About the Cancer League of Colorado Foundation, Inc.

As a donor to Cancer League of Colorado Foundation, your generosity, vision, and compassion are greatly appreciated. You inspire others to share the mission and experience the joy of giving.

Cancer League of Colorado Foundation recognizes a full range of gifting options such as cash, securities, and other property.

• Charitable Estate
• Simple Cash Gifting
• Real Estate / Securities Gifting
• Gifts by Beneficiary Designation: Life Insurance, Charitable Lead Trust and
  Charitable Remainder Trust
• Gifts by Bequest

Charitable Estate Planning
Most clients want to do more with their assets. Charity can include contributing to sound financial vehicles while giving back to favorite charities. There are five cardinal rules of gift giving:

1. Be clear on target charities. Making a plan will make giving easy.
2. Maximize tax deductions while implementing a donation plan.
3. Make sure a gift increases the value of the estate.
4. Create a plan without probate, red tape, or emotional stress.
5. Make sure to underwrite the gift plan by using strong and secure
    financial institutions.

Cancer League of Colorado Foundation wins when:
• Receives immediate cash donations
• Increases contributions from existing
  Donor base
• Attracts new Donors through referrals

The donor wins when he or she may:
• Preserve and continue to grow assets
• Gain knowledge and valuable tips on new retirement products

The Donor’s legacy wins:
• Grow and protect inheritance
• Move inheritance with tax efficiency

Simple Cash Gifting:
Cancer League of Colorado Foundation gladly accepts cash contributions in the form of cash, check or credit card. This accommodates the donor who wishes to be less involved , yet realize an rewarding and tax-deductible opportunity to donate on a one-time, periodic, or year-end basis. A cash gift to a public charity enjoys a deductibility ceiling of 50% of a donor’s Adjusted Gross Income (AGI) for the year of the gift with a five-year carryover of any excess that is not deductible in the year of the gift.

Cash Gifts vs. Gifts of Property
Gifts of property are a convenient and sensible choice for the taxpayer that plans to contribute to qualified charities. In addition to a charitable deduction for income tax purposes, a gift of appreciated property can create the potential advantage of avoiding capital gains taxes; however, recent tax laws, especially the Jobs and Growth Tax Relief Reconciliation Action of 2003 (JGTRRA) have both decreased the impact of capital gains taxes and encouraged the holding of dividend producing stocks – two changes that may affect the decisions of a taxpayer considering the options of gifting appreciated property or cash.

Again, a cash gift to a public charity enjoys a deductibility ceiling of 50% of a donor’s Adjusted Gross Income (AGI) for the year of the gift with a five-year carryover of any excess that is not deductible in the year of the gift.

A gift of appreciated property held long-term has a deductibility ceiling of 30% of a donor’s AGI with a five-year carryover of any excess that is not deductible in the current year. If the taxpayer wishes to deduct the contribution as he or she would a gift of cash (at 50% of the AGI), the taxpayer is limited to a deduction of the basis in the property. Moreover, unlike cash, gifts of property offer an additional tax advantage: the avoidance of capital gains taxes. A gift of appreciated property to a charity does not trigger capital gains taxes for the taxpayer.

Real Estate Gifting
When a donor considers making a charitable gift, a donor has many options. The donor can give virtually anything of value: cash, stocks, bonds, collectibles, land, or buildings.

When making the choice, the donor should be aware of special incentives Congress has created to encourage certain forms of private philanthropy, especially gifts of real estate.  Benefits may include:
• Reduced income, estate and property taxes
• Lower insurance and upkeep costs
• Avoidance of capital gains taxes
• Financial security for loved ones
• Increased lifetime income; and/or
• Continued use of contributed property during your life.

Outright Gifts
Generally, a person who makes a gift of real estate held for more than one year is entitled to an income tax deduction equal to the full value of the property contributed. In addition, the donor eliminates capital gains tax on the profit that would have been taxable if the property had been sold. Estate tax savings are also possible.

