Planned gifts include gifts that provide donors with an income for life such as charitable remainder trusts, charitable gift annuities, and gifts to be pooled income fund. Life income gifts are a wonderful way for donors to make a commitment to any component of the Center, receive income for the rest of their lives, and be recognized by the Center in perpetuity. In addition, bequests, or provisions for any component of the Center in wills or trusts also provide meaningful commitments. A more detailed description of various ways to make a planned gift to the Center or any of its artistic units follows:
Including any component of the Arts Center in your will is a wonderful way of making a planned gift. A bequest is an ideal method of making a substantial future gift without giving up financial assets during your lifetime. A bequest is deductible for federal estate tax purposes and there is no limit on the amount of the estate tax deduction for a bequest. A bequest can be made by creating a new will, or adding a codicil to your present will, or including the Center or any of its artistic units in your revocable trust. Many donors bequeath a specific amount while others bequeath a percentage of their estate.
Gifting Retirement Plans
Making a gift of your retirement plan(s) can offer significant tax advantages. Individual account plans, such as an IRA, Keogh, or 401(k) account, resemble tax-sheltered savings accounts. If a participant dies before the entire account has been distributed, the remaining balance can be transferred to an heir or to a charitable organization like the Woodruff Arts Center of any its components.
The principle advantage of donating retirement plan assets to the Center is that you avoid income and estate taxes, whereas giving the assets to individual heirs can trigger a total effective marginal tax rate that is extremely high, even exceeding 75% in some cases.
Life Insurance Gifts
Life insurance can be an effective way to make a planned gift. There are a variety of ways to give life insurance to the Arts Center or any of its artistic units. One method is to donate a paid-up policy you no longer need. You will be entitled to an income tax charitable deduction equal to the cost basis or replacement value, whichever is less. You may also give a policy that is not fully paid up and take a deduction for the cash surrender value or cost basis, whichever is less. Another way is to make the Center the owner and beneficiary of a new life insurance policy. The costs of your insurance premiums would be tax-deductible. You will also reduce estate taxes because the proceeds are removed from your taxable estate if your do not retain ownership. In addition, you can use life insurance as a wealth replacement asset for your heirs in combination with other types of planned gifts, such as with a charitable remainder trust.
Life Estate Agreement
A life estate agreement allows you to give your home, farm, or vacation home to any operating unit of the Arts Center while retaining the right to use this home for life. You will receive an immediate income tax deduction for the gift and remove the value of property from your taxable estate. At the end of your life, the Arts Center will receive the property to sell and use the proceeds for the purpose you have specified.
Tangible Personal Property
In planning your estate, it is important to remember that property such as works of art, antiques, stamp and coin collections, jewelry, etc., may be subject to estate taxes. Should you wish to donate this type of property to the Arts Center or any of its components in your lifetime, you may reduce your taxable estate as well as receive an income tax deduction in the year of your gift. For a gift of tangible property to the Center, you can take an income tax deduction for the full market value of the property as determined by an appraisal.
LIFE INCOME GIFTS
Charitable Gift Annuity
A charitable gift annuity is an agreement between a donor and the Woodruff Arts Center where the donor agrees to irrevocable transfer assets to the Arts Center in exchange for the Center providing guaranteed fixed income for life for you and/or another annuitant.
The fixed rate of return is based on the age of the annuitant(s) and is determined by the American Council of Gift Annuities. Rates typically range from the 6-12% and often, a significant portion of the income is tax-free. This gift qualifies for an immediate income tax charitable deduction. In addition, you can realize savings in capital gains and estate taxes while making a sound investment in the future of the Arts Center or any of its artistic units. A charitable gift annuity is an excellent way to convert appreciated, low income yielding securities to a higher income producing investment.
Pooled Income Fund
In a pooled income fund, your irrevocable gift is combined with those of other donors in much the same way that a mutual fund is managed. The fund provides you and /or a beneficiary a variable income for life depending on the market fluctuations, while providing an income tax charitable deduction as well as capital gains tax savings if you donate appreciated securities. The pooled income fund is another way to convert assets paying a low income, such as stock dividend, to an investment paying a higher return while making a commitment to the Arts Center or any of its components. Contributions to a pooled income fund can also help reduce estate taxes.
Charitable Remainder Trusts
Charitable remainder trusts are gift planning tools that provide you and/or another beneficiary with an annual income for your lifetime(s) or a term of years. When the trust ends, the assets remaining in the trust are transferred to the Arts Center or any of its artistic units to further their important missions. These trusts are usually structured as either unitrusts or annuity trusts, each of which has specific benefits.
A charitable remainder unitrust pays you and/or a beneficiary a variable income for life or for a term of years. This income reflects a fixed percentage of the fair market value of the trust's assets, which are determined annually. The income will vary from year to year based on the value of the assets in the trust. When the trust terminates, the assets in the trust provides a wonderful gift to whichever component of the Arts Center you designate. Charitable remainder unitrusts are often used to help donors increase income from a low yielding asset while providing an income tax charitable deduction as well as capital gains tax savings if the trust is funded with appreciated assets. Donors can make additional contributions to this type of trust if they desire. In addition, establishing a unitrust can reduce one's taxable estate while providing the donor with the satisfaction of providing for the future strength of the Center.
A charitable remainder annuity trust pays you and/or a beneficiary a fixed income for life or for a term of years. When the trust terminates, the remaining trust assets provide for the important work for the Arts Center or any of its components you designate. The annuity trust provides a guaranteed annual income regardless of market fluctuations. However, the annuity trust does not hedge against inflation and the donor cannot make additional contributions to this type of trust.
The annuity trust also provides an income tax charitable deduction, capital gains tax savings if the trust is funded with appreciated securities and can also reduce your taxable estate. This gift planning vehicle is also an effective way to convert appreciated, low yielding assets to a higher income producing instrument while making a significant commitment to benefit the Arts Center.
Charitable Lead Trust
A charitable lead trust is an excellent way to transfer property to your children, grandchildren or other heirs at minimal tax cost. This trust pays income to the Arts Center or any of its artistic units, either for a number of years you specify or for the life of one or more individuals you name. The income can be the same amount each year or a percentage of the trust value. When the trust term ends, the principal goes to your family, with estate or gift taxes reduced or even eliminated in certain cases. This type of trust is ideal if you are willing to forgo investment income on an asset but do not want to force your heirs to surrender the principal.
We are grateful to donors who have made planned gifts to any component of the Woodruff Arts Center. Their vision helps guarantee that future generations will have a place where the arts are performed, seen, heard, and taught. If you have made a planned gift to any component of the Woodruff Arts Center, please notify us at 404-733-4201 so that we many include you as a member of the Twenty-First Century Circle and properly acknowledge your commitment. For more information about making a planned gift or to receive a confidential illustration of how you or your heirs may benefit from making a planned gift , please contact: