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Ways to Donate Outright Gifts: Gifts of Cash, Securities, Real Estate, Personal Property Remembering Cabrillo in Your Will: Bequests of Cash and Real Property Income Producing Gift Plans: Unitrusts, Charitable Lead Trusts, Gift Annuities Your donation to Cabrillo is an investment in the human potential of our students and the wider community we serve. Your main reason for giving is probably to support and strengthen Cabrillo’s excellent programs. However, by structuring your gift with tax consequences and income opportunities in mind, you may be able to achieve some additional financial goals as well. Options for giving are listed below. Melinda Silverstein, Executive Director of the Cabrillo College Foundation, can help you to develop a giving plan that meets your needs. Call the Cabrillo College Foundation at 831-479-6338 or email Melinda Silverstein to arrange an appointment.
Outright gifts allow donors to see gifts at work during their lifetime. All outright gifts can result in income tax savings, but donors may realize multiple benefits by carefully structuring such gifts. Donors may give unrestricted funds or choose to target a gift to a particular program. Described below are gifts of Cash, Securities, Real Estate, Personal Property, Closely Held Stock, and Founders Stock. The simplest way to give If you wish to make a straightforward gift of cash, your gift is tax deductible in the year in which it is made. You can deduct an amount equal to 50% of your adjusted gross income. Amounts over 50% can be carried over for use during the next five years. Enjoy double tax savings Gifts of appreciated securities can provide substantial income tax savings. If you have held securities for more than a year, you are allowed to deduct the market value of the securities without paying tax on the appreciation, for an amount up to 30% of your adjusted gross income in the year you donate. Amounts over 30% can be used over the next five years. Remember, do not sell appreciated securities and then donate the proceeds. Transfer the stock to Cabrillo to make full use of the potential tax savings. If you wish to donate stock that has fallen in value, you should sell the stock at a loss and donate the proceeds. The loss can be used to offset gains, and you can receive the normal charitable deduction for donating the proceeds.
Maximize the value of your property A gift of real estate is often an excellent way to support Cabrillo. During the year that you transfer title to the Cabrillo College Foundation, you can take a charitable income tax deduction for up to 30% of your adjusted gross income. Amounts over 30% can be carried over for use during the next five years. To take advantage of potential tax deductions, it is important that you transfer title to appreciated real estate that you have held more than a year to the Cabrillo College Foundation rather than selling and donating the proceeds. You can then use the fair market value to establish your charitable deduction without being subject to capital gains tax on a sale.
Real estate gifts can offer many benefits to donors, but they can be complicated. We ask that you discuss your situation with us in advance of making your gift. Cabrillo financial advisors can evaluate your potential gift to decide if the gift can be accepted, with marketability an important factor, and can insure that you structure the gift to your advantage.
Cabrillo can benefit from your valuable possessions Cabrillo can accept any type of asset as a charitable contribution, including personal property such as art, jewelry, and antiques. However, donors can deduct the fair market value of the gift only if it is related to Cabrillo's function as an educational institution. For example, if the gift of a rare book or manuscript can be used by the library, you can deduct the fair market value. For gifts that Cabrillo must sell to support its educational mission, donors can deduct only the cost basis. Call us to discuss the appraisal and classification of a donation of personal property. (The restriction regarding direct relationship to Cabrillo's educational mission does not apply to bequests, only to lifetime gifts. Your estate can deduct the fair market value of any bequest of personal property).
A gift of life insurance that you no longer need is another way to fulfill your charitable goals. You can receive a current income tax charitable deduction when you assign ownership of a policy to the Cabrillo College Foundation and name the foundation as beneficiary of a life insurance policy. If the policy is not fully paid-up, you can take a deduction for the annual premiums. Even if you wish to continue to hold your life insurance policy, you can still name the Cabrillo College Foundation as a beneficiary or a contingent beneficiary of the policy.
Closely held stock typically is held by the owner of a corporation who has not received dividends on the stock. The owner can sometimes release retained earnings from the business though a charitable gift, without being taxed at both the corporate and personal level. This somewhat complicated transaction requires careful planning and attention to IRS statutes. Call us to discuss your individual situation.
An opportunity for entrepreneurs A company donating founder stock can claim a tax deduction at the beginning of its business venture, when such deductions can be especially helpful. If the business is successful, non-profits can often sell founder stock to realize substantial gains. The donating company receives the tax deduction regardless of whether the business goes forward.