Gifts by Will
A donor may prefer to leave real estate through a will. The donor’s gift can be outright or it can be contingent upon the happening of some event. For example, Peter would like to leave a parcel of land to his only son, Matthew; however, if Matthew dies before Peter, Peter directs that the property will pass to Cancer League of Colorado Foundation.

Give, But Keep Lifetime Use
If the donor owns a home or farm – or even a vacation home – the donor may be able to make a gift of the property, obtain an immediate income tax deduction and still continue to use the property for as long as the donor wishes.

How does this work? Simply give the property, but retain the right to use it for life (a “life estate”). A donor can continue to live on the property or receive income from it. After the donor’s death, the property pass for the benefit of Cancer League of Colorado Foundation. By arranging this gift now, rather than in a will, the donor receive an immediate income tax deduction for the present value of the Foundation’s future right to receive the property.

Take the example of Sam and Cathy. Sam is 77 years old and Cathy is 75. They are retired, but pay substantial income tax each year. They own the home that they live in (currently worth $500,000) and they finished paying off the mortgage ten years ago. Sam and Cathy plan to live in their home for the rest of their lives; however, they also would like to make a significant gift to Cancer League of Colorado Foundation. They’ve decided to deed the home to the Foundation, retaining use of the home for their lives. Based on their ages and other factors, they will receive an income tax deduction this year of about $220,000.

Contribute Just a “Slice”
A donor can also give a “partial interest” in property and receive an immediate income tax deduction. For example, the donor could make the Foundation the owner of a 10% interest in a vacation home. In order to qualify for the tax deduction, the donor would be required to contribute a 10% interest in every ownership right, including the right to use the property; however, the Foundation’s real benefit is realized when the property is sold. the Foundation will receive 10% of the proceeds – even if the sale doesn’t occur until after the donor’s death. The real benefit to the donor is a deduction for about 10% of the value of the gifted property.

Securities Gifting
Why Are Gifts of Appreciated Assets So Valuable?

What is the best asset a person can give a charity? Tax-wise, gifts of securities, real estate, or other assets that have gone up in value are the hands-down winners!

Why? Because donors receive a double tax benefit: They can deduct the full fair market value of their appreciated assets – if owned more than one year – and they save again by eliminated capital gains taxes on profits.

Take the example of Mrs. Green. The stock she purchased in 1985 for $200 is now worth $1,000. If Mrs. Green gives the stock instead of cash, Cancer League of Colorado Foundation receives a gift of $1,000 (the fair market value of the stock) and she can claim a $1,000 charitable deduction on her next income tax return. In a 33% bracket, that’s a tax savings of $330. Moreover, she saves $120 in capital gains taxes that would be due if she sold the stock. The results: After figuring the tax savings, a gift of $1,000 will cost Mrs. Green only $550! The chart below shows the tax savings from gifts of securities in various amounts where the stock has doubled in value, assuming a 15% capital gains tax rate:

Gifts by Beneficiary Designation

Trusts
Trusts…for family security…for investment assistance…for planned gifts – whatever your purpose, a trust is a very valuable financial planning tool.. Often a trust is the easiest means of guaranteeing that your wishes concerning the use and disposition of a donor’s property are carried out during the donor’s lifetime or the lives of others. Effective use of a trust may entirely eliminate any federal estate or income taxation, or at least substantially minimize their effect. Above all, the highly adaptable trust can be molded to fit a donor’s personal financial situation in order to accomplish unique gifting goals.

Basically, the trust is a form of property ownership. As a donor, you can create a trust by conveying property to a trust for the benefit of one or more beneficiaries. Legal ownership of the property is in the trust, drafted by you and your attorney. The trust defines the duration of the trust, the powers and duties of the trustee and the rights of all beneficiaries. You prescribe, in the trust instrument, exactly who is to receive income and principal and when payments are to be made. During the life of the trust, the trustee must manage, invest, and use the property in the manner you have directed.

