Retirement Plans

Retirement assets are considered to be one of the best assets to use in making a charitable gift because, under current law, passing these assets to your heirs can subject them to estate and income taxes that can reduce them by as much as 80%. Special consideration (by you and your financial advisor) should be taken with retirement assets.

Norman and Ruth had often put some of their savings into the stock market. They were also employed by companies that had 401k plans. They kept investing and the value of their plans kept growing. They had long been active in charitable giving. One of their first charitable gifts had been a gift of appreciated stock.

Norman: "Our first experience was giving several hundred shares of a stock that had more than doubled in value. We needed some help that year with our tax situation and that gift was a great idea. Also, our tax-sheltered retirement plans kept growing and just recently we rolled them into our IRA. It's grown beyond our wildest dreams."

Ruth: "But taxes will eat up so much of it. Not that we need it all, but we were hoping to get more value out of it."

Norman: "We recently sat down with our attorney to look at our overall financial plans to make sure we had set up our affairs to best suit our needs. Our attorney suggested we consider making a charity a partial contingent beneficiary knowing how much we would like to help others."

Ruth: "Tax benefits for our estate, protecting our future, and knowing we're making a difference in other peoples' lives - it feels good!"

However, careful planning concerning the withdrawals from retirement funds needs to be done. Not only is there a potential income tax burden, but if there is a balance in your retirement account at your death, there may be estate taxes as well. Estimates are that taxes could eat up as much as 75-80% of retirement assets under certain circumstances.

Using qualified retirement plan funds is an excellent source of assets to fund bequests. By designating WQLN Public Broadcasting as a beneficiary (it can be a contingent beneficiary after the death of a spouse) funds pass to WQLN free of taxes.

It is possible to set up the beneficiary as the recipient of the entire remaining funds in the account or establish a percentage to fund the bequest.

Please note - the designation of the station as a beneficiary of retirement fund assets cannot be simply written in your will or trust. The station must be designated as a beneficiary of the retirement plan.

Life Insurance

There are several ways you can use life insurance as the basis for a charitable gift.

Making the charity a beneficiary of your Life Insurance Policy

You may wish to make WQLN the beneficiary (or a contingent beneficiary) of a life insurance policy as a way to make a sizeable future gift.

You retain lifetime ownership of the policy, keeping the right to cash it in, borrow against it, and change the beneficiary.

A gift of this nature is treated much like a bequest made through your will. Because you retain the ownership of your asset (the policy), you will not receive an income tax charitable deduction for this future gift or for your premium payments during your lifetime.

The policy's proceeds will be included in your gross estate, and your estate can take an estate tax charitable deduction.

Making a gift of your policy

You may wish to transfer ownership of a policy to WQLN, or purchase a new policy with WQLN as owner and beneficiary. If you make a charity the owner and beneficiary of a policy, you are entitled to certain tax advantages.

This is the Walker’s story…

Since their children had grown up and begun lives on their own, the Walkers decided to review their finances. They realized that some of the insurance they carried while the children were dependent on them was now not really needed.

They decided to donate a fully paid-up policy to charity. Their financial advisor told them that as the policy is paid-up, they are entitled to a charitable deduction equal to the lesser of the premiums they paid over the life of the policy or the cost of a comparable replacement policy if purchased today.

The Walker children were very supportive of the idea. In fact, one of their children purchased a small whole life policy and designated the charity as the owner and irrevocable beneficiary. As a result, the annual premiums that are paid are a charitable deduction.

Gifts of real estate

A residence, a vacation home, a farm, acreage, a vacant lot—any of these may have so appreciated in value through the years that its sale would mean a sizeable capital gains tax!

By making a gift of this property instead, you would avoid the capital gains tax, and receive a charitable deduction for the full fair market value of the property. It is also possible for you to continue to use the property for your lifetime while you receive a tax deduction.

Paul and Eileen’s story…

Eileen and her husband, Paul, enjoyed their house. They had raised their three children there and had many family memories. But after Paul succumbed to cancer, Eileen began to find that the old house was a burden. Without Paul to take care of things and with their children involved in their own families miles away, it seemed that the house was too big, too old and even a bit lonely.

Eileen can make a gift of her home or farm, but retain the security of knowing she may live there as long as she wishes! She also has the satisfaction of giving now rather than later.

Eileen will also avoid capital gains taxes on the property’s appreciation at the time the gift is made.

Note: If the contribution from your property exceeds the allowable charitable deduction limits, the deduction may be carried forward for five years.

Here’s another idea…

Ask your attorney or financial planner how you can fund a charitable remainder trust with property that will provide you with an income over your lifetime!

Two creative ways to make a meaningful gift to WQLN!