangements provide significant gift and estate tax savings.
We would be pleased to provide further information on any of these gift arrangements, and to prepare confidential illustrations on how these plans might work for you. Our recommendations should always be discussed with your own legal/tax advisors.
Please review the following information and contact us if you would like to explore ways to support the Protect Kids’ mission and meet your own needs.
Gifts of Cash
An outright gift of cash is the simplest way to support the Protect Kids FoundationTM. Cumulative outright gifts of cash to charities are deductible up to 50% of your adjusted gross income, with a five-year carry-over for any excess.
Cash can also be used to fund a life income arrangement such as a charitable gift annuity or charitable remainder trust. This can enhance your income for life. If you don’t need income immediately, you can structure a gift to provide future retirement income. Either way, such a gift can provide significant income tax savings.
You can donate appreciated residential or commercial real estate outright to the Protect Kids FoundationTM. This will provide you with an immediate income tax deduction for the full fair market value, as long as you have owned your real estate for more than one year. (This assumes that no depreciation would be recaptured as ordinary income on a sale.) You will need to substantiate this deduction with a qualified appraisal. You will also completely avoid immediate capital gains tax. Cumulative gifts of appreciated assets such as securities and real estate to charity are deductible up to 30% of your adjusted gross income, with a five year carry-over for any excess.
You can also enhance your income for life by donating unencumbered residential or commercial real estate to a charitable remainder trust. The trust can sell your property without immediate capital gains tax and reinvest the proceeds to provide you with lifetime income. You will also get an immediate income tax deduction for part of the value. You cannot continue to use a property after it is donated to a charitable remainder trust.
If you wish to donate a property to the Protect Kids FoundationTM but want to continue to use it for a period of time, or have loved ones use it for a period of time, you can donate a personal residence, vacation home or farm to Protect Kids now, but reserve the right for yourself or others to live there for the remainder of your life, or the life time of others, or for a designated period of time. By deeding the property to Protect Kids now and retaining lifetime use, or use for a designated period of time, you will get a significant income tax deduction for a portion of the value of the property. You, or the individuals with the right to occupancy, will be responsible for continuing to pay carrying costs (e.g., taxes, insurance and maintenance) during the designated period.
Collectibles – Art, Antiques, Jewelry, Stamps, Coins
If you donate an appreciated collectible or collection that Protect Kids will sell to obtain funds for its programs, your deduction will be limited to your cost basis. This gift, along with your cash gifts to charity, will be deductible up to 50% of your adjusted gross income, with a five year carry-over for any excess.
You can enhance your income for life by donating a valuable collectible to a charitable remainder trust. (Suggested minimum $100,000.) The trust can sell the collectible without paying immediate capital gains tax and pay you income from the full sales proceeds. This tax saving is substantial. You will also get an income tax deduction for a portion of the cost basis when the trust sells the collectible.
You may also want to leave a valuable collectible to Protect Kids in your will or trust. The full value would be deductible for estate tax purposes.
You can also donate a life insurance policy you no longer need to the Protect Kids FoundationTM. For a cash value policy, this would entitle you to an immediate income tax deduction for the lesser of the cost basis or the fair market value. For a term policy your deduction would be for the unused portion of the premiums paid. If your policy is not fully paid you may make tax-deductible contributions to Protect Kids to cover future premium payments.
If you don’t want to make an irrevocable gift of the policy itself, you can simply name the Protect Kids FoundationTM as a beneficiary of any individual or group term life insurance policy. Proceeds received by Protect Kids would be completely deductible for estate tax purposes. You can name the Protect Kids FoundationTM as a contingent beneficiary in case a loved one designated as beneficiary does not survive you.
You can also use your life insurance policy to provide for loved ones who survive you and for Protect Kids. You can name a charitable remainder trust the beneficiary of your life insurance policy. Trust distributions can then be made to one or more designated beneficiaries (e.g., a spouse, close friend, sibling, child or grandchild) for life or a term of years, after which Protect Kids would receive the principal. You could name the Protect Kids FoundationTM as the beneficiary of the policy, establishing a charitable gift annuity that will pay lifetime income to one or two loved ones. Either way, the entire insurance proceeds would be deductible for estate tax purposes if your spouse were the sole beneficiary, and part of the proceeds would be deductible if others are named as beneficiaries.
