Give for the future

It is easy to give through corporate gifts, gifts of stock, real estate, personal property, retirement assets or life insurance.

Gifts of stock or securities

The gift of an appreciated asset, often common stock or mutual fund shares, is a valuable way to make a contribution to PAN that allows you to receive tax benefits based on the value of the asset(s).

For example, suppose Mark and Lindsey have 400 shares of ABC Corporation that her parents purchased at $15 a share some years ago. The current value in today’s market is $36 a share. If they sold the stock in the market, they would have a taxable, long-term capital gain on the difference between their cost and what they would receive from the sale ($36 – $15 = $21 capital gain per share). They would be taxed on $8,400 (400 shares x $21) in capital gains. Mark and Lindsey could sell the stock, pay the tax on the capital gain of $8,400, and either keep or donate the proceeds.

If, however, instead of selling the stock, they gave the 400 shares to charity, they would not incur any capital gains and would be able to deduct the current value (400 shares X $36 = $14,400) on their tax return as a charitable gift. By donating the stock Mark and Lindsey would also receive a greater tax deduction by giving the stock directly to the charity and avoiding the capital gains taxes. The charity receives a larger gift than it would receive if Mark and Lindsey first sold the stock and then donated the proceeds after deducting the capital gain taxes.

Gifts of personal property

Also known as a gift-in-kind, gifts of personal property can be charitably gifted to PAN. Gifts-in-kind such as books, equipment, real estate, and artwork can qualify donors for charitable gift credits on their tax returns. Gifts-in-kind must be properly appraised through the donor’s efforts.

Gifts of real estate

Gifts of real estate can be an effective means of planning a gift. Often a house, a second home or investment properties, are a significant part of net worth. Gifts of real estate, therefore, can enable you to make significant contributions.

Each piece of property and its unique circumstances need to be reviewed to determine the suitability of the property as a gift. Generally speaking, an acceptable piece of property is one that can be readily sold. Also, there are many ways to donate property. It can be an outright gift, a retained life estate, or placed in a trust. In addition to making a significant contribution, there can be other benefits for you:

There may be a charitable income tax deduction that would lower your income tax.

  • If your property has appreciated in value since you acquired it, there might be a large capital gain tax that would result if you sold it. By donating the property, you may be able to avoid realizing the capital gains.
  • Depending on your state regulations, you may be able to turn the property into a gift that is structured to provide income for you and a beneficiary.
  • If the property is your home or farm, you may be able to make a gift of it now and continue to live in it for the rest of your life and receive tax benefits the year of the gift.
  • If the contribution from your property exceeds the allowable charitable deduction limits, the deduction may be carried forward for five years.

Gifts of life insurance

There are several ways in which use your life insurance policy to help PAN patients, including making PAN a beneficiary of your policy, donating your policy to PAN, by wealth replacement of your policy or by making a life insurance trust.

Making the charity a beneficiary of your life insurance policy

You may wish to make the PAN Foundation the beneficiary (or a contingent beneficiary) of a life insurance policy as a way to make a sizable future gift. You retain lifetime ownership of the policy, keeping the right to cash it in, borrow against it, and change the beneficiary. A gift of this nature is treated much like a bequest made through your will. Because you retain the ownership of your asset (the policy), you will not receive an income tax charitable deduction for this future gift or for your premium payments during your lifetime. The policy’s proceeds will be included in your gross estate, and your estate can take an estate tax charitable deduction.

Making a gift of your policy

You may wish to transfer ownership of a policy to the PAN Foundation, or purchase a new policy with the charity as owner and beneficiary. If you make a charity the owner and beneficiary of a policy, you are entitled to certain tax advantages.

Wealth replacement using life insurance

A donor may make a current gift to charity and receive a charitable tax deduction. At the same time, the donor may purchase life insurance to replace the donated amount or perhaps, the amount after estate tax that the beneficiaries would have received. Depending on the circumstances, the charitable tax savings and any life income resulting from the gift may defray the cost of the wealth replacement insurance premiums.

Creating a life insurance trust

You may want to set up an Irrevocable Life Insurance Trust (ILIT). An ILIT removes the life insurance from your estate to help reduce estate tax while providing other benefits. For example, upon one’s death, the proceeds of the life insurance policy may remain in the trust to provide income for the surviving spouse, but stays outside of the spouse’s estate for estate tax purposes. Or, the trust could be used to distribute proceeds to children of a previous marriage. Although ILITs can be expensive and more complicated than owning life insurance directly, they may be an attractive option in certain situations.

Gifts of retirement assets

Another easy way to donate to PAN is by leveraging some or all of the accumulated earnings from retirement plan contributions. Retirement plan contributions grow tax-free because their earnings are not taxed annually. Instead, earnings are taxed when they are withdrawn. Over time, this allows more dollars to be invested in the plan, which leads to more growth. Additional savings can occur if the recipient is in a lower tax bracket when the funds are withdrawn (for example, during retirement) than when the investments were growing.

You should plan carefully when considering retirement fund withdrawals. Not only is there a potential income tax burden, but if there is a balance in your retirement account at your death, there may be estate taxes as well. Estimates are that taxes could eat up as much as 70-75% of retirement assets under certain circumstances.

Using earnings from a qualified retirement plan, however, is an excellent way to fund bequests. By designating the PAN Foundation as a beneficiary (it can be a contingent beneficiary after the death of a spouse – see sample bequest language) funds pass to the PAN Foundation free of taxes. It is possible to set up the beneficiary as the recipient of the entire remaining funds in the account or establish a percentage to fund the bequest.when the investments were growing.

Corporate & foundation support

Corporate and foundation giving provides a base of support that helps further the partnership between Patient Access Network and the corporate and private giving sectors across the nation. Support from corporations and foundations are key to the success of our programs and may be in the form of cash, grants or property.

Corporate matching gift programs are an increasingly important way for companies to allow employees to direct a portion of the monies earmarked for charitable contribution. Since gift matching procedures can vary from company to company, first contact your employer’s human resources department, then call us at 202-347-9272 to further discuss ways to give matching gifts.