Tax Planning

Currently, U.S. tax laws strictly limit how much you can transfer tax-free to individuals other than your spouse. Gifts made during your lifetime trigger a "gift tax" and those by bequest an "estate tax". Since both gifts represent a transfer of funds from one individual to another, they are taxed at the same rate.

There is no limit, however, to how much you are able to gift - during lifetime or by bequest - to charitable beneficiaries.

Income Tax Deduction.

If you make a gift during your lifetime, you receive a charitable income tax deduction.

• Donate before 12/31 to ensure your charitable deduction for this tax year.
• Donating long-term appreciated securities outright entitles you to a "double" tax benefit:
• You are allowed an income tax charitable deduction for the full fair market value of appreciated securities if they have been held for at least one year (or for your cost basis if they have been held for less than one year).
• You pay no capital gains tax on the transfer.
• Charitable gifts are generally deductible up to 50% of your adjusted gross income(AGI) for cash and non-appreciated property, and 30% of your AGI for gifts of appreciated securities (stocks, bonds, mutual funds). You may, if necessary, take unused deductions of this kind over the next five yeas, subject to the same 50% or 30% limitation.
• More and more taxpayers are discovering that their basic itemized deductions (i.e., deductions for mortgage interest, property and state taxes) are being reduced due to Alternative Minimum Tax (AMT). Charitable donations of non-appreciated assets (i.e., cash) are not subject to AMT!

Estate Tax Deduction.

You can also make your gift through a bequest in your Will, which, will be deductible from your estate, if you have a taxable estate. It is wise to synchronize your estate plan and your charitable bequest. For example, an IRA incurs a steeper tax in your estate than other property. Thus, for many estate plans, funding your charitable bequest with your IRA and passing other, non-IRA property to your heirs, will maximize your estate tax charitable deduction as well as the amount that can be left to your heirs.

Gifts of Insurance.

You can also fund your gift with insurance, payable at your death to the Foundation. If such insurance is owned by the Foundation and the Foundation is the beneficiary of the insurance, your premium payments for the insurance will be income tax deductible.

Gifts of Appreciated Property

Lifetime gift of appreciated property, such as securities or real estate, affords you the opportunity to eliminate the income tax on the long-term capital gain and will, in some instances, generate a full income tax charitable deduction and will remove those assets from your estate for estate tax purposes.

Retirement Assets

Did you know that if you have a taxable estate, after applicable estate and income taxes have been imposed, as little as 25% of every dollar might remain for your beneficiaries? Designating a charity as a beneficiary of a retirement plan is an attractive option because the assets can be preserved and put to good use.

There are tax benefits to naming the Jewish Foundation as the beneficiary of your retirement plan and using other assets, not subject to income tax, to make gifts to your heirs. When this is properly done the Jewish Foundation won't pay income tax on the distribution and your heirs will receive their share of your estate without the burden of extra taxes. If you are not sure what your estate's tax situation may be, consider naming your heirs as the primary beneficiary of your retirement assets and naming the Jewish Foundation as a contingent beneficiary thus allowing your heirs, should they desire, to disclaim their interest in your retirement assets in favor of the Jewish Foundation.