Giving Today

Where’s the Wrapping Paper?

An outright gift
In the typical situation, your gift will be for the charity's benefit only, and the charity will take possession of the gift immediately. This type of gift is called an outright gift. This arrangement satisfies the general rule that a gift to charity must be paid to the charity in the form of money or property before the end of the tax year to be deductible for income tax purposes (click here to donate now).

Split interest gift in trust
Another option is for your gift to be split between a charity and a non-charitable beneficiary. Here, one party (usually the non-charitable beneficiary) receives the use of the donated property for a specific period of time, which means he or she is paid a certain sum every year out of the donated property. Then, after this time period is up, the remaining property passes to the charity.

Bargain sale
A bargain sale in the context of charitable giving is a sale to charity at a bargain price (i.e., a price below the fair market value of the item sold, fair market value being the price a willing buyer would pay a willing seller in an arm's length transaction). The difference between the sale price and the actual fair market value of the asset equals your donation to charity. A bargain sale involves two separate transactions for tax purposes: a sale and a charitable gift.

You Scratch Our Back, We’ll Scratch Yours…

by using a Charitable Trust

How a Charitable Remainder Trust Works

There are many types of charitable trusts. You may consult your estate attorney or financial advisor for further details.
Some basic trust descriptions:

CRAT (charitable remainder annuity trust)
A CRAT is a split interest gift between a noncharitable beneficiary and a charitable beneficiary. The noncharitable beneficiary has the first interest, and the charity has the remainder interest or second-in-line interest. The trust pays out a fixed amount of income every year (an annuity) to the noncharitable beneficiary for the term of the trust, and the remaining assets pass to the charity at the end of the term.

CRUT (charitable remainder unitrust)
A CRUT is a split interest gift between a noncharitable beneficiary and a charitable beneficiary. As with a CRAT, the noncharitable beneficiary has the first interest, and the charity has the remainder interest. However, instead of paying out a fixed amount each year, a CRUT pays the noncharitable beneficiary a fluctuating amount each year, depending on the value of the trust assets for that year. This amount is calculated as a percentage of the assets in the trust on a specified date each year. At the end of the trust term, the remaining assets pass to the charity.

Pooled income fund
A pooled income fund is a split interest gift between a noncharitable beneficiary and a charitable beneficiary. Like the CRAT and CRUT, the noncharitable beneficiary has the first interest and the charity has the remainder interest. A pooled income fund is managed by the charity (much like a mutual fund) and is made up of donations from several donors. The charity pays the noncharitable beneficiary a fluctuating amount each year, depending on the value of the fund in that year.

Charitable lead trust
A charitable lead trust is a split interest gift between a noncharitable beneficiary and a charitable beneficiary. Here, the charity has the first or lead interest and the noncharitable beneficiary has the remainder interest. The charity is paid a certain amount every year for the term of the trust, and then the remaining assets pass to the noncharitable beneficiary at the end of the trust term.

Private foundation
Donors with sufficient resources may want to create a private foundation. A private foundation is a separate legal entity (often named for the donor) than can endure for many generations after the original donor's death. The donor creates the foundation, and then transfers assets (typically appreciated assets) to the foundation, which in turn makes grants to public charities.

Giving Tomorrow

“Facts are stubborn things” ~ Make Your Wishes Known
The easiest and most direct way to make a charitable gift is by an outright bequest of cash in your will. Making an outright bequest requires only a short paragraph in your will that names the charitable beneficiary and states the amount of your gift. The outright bequest is especially appropriate when the amount of your gift is relatively small, or when you want the funds to go to the charity without strings attached.

Make your money work for you, long after your stop working by …

       making WCDS the beneficiary of an IRA or retirement plan. If you have funds in an IRA or employer-sponsored retirement plan, you can name your favorite charity as a beneficiary. Naming a charity as beneficiary can provide double tax savings. First, the charitable gift will be deductible for estate tax purposes. Second, the charity will not have to pay any income tax on the funds it receives. This double benefit can save combined taxes that otherwise could eat up a substantial portion of your retirement account.

You’ve Heard it Said, Life Goes On…

       well then consider using life insurance for charitable giving. Life insurance allows you to make a much larger gift to charity than you might otherwise be able to afford. Although the cost to you (your premiums) is relatively small, the amount the charity will receive (the death benefit) can be quite substantial. As long as you continue to pay the premiums on the life insurance policy, the charity is guaranteed to receive the proceeds of the policy when you die. (Guarantees are subject to the claims-paying ability of the issuing insurance company.) Since life insurance proceeds paid to a charity are not subject to income and estate taxes, probate costs, and other expenses, the charity can count on receiving 100 percent of your gift.

Name charity as beneficiary of proceeds
How to do it
This is the simplest type of charitable gift using life insurance. You designate the charity as the beneficiary of your existing policy or a new policy by completing a beneficiary designation form. (See Life Insurance Ownership and Beneficiary Designations). You own the policy and pay the premiums. Upon your death, the charity receives some or all of the proceeds from the policy.

Donate an existing life insurance policy to charity
How to do it
In order to donate an existing life insurance policy to charity, you must assign all rights in the policy to the charity. You must also deliver the policy itself to the charity. The charity becomes the new owner of the policy as well as the beneficiary, but you will continue to pay the premiums (unless the policy is paid up). As the owner, the charity will have access to any cash values during your life.
Caution: If you retain any "incidents of ownership,” no income tax or gift tax deductions will be allowed.

Donate a new policy to charity
How to do it
In order to use this strategy, you purchase a new insurance policy in the charity's name. You never own the policy. The charity is the owner and beneficiary. You will make any future premium payments (unless it is a single premium policy). As the owner, the charity will have access to any cash values during your life.

To speak further about the many ways you can give to Wakefield Country Day School please contact:

Mr. Jim Hart - Director of Development
Wakefield Country Day School
540-635-8555, Ext. 231

Or

Mrs. Lisa Cieplak
540-635-8555, Ext. 227