Congress Provides a New Way to Give Tax-Free Donation

If you are 70 ½ and have an IRA, please read on.

NEW IRS 2008

A provision in the new federal law re-opns the door that closed last year:ontains a two-year:

Transferring IRA assets directly to a charity. By going directly to a qualified public charity, the money is not included in the IRA owner's income and - most important - is not taxed, preserving the full amount for charitable purposes.

During 2008 and 2009 only, holders of traditional IRAs who are at least 701/2 years old can make direct charitable transers up to $100,000 per year given the following provisions:

- An individual can give a maximum of $100,000 in 2008 and an additional $100,000 in 2009. A spouse can give an equal amount from his/her IRA.

- Individuals can make as many gifts in any amount to as many charities as desired as long as the total does not exceed $100,000 for 2008 and an additional $100,000 in 2009

- The gift may NOT be made in exchange for a charitable gift annuity or to a charitable reminder trust.

- The gift may NOT be made to a private foundation, donor advised fund, or supporting organization [as described in section 509(a)(3)].

- Donors who have reached age 70 1/2 and are required to take minimum required distributions can direct the entire amount to charity in satisfaction of their minimum required distribution.

Real Estate & Other Capital Assets 
Many people make larger gifts from assets other than cash. While these gifts provide a current tax benefit and incur no capital gains tax, they may be more complicated to make. If you have owned these types of assets for more than one year they are fully deductible at the fair-market value unless your gift exceeds 30% of your adjusted gross income. Any amount in excess of the 30% limit may be carried forward for up to five years. There is one exception if the nature of the gift comes under the alternative minimum tax rules; a professional advisor will help determine this. 

Deferred Gifts 

There are several types of deferred gifts that may offer significant financial advantages for you.

Gifts Through a Will (Bequests):  A gift made by will is a bequest. The gift is made after your death from assets you owned. Having a will is very important. If you do not have a will the determination of how your assets will be distributed will be made by the State of Florida or the state you claim as a permanent residence. 

If you wish to include a bequest for Catholic Charities in a will please use the following language: “I hereby give, devise and bequeath to the Catholic Charities Foundation, Diocese of Venice, Inc., which has its principal offices at 1000 Pinebrook Road, Venice, FL 34292.” Here you may designate a specific dollar amount, or specific property such as your residence, or a percentage of your estate or a portion or all of the residuary of your estate (what remains after all bequests are made as provided in your will and all taxes and other expense of administering your estate have been paid).

Charitable Gift Annuities: A charitable gift annuity is a legal contract between you and The Catholic Charities Foundation whereby we agree to pay you a specific amount for life and/or for the life of your designated beneficiary. The assets you contribute through a charitable gift annuity are treated for tax purposes as part gift and part purchase of an annuity.

Part of the income received is a tax-free return of principal. The amount of income received is based on the amount of contribution and on the age(s) of the person(s) who receives the income for life. Payout rates are higher for individuals who are older when they establish a charitable gift annuity for themselves. When a person is younger, or when more than one person is to receive income, payout rates are lower. Charitable gift annuity payout rates are established every three years.

By creating a charitable trust and placing assets into it, you can often increase your income and receive that income for a life (or lives) or a term of years. While the trust exists, the assets in it are invested to provide income to you and, hopefully, some growth in the assets as well. Only when the trust terminates are the assets distributed to The Catholic Charities Foundation to be used for Catholic Charities. However, when you create the trust you receive a current income tax deduction for the present value of the deferred gift to the charity. The Catholic Charities Foundation offers three kinds of charitable remainder trusts:

1. Charitable Remainder Unitrust: This trust provides a variable income to you or someone you love for life. You or your beneficiary receives a percentage of the fair market value of the trust assets as revalued each year. At your death, or the death of a beneficiary, the remainder of the trust passes to The Catholic Charities Foundation.
2. Charitable Remainder Annuity Trust: This trust provides fixed income to you or someone you love for life. You or your beneficiary receives a fixed dollar amount each year based on the value of the assets transferred to the trust. At your death, the remainder of the trust passes to The Catholic Charities Foundation.
3. Charitable Lead Trusts: A charitable lead trust provides income to Catholic Charities for a set number of years. After the set number of years, when the trust terminates, the remaining principal and any accumulated assets pass to your beneficiary (often the children or grandchildren of the donor).

Giving the assets of your company pension plan, a 401k plan, an Individual Retirement Account (IRA) or a Keogh plan to The Catholic Charities Foundation offers you several benefits such as making a substantial gift to Catholic Charities, reducing your taxable estate, and eliminating the effect of income and estate tax and sometimes excise tax all of which can reduce the amount of your retirement plan by as much as 80% before it reaches your heirs.

Gifts of Real Estate

Contributing real estate, which is reasonably expected to be easily sold, or an interest in such property to Catholic Charities whether a personal residence, family farm, vacation home, condominium, cooperative apartment, business property or speculative acreage can be highly advantageous to you. You will have a significant income tax charitable deduction; you will completely avoid capital gains tax on appreciated, long-term real estate (owned more than one year); and estate taxes for your family will be reduced. Also you may donate your personal residence or farm and retain the right to use and enjoy it for life while enjoying a current income tax deduction for the present value of the charity’s residual interest. 

Gifts of Life Insurance

A gift of life insurance is one way you can make a major contribution to The Catholic Charities Foundation at a relatively low cost. There are several possible options:

1.         You may donate an existing paid-up policy and name The Catholic Charities Foundation as the permanent owner and beneficiary of the policy.

2.         You can deduct the interpolated terminal reserve (in IRS language that means approximately the cash surrender value) as a charitable contribution for income tax purposes.

3.         You may purchase and donate a new policy. The Catholic Charities Foundation can be applicant, owner and beneficiary of the new policy. You make annual contributions to Catholic Charities that equal the premium cost. Catholic Charities then pays the premium. Your annual contributions are charitable contributions for income tax purposes.

Catholic Charities always encourages prospective donors to seek the advice of professional counsel concerning the best giving option for them. We would welcome the opportunity to provide you or your attorney with additional information on any of the methods of giving described in this brochure. 

Catholic Charities Foundation
Diocese of Venice
P.O. Box 2116
Venice, FL 34284-2116

This information is an overview based upon current tax laws; it does not purport to be definitive. We hope it will help you find the most mutually advantageous way to make your gift to Catholic Charities.

A matter of the Utmost Confidentiality

During the past year a number of friends of Catholic Charities wrote, called or told us in person that they were remembering Catholic Charities in their Will. All of them were pleased to find that their bequest made them eligible for both membership and the spiritual gifts that accrue to members of the Good Samaritan Guild.

However, many people do not tell us about their bequest while they are alive. By the time we receive notice from probate or an attorney, it’s too late for us to thank them. If you are one of these “anonymous benefactors,” please let us know so that we can enroll you in the Guild. We won’t ask you any questions about your bequest. We will simply send you your membership information and make certain that you are remembered in the monthly Mass said for members of the Good Samaritan Guild.

Just send a note to tell us about your remembrance in your Will. We will hold your reply in the utmost confidence.

Send to:

Catholic Charities Foundation
Diocese of Venice
P.O. Box 2116
Venice, FL 34284-2116