Charitable Gift Planning

Eileen Fitzenreiter is the LCMS Gift Planning Counselor assigned to the Ohio District. On the LCMS Foundation's website, you will find a wide array of reliable information and advice that can help you build a gift plan that will benefit you, your family and the ministries of the Church that are close to your heart. Contact Eileen Fitzenreiter for more information.

1. Outright Gift – cash, securities, real estate, personal property

Title to these gifts is legally transferred to a qualified charity. In most cases, an income tax deduction is allowed for the full fair market value and capital gains taxes are avoided, thereby reducing the cost to the donor of the gift.

2. Bequest – the most common planned gift

The designated church/ministry is bequeathed a gift in a donor's will/trust. The gift may be designated as a (a) percentage of the donor's estate, (b) specific dollar amount or description of property, (c) residual of the donor's estate, or (d) contingent upon a certain event happening. Estate taxes are reduced by the value of the gift to the charity.

3. Charitable Gift Annuity – beneficial to older donors

The donor contributes stock or cash into a gift annuity contract with LCMS Foundation. He/she receives a fixed lifetime payment. A portion of the income is not taxable, but considered a return of principal. Therefore, the income tax deduction is based on the difference between the gift value and the amount required to fund the annuity (actuarial value). Two people may be income beneficiaries. At the death(s) of the income recipient(s), the residual is distributed to the designated Church/ministry.

4. Deferred Gift Annuity – gift now, annuity benefits later

Donor(s) makes a gift now and receives an immediate tax deduction. Later, usually retirement, the donor(s) begins receiving a lifetime payment. Because the principal compounds between the date of the gift and the first date when the donor(s) receives the annuity payment, the payment can be significant and at a much greater rate than that of the immediate charitable gift annuity. At the death(s) of the recipient(s), the residual is distributed to the designated charity(ies).

5. Life Insurance Policies – major gifts at death

A new policy may be taken out on the life of a younger donor to create a major deferred gift to a charity with the cost of the premium being a small fraction of the face value of the policy. Donors may also have existing policies which are no longer needed for their original purposes (e.g., to assure a child's education or pay off a mortgage). With a change of policy ownership and beneficiary to the charity, the donor can contribute the premium amount to the charity and the policy's face value can be maintained. Or, if the donor chooses not to continue payments, the cash value or "paid up insurance" value can be significant. Donor's tax deductions are equal to the cash/replacement value or premiums paid, depending on the type of policy.

6. Charitable Remainder Unitrust – lifetime income rights

The charitable trust can be funded with cash, securities, real estate and personal property. The donor or donor couple receive lifetime income. The income is based on a specified percent of the trust principal, revalued each year, reflecting any increases in the value of the trust's assets. More than one person may receive income. The trust assets become the property of the designated charity(ies) upon the donor(s)' death(s), or, in a pre-established time period. Additional contributions can be made to the trust. Income tax deductions for the donor are based on the current value of the remainder interest designated to charity.

7. Charitable Remainder Annuity Trust – similar to the Unitrust

This trust operates the same as the Unitrust except that (a) the donor receives a fixed income from the gift for life, (b) the income amount is based on the original value of the trust's assets, and (c) additional contributions cannot be made.

8. Life Estate – gift your home with right to reside

A donor deeds his/her residential property to the charity. While the donor is still living, he/she retains the right to live there or to rent or sell those rights. The donor receives an immediate income tax deduction for the remainder interest value of the estate.

9. Pooled Income Fund – charity's "mutual fund"

Contributions from several donors are placed in a common trust fund for investment and management. Each donor has a pro rata share interest of the pooled fund and receives his/her share of the total net ordinary income earned. When the donor dies, his/her share becomes the property of the designated church or ministry. Since this is a gift, the income tax deduction is based on the current value of the remainder interest going to the Church.

10. Donor Advised/Endowment Funds

A donor creates a donor advised fund (DAF) by transferring cash or securities (generally starting at $10,000) to LCMS Foundation. Each year the donor advises the Foundation which ministries should receive distributions and how much each should receive. Unlike a DAF, an Endowment Fund is used to support the same charity(ies) year after year, oftentimes, in perpetuity. For many Christian stewards, a DAF is an attractive, simplified alternative to establishing a private foundation. The donor(s) continues to enjoy "hands-on" giving to various ministries without costly start-up and administrative expenses.

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