Tax laws intentionally encourage charitable giving which can many times reduce income tax, estate tax and capital gains tax. Using appreciated securities or other assets to make a charitable gift creates some very favorable tax advantages. If the asset has been held longer than twelve months, the donor can deduct the full fair market value on the date of the gift and avoid the capital gains tax. A gift of a highly appreciated asset is an excellent way to fulfill a pledge or make a more substantial gift than what might have otherwise been possible. After checking with your attorney or other professional financial advisor, you might consider the following types of gifts:
- Long-term appreciated securities (stocks, bonds, mutual funds)
- Life insurance policy with Sumner Academy as the primary beneficiary
- Real property
- Personal property (artwork, jewelry, collectibles)
- Bequests in a Will or Trust
Charitable Remainder Trusts:
- Charitable Remainder Annuity Trust provides the donor an annual percentage payment based on the fair market value of an asset for the donor’s lifetime, while the school receives a substantial gift.
- Charitable Remainder Unitrust is a similar plan, but the payments to the donor fluctuate based on the fair market value of the asset each year.