PG Calc Blog

Alternative Endings: Early Terminations of Split-Interest Gifts

Split-interest gifts are legal arrangements through which individuals contribute something of value to a nonprofit organization (frequently cash, marketable securities, or real estate), and receive, in return, both a charitable income tax deduction and a benefit of some monetary value. The majority of split-interest gifts are so-called “life income gifts,” whereby the donors receive certain amounts of income for the rest of their lives. The most popular examples are charitable gift annuities and charitable remainder trusts. Participations in pooled income funds have fallen out of favor in recent years. Another popular split-interest gift – one that is NOT a life income gift – is the retained life estate. With this gift vehicle, the donor contributes real estate – typically, a residence – and receives two things in return. First, an income tax deduction, and second, the right to live in the property for the rest of his or her life. While the life estate does not represent income, it...

Can The Donor “Gift” Her Entire IRA to a Charity – Now, During Life?

This question comes up from time to time. Some might point out that “gift” is not a verb, but we’ve all heard it used that way, and everyone knows what it means. In our niche area of fundraising, professional gift planners routinely speak with donors about the possibility of making charitable gifts with funds from qualified retirement plans. The Individual Retirement Account (IRA) is a vehicle in which many Americans hold considerable wealth, and it’s only natural to ask whether some of those funds could be used for charitable gifts. It IS possible to use funds from IRAs and other retirement plans to make gifts to charities, however, there are limitations and conditions. Gift planning professionals should be familiar with these unique requirements.

Flip CRUTs and Deferred Gift Annuities – Know the Difference

Clients sometimes ask us how their donor can establish a deferred charitable remainder unitrust (CRUT). The donor would like to transfer the funds now, receive the charitable deduction now, but delay receiving payments until a later date. The presumption is that the CRUT can be structured in such a way that payments will only begin upon a specified date in the future. Unfortunately, in this situation we must say, “No, that cannot be done.” While the qualified charitable remainder unitrust can be structured in a number of different ways, the deliberate delaying of payments is not allowed. The trust can be written with annual payments, which might allow for as much as a year between the funding date and the first payment, but that is as long as payments can be delayed. And that would mean that all future payments would also be made annually, which may not be appealing to the donor. If it sounds like the donor should consider funding a deferred charitable gift annuity (DCGA), that is...

BDQ #10: Retained Life Estates – Who Says You Can’t Have Your Cake and Eat It Too?

No doubt you, as a gift planner, know why a gift of appreciated property is more advantageous than a gift of cash. You’ve even said something like, “Cash is the worst thing you can give. Don’t you have anything that’s worth more than you paid for it?” For many donors, their home is one of the most highly appreciated assets they will ever own. But there’s a rub: their home is also highly useful as a personal residence and, if they give it away, they’ll have to find another place to live. So, donors aren’t encouraged to think of their home as a potential contribution. But what if there was a way for your donor to give their personal residence now and continue to live there and enjoy it for the rest of their lives? Enter the redoubtable but often overlooked Retained Life Estate. This gift plan allows your donor to contribute their personal residence now but continue to use the property for the rest of their lifetime. They’ll get an income tax deduction now and, if they decide to move out...