Episcopal Diocese of Alaska

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GIFT PLANNING

You can reach the Stewardship Office by calling the Rev. George Silides at 452-3040 or by e-mail at: revsilides@gci.net

The following considerations of planned giving opportunities in no way constitute tax or legal advice by the diocese of Alaska.  Please consult your attorney or tax preparer before making final arrangements for transfer of property, securities or cash.

What is a Planned Gift?

A planned gift is any gift made with the involvement of another person. For instance, a bequest is made through a Will and real estate is given through a Deed prepared by an attorney; a gift of stock is made with the help of a broker, mutual fund, transfer agent, etc. Gifts can be either deferred or current. This means you can give away the gift today, or later.  A bequest is an example of a deferred gift and a gift of securities is an example of a current gift.

Why Should I Make a Planned Gift?

1. You can teach those you love about the importance of giving, how to give, and the place of the Church in your life.
2. You can give assets other than cash.
3. You can avoid paying capital gains taxes on your gift.
4. You can make a larger gift than you thought possible.
5. You can pass sizable assets to your children and grandchildren, free of estate and gift taxes.
6. The gift can pay you income for life and then to another person for life.
7. You can make a gift that does not cost you anything now and that can be revoked at any time.
8. You can be creative in making your gift by giving assets that you are not using or that are paying a yield less than 6%.
9. You can aid the specific ministries of the Church that interest you.

What Planned Giving Can Do For You

A Planned Gift can:

1. Pay you a stream of income for your life and/or the life of another.
2. Increase the income you may be receiving from an investment.
3. Provide a charitable income tax deduction.
4. Reduce or eliminate capital gains taxes or estate taxes.
5. Help your church and the diocese of Alaska
6. Enable you to leave a legacy for the next generation.

Can I See What the Gift Will Look Like?

YES. Through our partnership with The Episcopal Church Foundation, they can provide projections to you and your financial advisors using the best software available. Based on certain information you give them and certain economic assumptions, they can describe the expected financial consequences to you and your church, including tax deductions and income. Or you may take advantage of the on-line analysis instrument available at: www.ecf.giftplanning.org  If you wish personal assistance, all you need to do is provide them with the following information:

Name
Address
Phone numbers (work and home)
Name of spouse
Type of gift(s) you are considering
Your Age and Age of Spouse

FAX it to our partners at The Episcopal Church Foundation at: 212-297-0142 or E-Mail to: Dale Simison at dales@pacifier.com  

If you are uncertain of the gift you want analyzed, they will be happy to make a suggestion. The projection will tell you the amount of income you could receive, the tax deductions, the savings you receive compared with selling the asset, the expected gift to the church, and more.

What Assets Can I Use to Make a Planned Gift?

Cash (or Check)

Appreciated Securities, stock in Native Corporations, and “closely-held stock”

Tangible Personal Property

Real Estate

Life Insurance, Whole or Term

Retirement Funds and Assets

A Check or Cash
Cash or a check is always an acceptable gift to your church or diocese. We will return a receipt for your gift.  You will need it to receive a tax deduction.  Always make the check payable to the church or diocese, never an individual.  Bank accounts can also be made payable upon death (POD) to your church or diocese. This will make them pass directly to your choice 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 or diocesan ministries. Using appreciated securities at year-end is even more beneficial.

An owner of closely held stock may give the stock to their church or diocese and receive important financial benefits. A very attractive feature of this gift is the practice of a company repurchasing the stock from the Church, which allows it to retain the company’s private control and who instead transfers cash to your chosen recipient.
Gifts can be made outright or through one of the charitable gift arrangements discussed here. The transfer of stock is easy. You can have the stock transferred to a brokerage account opened for the church or diocese at your broker, or to the church or diocese’s existing brokerage account, or by the transfer agent. Remember: the gift doesn't legally occur until the church or diocese owns the stock.  The means to do this are included elsewhere on this document, entitled Transfer of 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 Church (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.  The property must be unencumbered, that is, no money may be owed on the property when it is transferred to the Church; and an inspection of the property may be required by the parish or diocese before accepting or refusing the gift.

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 or diocese as one of the primary, secondary, or contingent beneficiaries. Naming the church or diocese as a contingent beneficiary means they receive 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 or diocese 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 or diocese are made free of any income or estate tax because the gift to the 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.

What Are Some Examples of Planned Gifts?