During the past 500 years, courts have developed a body of guidelines which adequately define the proper role and conduct of the trustee so as to provide you with maximum peace of mind once you create the trust.

Forms of Trust
It is important to note that there is no such thing as a “standard” trust. Every trust is tailor-made to carry out the specific objectives of the creator.

Trusts may have multiple beneficiaries. Income may be payable to persons or organizations for life and the property may then be distributed to other beneficiaries. A husband may set up a trust under which he is to receive the income for his life;, then the income is to be paid to his wife for her life; when she dies, income can to be distributed among children, grandchildren, and/or designated charities.

A beneficiary may have interests in both income and principal. For example, a trust may provide that on party is to receive the income for life plus as much of the principal as needed for comfortable support, or education, etc. with any principal remaining at the initial beneficiary’s death passing to subsequent beneficiaries. The important point to note is that the trust is extremely flexible and can be set up to meet the creator’s needs and objectives.

Charitable Lead Trusts (CLTs)
Testamentary CLTs offer the distinctive advantage of benefiting both charitable and non-charitable beneficiaries while reducing transfer tax costs. Testamentary CLTs are irrevocable trusts that distribute income to a designated charitable organization for a term of years or for the life of an individual. At the conclusion of the term, the principal is distributed to non-charitable beneficiaries.

The IRS calculates the value of the remainder interest to the donor’s heirs at its present value at the time the trust is established. When the trust ends and the assets are distributed to heirs, the assets may be worth considerably more than their estate tax value, if the trust corpus has been growing at a rate higher than the payout rate to the charity. Regardless of the amount of the growth, there will be no additional estate tax on this appreciated amount. Thus, CLTs not only benefit charity but enable the donor to (1) realize a “tax discount” on the date-of-death value of the principal by virtue of the charitable income interest, and (2) avoid estate tax on the post-death appreciation.

For example: Ruth Miller wants to make a will distributing funds to both her church and her daughter. To accomplish both goals, she sets up a testamentary charitable lead unitrust with $3,000,000 from her estate. At Ruth’s death, the charitable lead unitrust will pay out 6% annually of the value of the trust assets to her church for a period of ten years. Over that period, the church will receive $1,883,198. In turn, Ruth’s estate will qualify for $1,327,677 charitable deduction. If the trust earns a 7% rate of return, at the conclusion of the ten-year period, Ruth’s daughter will receive $3,313,866.

This example assumes an Adjusted Federal Interest Rate (AFR) of 6%

Charitable Remainder Trusts (CRTs)
Like CLTs, CRTs distribute funds to both charitable and non-charitable beneficiaries, while sheltering the trust from transfer taxes. Unlike CLTs, CRTs first pay out income to non-charitable beneficiaries (for a term of years up to 20 or for life), with the remainder distributed to a charitable organization. The estate may claim an immediate estate tax charitable deduction for the present value of the remainder interest, provided the trust is either a qualifying charitable remainder unitrust or charitable remainder annuity trust.

For example: Carl Wilson wants to make a bequest to provide for both his elderly brother, John and his alma mater, State University. John is 80 years old, and needs financial assistance to cover his medical and caregiver expenses for the remainder of his life. Therefore, Carl sets up a testamentary charitable remainder unitrust funded with $2,000,000 from his estate. At Carl’s death, John will receive annually 6% of the annual value of the trust assets until his death. Based on John’s life expectancy, he will receive roughly $1,217,000 over his life. If the trust earns a 7% rate of return, at John’s death, State University will receive $1,632,406. Finally, Carl’s estate will qualify for a $966,000 charitable deduction.