Remembering Cabrillo in Your Will: Charitable Bequests
Charitable bequests allow you to contribute to Cabrillo without giving away assets you may need during your lifetime. We can provide you and your legal advisor with language to include in your will that ensures that your wishes will be carried out. As with any gift, you can designate a program to support, or you can make an unrestricted bequest and let Cabrillo determine the best use for the donation. One popular option is to make a bequest in memory of a loved one. Another is to establish an endowment that will provide income in perpetuity. It is helpful if you inform the Cabrillo College Foundation of your bequest so the college can assure you that your gift is properly structured and can be used as you wish. We honor those who remember Cabrillo in their wills with membership in the Heritage Club.
Your will can designate the Cabrillo College Foundation as the beneficiary of either a specific legacy or a bequest that is a fixed percentage of your estate. You can bequeath securities, real estate, or other property. If your first priority is your family's well being, you can make your gift contingent on other conditions of the will being fulfilled before the foundation receives a gift. You can also bequeath the assets that remain after other bequests are met. Your estate receives the benefit of freedom from federal estate taxes for the full value of the gift. If your needs change, you can alter a bequest at any time by signing a new will or amending your will or trust.
Assets you hold in individual retirement accounts, such as IRA's or Keoghs, can be bequeathed to the Cabrillo College Foundation. The advantage of bequeathing such retirement assets to a charitable institution is that the legacy escapes both deferred income tax and estate tax that come due if the assets are transferred to individuals.
Cabrillo has helped many donors to support programs they value highly while contributing to their own financial security and peace of mind. Income producing gift plans can allow you to make a gift to Cabrillo and provide income for yourself or your beneficiaries at the same time. These plans allow you to take advantage of government tax laws that are designed to encourage philanthropy. They offer current income tax deductions and may provide an opportunity to avoid or reduce capital gains tax on assets that have substantially appreciated. Plans can also be used to minimize estate taxes. Cabrillo's planned giving professionals will work with you to carefully and confidentially shape a gift that meets your needs. You may be unfamiliar with the language of planned giving, so here we provide straightforward explanations for the basic tools for structuring these gifts: Charitable Remainder Trusts, Charitable Lead Trusts, and Pooled Income Funds.
(1) Unitrusts: When you prefer an income that varies with market conditions A charitable remainder trust allows you to make a major gift, typically of real estate or securities, while continuing to receive the income from your gift during your lifetime. A unitrust may even allow you to earn a higher return than you now receive, though you no longer have to manage your asset. After your lifetime or the lifetime of a beneficiary, the principal of your trust goes to support Cabrillo. During the year you establish the trust, you receive a charitable income tax deduction based on the current value of the asset less the value of the income interest, not the cost basis (what you have actually invested). You can make additional gifts to a unitrust at any time. The option is appropriate for gifts of $50,000 and above. A charitable remainder percentage unitrust pays a fixed percentage of the value of the trust. This value can change with fluctuations in asset markets, so the amount that you receive can change every year. Since the amount of income you earn is not fixed, unitrusts, unlike annuities, can be a valuable hedge against inflation. (2) Annuity Trusts: When your goal is a fixed annual income Annuity trusts provide an annual income that is a fixed dollar amount based on the value of your assets when you place them in the trust. You minimize market risk with an annuity trust, though you earnings may be affected by inflation. You receive the annuity during your lifetime, your lifetime and the lifetime of a beneficiary, or for a specified time up to twenty years. The amount you receive is based on forecasts of future market conditions. If you place appreciated assets in an annuity trust, you avoid capital gains taxes on the assets. You can also take a charitable income tax deduction during the year you make the gift. You have no further responsibility for managing the assets placed in the trust. Older donors who don't anticipate significant losses from inflation during their lifetimes, and want an income they can depend on, often choose annuity trusts as a planned gift option.
When you want to see the difference your gift makes during your lifetime If your main financial objective is safeguarding your estate from federal estate taxes, a charitable lead trust may be the ideal gift strategy. The trust pays out income to the Cabrillo College Foundation for a term you specify. When the term of the trust expires, the principal returns to you or goes to your heirs, but estate and gift taxes have been reduced or eliminated. The advantage of a lifetime lead trust is that you can see the difference your gift makes during your lifetime.
Income for Life for you—benefit for future generations A charitable gift annuity is an extraordinary way to make a gift, increase your income, and slice your tax bill—all in one transaction! Our charitable gift annuity program was created as a service to our many friends who have expressed a desire to make a gift of significance, while still retaining income from the gift property during their lives. A charitable gift annuity is a contract in which you exchange a gift of cash or securities for a guaranteed, fixed income each year for the rest of your life. Your gift annuity offers five distinct advantages:
You can choose how frequently payments will be made—quarterly, semi-annually, annually; one-life or two-life annuities; cash or securities to fund your gift. Cash gifts allow maximum tax-free income; gifts of securities allow you to minimize capital gains taxes. For more information please contact Melinda Silverstein at 831-479-6338 or via email Melinda Silverstein. |