ESTATE GIVING TO THE BIG RED BARN RETREAT

The changing tax laws can have a significant impact on your estate for your heirs. Therefore, we recommend that you contact an estate attorney who specializes in gifting techniques

There are a variety of tax-wise ways which may be used to make desired gifts. The different methods must take into account the personal objectives, the income tax situation and the estate planning goals of the donor. In the end, you may be amazed to see how much more generous you can be with tax-wise planning. 

Here are the different ways of giving:

Gifts Of Cash

The most popular method of giving is to simply write a check. If a person itemizes their deductions, cash gifts are generally deductible up to 50% of adjusted gross income

Gifts of Stock

A gift of stock to the Big Red Barn Retreat will generally not result in capital gains tax, and the value of the charitable deduction is the full value of the stock on the date of the gift. Gifts of stock are generally deductible up to 30% of your adjusted gross income. As with gifts of cash, any excess which cannot be deducted in the year you make the gift may be carried forward for up to five years.

Gifts of Real Estate

A gift of real estate is generally deductible at its full market value in the year that the gift is made. An independent appraisal is generally required to substantiate the deduction. As with the gift of appreciated stock, a gift of appreciated real estate generally does not require the donor to recognize any capital gain on the gift.

A simple bequest under a Will results in a charitable deduction for estate tax purposes and can easily be added to an existing Will by executing a simple Codicil. **

Charitable Remainder Trusts (CRT)

If you desire is give away property and retain an income for life with the remainder of the trust passing to charity after your death, you would set up a Charitable Remainder Trusts (CRT). These type trusts are particularly attractive to receive highly appreciated assets which produce little or no income. For example a gift of appreciated land to a CRT generates no capital gains at the time the gift is made. The trustee then sells the land with no capital gains and invests the money to produce a 5% to 10% stream of income for the donor for life. Upon the death of the donor the balance remaining is to the designated charity. The donor receives an income tax deduction when the gift is made. This strategy works best when interest rates are high.

Charitable Lead Trust

A Charitable Lead Trust (CLT) is almost an opposite approach from the CRT. A gift is given to the Big Red Barn Retreat and an annuity is paid for a term and at the end of the term the remainder of the trust assets are given to an individual beneficiary.

Retirement Plan Gifts

While most will agree that a retirement plan is a delightful thing to have producing income for retirement, most are startled to find that they are particularly poor to inherit. The obvious reason that retirement plan benefits are poor to inherit is that they are subject to estate taxes and the balance left after estate taxes is subjected to income taxes. It is not unusual, after the application of 37% to 60% estate taxes and then 25% to 40% income taxes to see children wind up with only thirty cents on the dollar. While the IRS does recognize this as double taxation and provides a method for beneficiaries to claim an annual credit, this is sometimes referred to as the forgotten credit...for obvious reasons.

Therefore, with retirement plans, they can designate a portion of their IRA, Keogh, 401-K or pension plan benefits to pass to a charity. Since there are no estate taxes or income taxes when this is properly done, this represents the most leveraged giving method possible.

Life Insurance

A gift of a new or existing life insurance policy to The Big Red Barn Retreat can be made and the giver will receive income tax deductions of remaining premiums.

**As an aside, a couple of interesting footnotes should be added here.

(a) Since there are generally no estate taxes paid at the death of the first of a husband and wife to die, it is sometimes helpful to state in a Will that I give $10,000 to my wife with the request that she give it to The Big Red Barn Retreat. Assuming you trust your spouse to carry out your requested gift, this will result in an income tax deduction for her and a net lower cost to making the gift. Obviously, this bequest should also say that if your spouse has predeceased you then the gift is made directly from your estate.

(b) It is advantageous to give authority in a Power of Attorney to make an advance of any gifts otherwise directed to be made after your death in the Will if it is apparent that death is imminent. This will result in an extra income tax deduction in the last year of your life that would otherwise be lost.