IRAs and Qualified Retirement Plans
You can name the Protect Kids FoundationTM as the beneficiary of all or part of the amounts remaining in your traditional IRA, Roth IRA or other “account type” qualified retirement plans (e.g., 401(k), profit-sharing and money purchase plans) after your lifetime.
Traditional IRAs and qualified retirement plans are often considered assets of choice to leave to charities, since they are subject to two taxes when left to heirs other than your spouse. They are not only subject to estate tax, but are also subject to income tax as assets are withdrawn by your heirs. Both taxes are completely avoided when these assets are left to the Protect Kids FoundationTM, ensuring that every penny of your hard-earned funds will be used for our projects and services.
You can also use your traditional IRA or qualified retirement plans to provide for loved ones by naming a charitable remainder trust as the beneficiary. The trust would make payments to one or more surviving loved ones (e.g. your spouse, a sibling, a friend or a child or grandchild) for life or a term of years, after which the principal would come to the Protect Kids FoundationTM. You could name Protect Kids as the beneficiary of the retirement plan, establishing a charitable gift annuity that will pay lifetime income to one or two loved ones. Either way, the entire value would be deductible if your spouse was the sole beneficiary, and part of the value would be deductible if others are named as beneficiaries.
If a loved one is named as the direct beneficiary of a retirement plan, you may want to name Protect Kids as the contingent beneficiary, in the event that your loved one does not survive you.
Charitable Gift Annuities
The Protect Kids FoundationTM offers two types of charitable gift annuities. An immediate payment gift annuity pays you a set dollar amount each year beginning immediately and continuing for the rest of your life. If you don’t need income right away, you can defer your income with a deferred gift annuity. Either way, you will get a high and secure rate of return along with substantial tax benefits. A charitable gift annuity is simple to establish.
a) Immediate Payment Gift Annuities
You can establish your gift annuity with a gift of cash, stock or mutual funds (minimum $5,000). Your annuity rate will depend on your age (at nearest birthday) when you make your gift. You will also get an income tax deduction when you make your gift. The spending power of your annuity will be increased by favorable tax treatment. Part of the income may be completely tax-free. [Example: Make a cash gift of $10,000 at age 80 and get $710/year (7.1%) for life. Approximately $520 of the $710 will be completely tax-free for the first 9.4 years. You will also get an immediate income tax deduction for approximately $5,100.]
b) Deferred Gift Annuities
A deferred gift annuity enables you to defer your annuity payments until a stated future date. Your annuity rate will depend on your date of birth and the exact period of time (years and days) from the date of your gift to the date payments begin. The longer you defer your payments, the higher your return. You can donate cash, stock or mutual funds (minimum $5,000) to establish your gift. [Example: Donate $25,000 of appreciated stock at age 50 with payments beginning at age 65. You will get an annuity rate of approximately 9.8% of the full value of the securities you donate ($2,450/year), no matter how low your cost basis. You will also get an immediate income tax deduction of approximately $9,275. This can be used to shelter high income, a bonus or reportable income from the exercise of nonqualified stock options. If you defer payments until age 68, your annuity rate will jump to 11.6%.]
Charitable Lead Trusts
A charitable lead trust would make payments to one or more charities for a designated period of time. Then principal would be distributed to your heirs (generally children or grandchildren). The term of the trust during which payments are made to charity can be a specific number of years, your lifetime, or the life or lives of certain other designated individuals. You can establish a charitable lead trust now or do it through your will or living trust. Either way, by waiting until the end of the trust term to receive the assets, your heirs will receive them at significantly reduced gift or estate tax. A charitable lead trust can be particularly useful if you have a large estate and want to see a period of time pass before your heirs receive the gift or that portion of their inheritance.
