Making a Gift to a Church
What Assets Can I Use to Make a Planned Gift?
A Check or Cash Cash or a check is always an acceptable gift to your church. Always request a receipt for your gift. You may need it to receive a tax deduction. You should also ask for year-end written confirmation of a gift of cash or a check from the church. Always make the check payable to the church or other related agency acting as custodian of the funds. Bank accounts can also be made payable upon death (POD) to your church. This will make them pass directly to your church upon your death.
Appreciated Securities Gifts made with appreciated publicly traded securities such as stocks, mutual funds, and bonds provide attractive benefits. Making a gift of securities held for more than a year can eliminate capital gains taxes and, in most cases, the donor obtains a charitable income tax deduction equal to the market value of the securities. Appreciated securities that are not paying a competitive dividend or are not appreciating significantly might be especially advantageous to you as a gift to your church. Using appreciated securities at year-end is even more beneficial.
An owner of closely held stock may give the stock to their Church and receive important financial benefits. A very attractive feature of this gift is the practice of a company repurchasing the stock from the charity, which allows it to retain its private control and transfers cash to the charity.
Gifts can be made outright or through one of the charitable gift arrangements discussed at this location. The transfer of stock is easy. You can have the stock transferred to a brokerage account opened for the church at your broker, or to the church's existing brokerage account, or by the transfer agent. Remember: the gift doesn't legally occur until the church owns the stock.
Real Estate Real estate includes vacant land, homes, condominiums, commercial property, rental property, and others. If the property has been owned for at least a year and appreciated significantly, a gift of real estate will eliminate capital gains taxes and broker's commissions if the property were sold. The gift also gives the donor a chance to change investments.
If you are thinking of giving real estate, do not sell it yourself. If you do, you will have to pay any taxes owed on the appreciation. If it is sold by the charity (even if you find the buyer), you can receive a charitable deduction for the entire value without paying any capital gains taxes you might otherwise owe.
Donors can make an outright gift or they may retain some interest in the property, such as the right to live in it for the rest of their lives. You can also place the property in a trust. You can give a fractional interest in the property. Real property may also be given to the church through your Will.
Life Insurance policies All insurance policies allow you to name one or more primary, secondary, and contingent beneficiaries. You can give some or all of the proceeds from an insurance policy to a church by naming the church as one of the primary, secondary, or contingent beneficiaries. Naming the church as a contingent beneficiary means the church receives all or part of the proceeds if none of the other beneficiaries survive you.
There are basically two types of life insurance: Term and Whole Life. Term insurance is commonly called pure insurance because the premium is only to insure your life for a term of one year. Whole life is insurance coupled with an investment. Once you have paid your premium in full, you can surrender the policy and receive the cash value.
Retirement Funds (401(k); 403(b); IRAs, Keogh, SEP, Qualified Plans) All retirement funds allow you to name one or more primary, secondary, and contingent beneficiaries. You can include the church among the named beneficiaries of your retirement plan(s). Retirement funds can be among the best assets to use for a charitable gift. The reason involves the fact that they grow without paying income taxes. If you give them to an individual upon your death, income taxes and estate taxes may dramatically reduce the funds. Your loved ones may only receive a fraction of their present value. Check your situation with your accountant. However, any gifts of retirement funds to a church are made free of any income or estate tax because the gift to a church receives a charitable deduction. You can also make this gift without going to a lawyer or incurring any fee or charge. Check with your accountant or human resources department at your employment.
These funds are also passed by naming a beneficiary. If none is named or all are deceased, the assets become part of your estate and pass according to the Will or laws of intestacy if there is no Will. Retirement funds can be among the most valuable assets you own. They accumulate tax free and thereby grow much faster than taxable assets.
Tangible Personal Property Tangible personal property is anything you can touch, except real estate. Also, it does not include money or securities of any kind. They are intangible. In order for the owner to take advantage of the largest tax deduction, the charity must use the property for a related use. This means the church uses the gift for a purpose related to its charitable purpose. It the gift is so related, the donor may deduct the full-appraised value of the gift. Otherwise, the donor can only deduct his/her original cost of the gift. Tangible personal property can be delivered to a charity during the donor's lifetime, or it can be given to the charity through the donor's Will. Some states, such as New Jersey, allow testators to leave tangible personal property to people or institutions through a signed list created outside the Will, but referred to in the Will. Trusts can also be used to make the gift.