Gifts made through your Last Will and Testament
A gift through your will (a bequest) can provide significant support to the Church. It also provides the following benefits: (a) the opportunity to make a major gift while preserving assets during life; (b) reduction in federal estate taxes; (c) the opportunity to designate the gift to a specific program at your Church or ministries and endowments of the diocese. Remember, your will only passes probate assets. It does not transfer assets that designate a beneficiary, such as life insurance. Arrangements to make a gift of these assets are included elsewhere in this document.

A gift through your will can be made in the following ways:

1. Specific Bequest: Your church or the diocese receives a specific dollar amount, a specific piece of property, or a stated percentage of the estate. This is one of the most popular forms of bequests.
2. Residuary Bequest: The church or diocese will receive all or a stated percentage of an estate after distribution of specific bequests and payment of debts, taxes, and expenses.
3. Contingent Bequest: The Church or diocese will receive part or all of the estate under certain specified circumstances.
4. Trust Established Under a Will: A trust may be established that provides for both the Church and other beneficiaries, such as the diocese of Alaska.

Life Income Gifts
A donor may make a gift to the Church and receive direct financial benefits. The benefits include an income for life to the donor and/or the donor's spouse and a charitable income tax deduction, in addition to the good feeling that comes from making a gift.
There are several forms of the gifts. They can provide you with an immediate income of a variable or fixed rate, or you may want a gift that will give you a fixed rate of return some time in the future. This last form is especially useful in retirement planning.  In determining which life income gift is most appropriate, the following questions should be answered:

Benefits of Life Income Gifts:

Charitable Remainder Trust
A charitable remainder trust provides a donor with a lifetime income and a charitable income tax deduction. The donor selects the payout rate, usually between 5% and 7%. The higher the payout rate, the lower the charitable income tax deduction. This gives the donor, and perhaps the donor's spouse, an income every year for life. If the donor funds the trust with appreciated securities, the donor will avoid capital gains taxes.
Donors may choose from two types of charitable remainder trusts: the annuity trust and the unitrust. The annuity trust pays a fixed, guaranteed dollar amount regardless of the trust's investment performance. The unitrust pays the donor a predetermined percentage of the fair market value of the trust's assets as revalued annually.

Benefits:

Charitable Lead Trusts
A lead trust is the opposite of a charitable remainder trust. The "lead" income is paid first to your Church, and after a number of years (based on a term or a lifetime) the remainder is returned either to the grantor (a grantor lead trust) or to someone other than the grantor, such as the grantor's beneficiaries (a non-grantor lead trust).
It is an extremely tax efficient way of passing assets to future generations while, at the same time, making a large donation to the church. The church is given a stream of dependable annual income to carry out its mission. The donor may be able to pass the asset to heirs at a very low tax cost.

Benefits:

Life Insurance
The need for insurance coverage usually lessens as we age. By then, insurance has served its original purpose of protecting our families and it can now be used for other purposes.
There are two types of insurance: Term insurance protects us for a stated term, usually one year. Whole life buys the policyholder a death benefit and will also pay the holder the cash value of the policy if he/she terminates the policy before death.
A life insurance policy can be given as an outright gift. The donor gives up all rights of ownership in the policy and thereby receives an income tax deduction.
A donor can also name a charity as a total or partial beneficiary of the policy, continue to maintain the policy, and receive a charitable tax deduction for premiums he or she makes to keep the policy in force. You have to change the beneficiary form.

In making a gift of life insurance, you may:

Retirement Plans
These plans include IRAs, Section 401(k) and 403(b) Plans, Qualified Pension Plans, and Qualified Profit-Sharing Plans. You can transfer all or part of these assets to a charity. These options include an outright gift, designation of a beneficiary, bequest, and transfer to a charitable remainder trust.

Designation of beneficiary. A donor can designate a charity or church to receive all or a stated percentage of a retirement account upon death. The donor receives an estate tax charitable deduction. Please note: As regards some retirement plans, your spouse must also sign a statement agreeing to include the church as a beneficiary.

Bequest. In the absence of a beneficiary designation, you can transfer your retirement accounts upon your death through your will. A bequest of a retirement account should be specifically to a parish or diocesan ministry to avoid income taxation of the funds.

Trust. If the plan permits, a donor may transfer the account to a charitable remainder trust. The plan donor will be taxed only on the funds received by him/her. At death, the balance will be paid to a charitable remainder trust, which can pay income to one or more beneficiaries for life, with the remainder going to the charity or ministry of your choice upon the death of the last beneficiary.

Send mail to lwinfrey@gci.net with questions or comments about this web site.
Last modified: 03/30/04