This example assumes an Adjusted Federal Interest Rate (AFR) of 6%

What is a unitrust?
It is a trust in which a grantor irrevocably places property, but retains a specified income, usually for life. At the end of the trust, the trustee distributes the property to the beneficiaries. because the grantor set up the trust now, rather than leave the property through a will, the grantor is entitled to a substantial income tax charitable deduction. Setting up a unitrust, the grantor may :

• Establish an income for life – one that can grow with inflation; • Reinvest a highly appreciated, low-yield asset, without incurring capital gains tax; • Reduce income taxes significantly; • Gain the investment and administrative services of a trustee; • Reduce the financial and personal burdens of property management; and/or • Make a magnificent gift for the future of Cancer League of Colorado Foundation.

An example of how a unitrust might work for a hypothetical grantor:
Joseph, age 72, owns an apartment building worth $300,000, that he purchased many years ago for $100,000. He has taken straight-line depreciation on the building and has an adjusted basis of $20,000. Joseph plans to move to a retirement community and wants to sell the apartment building and invest for retirement income. Capital gains taxes would take approximately $50,000 of his profit. Joseph instead transfers the apartment to a charitable remainder unitrust that will pay him 6% income for the rest of his life. The $50,000 capital gains tax disappears under the unitrust and Joseph will begin receiving trust income of about $18,000 a year. Based on his age and other related factors, Joseph also receives a charitable deduction of about $153,000!

Gifts by Bequest
A donor can accomplish some gifting objectives by making “bequests”. A bequest is simply defined as a transfer of property under a will and can entail any of the aforementioned avenues of gifting. In writing a will, the donor should be aware of the different forms of bequests that can be used to accomplish different forms of bequests.

A specific bequest directs that a specific thing be given to a specific beneficiary, e.g. the crystal goblets to Sara, the power tools to David, the Victorian chairs to Beth. (A will can be a very human and personal thing, not just a cold, business document.)

A general bequest directs that a specified amount of money or a specified percentage of an estate to be paid to a particular beneficiary. As a primary charge against an estate, a general bequest must be satisfied even if property must be sold to obtain the cash. Bequests of certain percentages of cash in an estate are therefore preferable to bequests of absolute amounts.

A residuary bequest directs that a beneficiary (or beneficiaries) receive all that remains in an estate after payment of funeral costs, debts, taxes, administrative and settlement costs and any specific and general bequests.

An absolute bequest has “no strings attached,” but the intended beneficiary may, of course, predecease the donor. In this case a contingent beneficiary may be named in a will to receive the bequest intended for the primary beneficiary in the event the latter dies first. Under the laws of most states, if a beneficiary of will dies first, that bequest will be void and the property will pass to any residuary beneficiary named. If the residuary beneficiary has not survived, the property may pass under the intestacy laws of the respective state.

A bequest for the future benefit of Cancer League of Colorado Foundation can take any of these forms. Please consider naming Cancer League of Colorado Foundation, Inc. as a primary or contingent beneficiary of your estate. A specific property can be bequeathed to charity and in many instances this is a very satisfying gift.

A monetary bequest to charity is most common. This is simply a direction that the charity be paid a specified sum of money. All monetary bequests pose the difficult problem of being absolute and fixed, while the value of the estate is variable and changes from week to week. A donor should consider whether a bequest of a percentage of the estate is a more realistic planning technique.

Charitable bequests present some opportunities not available through lifetime giving. Please ensure that you receive careful planning counsel. An improperly made charitable bequest can defeat intentions and result in a denial of the estate tax charitable deduction.

Cancer League of Colorado Foundation is pleased to present this information and encouraged that you are considering contributing to our organization.

For additional information, please call Karen White at 303-670-8362. Donations can be sent to Cancer League of Colorado Foundation, Inc. PO Box 5373 Englewood CO 80155
 

About Us
President's Message
Golf 2009
Testimonials
Foundation
How Can You Help?
Advisory Boards
Research Grants
Service Grants
Volunteers Needed!
Fundraising / Calendar
Memorial Garden
Donation Information
Contact Us
Members / Resources

Home