Wednesday, February 24, 2016

Flexible Life Income Gift

By: Laurie Valentine

Are the “minimum distribution rules” requiring you to take more from your IRA than you currently need for living expenses? Are you interested in establishing a charitable gift plan that will ultimately provide a significant gift to one or more charitable causes, while allowing you to “tap in” to an income stream at a later age?

A “flexible deferred charitable gift annuity” may be the way to solve your problem and accomplish your charitable giving objectives.

A deferred charitable gift annuity is gift plan in which a charity agrees, in exchange for a gift of cash, appreciated securities or real estate, to make fixed payments to the giver and/or one other person for their lifetime(s) beginning at least one year and one day after the gift is made. At the death of the “life income” beneficiary(s), whatever remains is paid out to the charitable cause(s) the giver designated.

While the annuity payments don’t start for a year or more, the giver is entitled to a charitable income tax deduction in the year the gift is made to the charity.

A “flexible deferred charitable gift annuity” offers an additional benefit. Instead of designating a particular, unchangeable start date for the annuity payments, the flexible gift annuity contract reserves to the giver the right to postpone the decision about the actual annuity payment start date until later.

Your charitable income tax deduction will be determined using the earliest date on which you can “turn on” the annuity payments. And, the annuity payment amount will vary depending on when you elect to start the payments…the longer you wait, the higher the annuity payment amount.

Laurie Valentine is COO and Trust Counsel for the Kentucky Baptist Foundation, PO Box 436389, Louisville, KY 40253; (502) 489-3533 or 1-866-489-3533 (Toll-free, Kentucky Only); KYBaptistFoundation.org

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.

Thursday, February 11, 2016

Gifting Real Estate

By: Richard Carnes

Laurie Valentine, trust counsel for the Kentucky Baptist Foundation and I had the recent pleasure of visiting with a husband and wife that were seeking guidance on what steps they should take to enable them to gift real estate property to create an endowment fund which would benefit two Kentucky Baptist causes they faithfully supported. The wife of this couple attended one of the Foundation’s legacy giving seminars a few months ago and was inspired to think about the Christian stewardship of their cash assets and non-cash assets (home equity, life insurance, retirement assets, investments or business interests). During our seminars we share with the participants that the average person’s net worth consists of 9% in cash and 91% in non-cash assets. When hearing this statistic, participants are enlightened that their financial stewardship covers more than just the 9% of their cash assets.

As Laurie and I spoke with this couple, we acknowledged that cash is the most common form of charitable gift for most people. However, by giving property, a donor may receive greater tax benefits and conserve cash for other uses. Also, the donor may find that they can sometimes make a larger gift at less after-tax cost by giving real estate or other non-cash property.

Most types of marketable real property may be given. Personal residences, farms, vacation homes, undeveloped land, and rental property are common sources. And, it is possible to give either all or a portion of the property’s value. The property should be readily marketable, especially if the donor plans to make the gift if the form of a life income arrangement.

Giving real property is handled by deeding the property to a charitable organization such as the Kentucky Baptist Foundation. Our staff, along with a donor’s professional advisor can help evaluate the benefits of gifting real estate as well as providing guidance in securing an appraisal and other steps.

Charitable gifts of real estate often involve more tax and legal complexities than other types of donations. Over the years, however, such gifts have provided substantial benefits to both the donors and the charity. To learn more, you may contact the Foundation’s trust counsel, Laurie Valentine, or me at our toll-free number (866) 489-3533.

Richard Carnes is the president of the Kentucky Baptist Foundation, PO Box 436389, Louisville, KY 40253; toll-free (866)489-3533; KYBaptistFoundation.org

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.