Charitable Remainder Trusts
A charitable remainder trust is a tax-exempt trust that makes payments to you and/or others for life or a term of years. (Suggested minimum – $100,000.) Principal is then distributed to the Protect Kids FoundationTM or is divided between Protect Kids and other charities. Tax benefits include the avoidance of immediate capital gains tax on the sale by the trust of appreciated assets that you donate, so that full sales proceeds can be reinvested for your benefit. This makes a charitable remainder trust ideal for gifts of appreciated securities, real estate or collectibles.
a) Charitable Remainder Annuity Trusts
These trusts pay you a set dollar amount each year, equal to your chosen percentage of the original trust value. (Establish a 5% trust with $100,000, and get $5,000 every year.) This provides the security of a fixed return. This type of trust is generally funded with cash or marketable securities (stock or mutual funds). You cannot add to a charitable remainder annuity trust after it is created.
b) Standard Charitable Remainder Unitrusts
A unitrust pays you your chosen percentage of the changing value of the trust each year. If your trust grows over time, so too will your income. This can provide a valuable hedge against inflation. This type of unitrust is generally funded with cash or with marketable securities. You can add to a unitrust at anytime.
c) FLIP Unitrusts
This is a special type of unitrust that can accommodate gifts of difficult to market assets such as real estate, closely held stock or collectibles. This type of trust can also be used to enhance future retirement income, if you don’t need income immediately. In either case, your income maybe limited in the beginning, but your trust will FLIP to a standard unitrust (see above) at a specified time (generally on January 1 after the sale of a difficult-to-market asset or at the age you want retirement income).
d) Planning Opportunities
A charitable remainder trust can be tailored to your personal situation. It can be used to enhance your income immediately or enhance your future retirement income. The wide range of assets that can be used to fund a charitable remainder trust provides the following planning opportunities.
Publicly traded stock: Diversify a stock portfolio tax-free. (This is extremely valuable for executives whose portfolios are overloaded with one stock.)
Closely held stock: Sell all or part of a business without paying immediate capital gains tax. (Note: The charitable remainder trust is prohibited from selling the stock to certain family members.)
Real estate: Sell a personal residence, vacation home, residential or commercial property tax-free.
Collectibles (art, antiques, jewelry, stamps, and coins): Convert an asset you no longer use, enjoy owning, or have room for, into an income stream tax-free.
Bequests are extremely important to the Protect Kids FoundationTM. By leaving a legacy to Protect Kids in your will or living trust, you will help us in our continuing work to improve public education and to stop attempts to socially engineer our children.
Because of extensive changes in the estate tax through 2011 as a result of the 2001 Tax Act, this is an extremely important time to review your estate plans. Reductions in the estate tax over time may mean that considerably more will be available to leave to charities and loved ones after your lifetime.
You can designate a specified amount of money to Protect Kids or you can leave a percentage of your entire estate or a percentage of the estate remaining after specific bequests are made to loved ones. You can also leave specific assets to Protect Kids, which would pass to us completely free of estate tax.
You can also name Protect Kids as a contingent beneficiary of a bequest designated for a loved one, in case that individual does not survive you.
Gifts of Stock
Using appreciated stock or mutual funds is a particularly smart way to make an outright gift to the Protect Kids FoundationTM. You will get an income tax deduction for the full value of appreciated securities you have owned more than one year. You will also completely avoid immediate capital gains tax. Cumulative gifts of appreciated assets such as securities and real estate to charity are deductible up to 30% of your adjusted gross income, with a five-year carry-over for any excess.
Publicly traded securities can also be used to fund a life income arrangement such as a charitable gift annuity or charitable remainder trust. This can enhance your income for life. If you don’t need income immediately, your gift can be structured to enhance your future retirement income. Either way, such a gift can provide significant income tax and capital gains tax savings.
If you are about to sell a privately held C Corporation, you can also donate part or all of your stock to a charitable remainder trust before the sale. You will avoid immediate capital gains tax on the portion donated and enhance your income for life. You will also get an income tax deduction for part of the value
Stock held in electronic form can normally be transferred electronically. Stocks held in certificate form require special handling. Please notify us before you initiate any stock transfer so we can ensure a smooth process and proper acknowledgement of your contribution. Gifts of securities and mutual fund shares may take several weeks or more to process. Please be sure to allow adequate time to complete the transaction, especially in December as the end of the tax year approaches.
Many Protect Kids donors maximize their support through matching gifts or workplace giving campaigns with their employer. If your employer has a matching gift program already in place, please consider leveraging your support of Protect Kids with them or contact the Protect Kids FoundationTM if you have any questions.
We would be pleased to provide further information on any of these gift planning arrangements, and to prepare confidential illustrations on how these plans might work for you. Simply contact us. We will provide you with what you need.