The ARC of Martin County

Most of us wish to live a life of integrity and accomplishment and fulfill a desire to be remembered. Given the opportunity, many would like to make an important contribution that might improve the quality of life for others and leave their mark on the future.

What follows are descriptions of the various ways of making a tax-favored gift to the ARC of Martin County, Inc. These methods may enable you to enhance your future financial well-being, while at the same time assuring that you have touched the lives of others for perhaps many generations to come.

You can benefit in a number of ways from carefully planning your charitable gifts. Tax planning is only one of the many factors that go into deciding how best to make your charitable gifts.

The following must be properly balanced to assure that you give what you can afford in light of your overall financial picture:

Giving the right amount. In deciding how much to give, it is important not to jeopardize your own financial well-being. You can often give more than you might have thought possible without risk to the financial security of yourself or your heirs.

Giving at the right time. Tax benefits can be enhanced by the careful timing of gifts. Because you can give whenever and as much as you wish, you have more control over the time and size of your charitable deduction than other deductions which you may itemize, such as home mortgage interest or medical bills.

Giving the right property. What you give can be as important as when you give and can have a great impact on how much you can give.

While most donors first think of writing a check when they give,
Charitable gifts may actually be made with many types of property.

GIFTS OF CASH

Cash – usually in the form of a check – is probably the most common and popular type of property given. Most gifts made to the ARC of Martin County are in this form, the most common form for charitable gifts. Cash makes a convenient gift for many donors and is easily recorded through canceled checks and receipts. When you itemize your deductions at tax time, your gifts of cash may be deducted in amounts up to fifty percent of your adjusted gross income; any excess can be deducted over the next five tax years.

Cash gifts to the ARC of Martin County have the added advantage of being immediately available to fund services children and adults with developmental disabilities and their families. Not-with-standing the attractiveness of a cash donation, many people find that assets other than cash also make practical gifts.

Non-cash property – surprising benefits from giving stocks and other Assets. Property such as stocks, mutual funds, real estate and other Assets may help you make gifts of equal value to your planned cash gift at a lower cost to you. Here’s how:

GIFTS OF APPRECIATED SECURITIES

Stocks, including mutual funds, many types of bonds, and other publicly traded securities that have increased in value make excellent gifts. Current tax laws provide a way to make a substantial gift at a low after tax cost.

If you have property that has increased in value and you have owned it long enough to qualify as long-term capital gain property, you might consider using such an asset to make a charitable gift.

When you give appreciated property, you may receive a deduction for the full value of the asset, while you avoid the capital gains tax that would have been due if you had sold the property. With capital gains taxed as high as $.28 per dollar of gain for federal tax purposes, this can be a significant savings. You may generally deduct gifts in the form of appreciated property up to thirty percent of your adjusted gross income.

When property has decreased in value. If you have securities that have dropped in value, it is usually best to sell them and give the cash proceeds. You can then be able to claim the capital loss AND deduct the charitable gift of the cash proceeds of the sale.

When property has fluctuated in value. During periods of stock market fluctuation, you may own stock that has increased in value, then experienced a loss. It may still be worth more than you paid. In this case, making a gift of the stock and repurchasing with available cash to establish a new “cost basis” may be the best tax planning strategy.

By establishing a new cost basis, in the case of a stock decline, you now have a capital loss For tax purposes. If it increases, you have less gain to report on a subsequent sale.

GIFTS OF REAL ESTATE

Basically, the tax benefits available for gifts of appreciated real estate are identical to gifts of appreciated securities. First, you avoid paying the capital gains tax on the profit. Second, you receive an income tax deduction for the full-appraised value of the real estate.

In addition, you may reserve the right to either live in the property as long as you live, or during the lifetime of your surviving spouse. Such an arrangement permits a current income tax deduction for a portion of the fair-market value of the property.

Other properties to give include collections of value, works of art, Jewelry, Antiques, and other personal property which may also make Practical and meaningful gifts. The amount of your allowable deduction depends on the appraised value of the property and how the gift will be used.

GIFTS OF LIFE INSURANCE

Life insurance needs change as life continues. Children become self-sufficient, and in many instances investments provide income and security. After such developments, some life insurance coverage may no longer be needed. One of the simplest ways to make a significant future gift is to name the ARC of Martin County as beneficiary to receive all or part of the proceeds of the policy.

To receive a tax deduction you should designate the ARC of Martin County as the owner and beneficiary of the policy. Additionally, if you continue to pay the annual premiums, the amount of the premiums will be tax deductible each year.

There are actually several methods to make a gift of life insurance. Your attorney, accountant or other advisor will tailor an arrangement to meet your estate or financial plan.

LIFE INCOME PLANS

These deferred or planned gifts are ways of making a significant contribution to the ARC of Martin County while providing you with an immediate tax deduction and with income for life. The gift may also be funded with securities or other property.

This may be accomplished by making a gift through a trust arrangement called an “Annuity Trust” or ‘Unitrust”. Through either arrangement you may:

Avoid income tax on appreciated property used to fund the gift;

Receive the income earned by the gift for life (may include another designated beneficiary);

Increase income for your family;

Defer income until retirement;

Avoid gift tax; and

Reduce estate settlement costs.

CHARITABLE ANNUITY TRUST

An ANNUITY TRUST is an arrangement whereby you irrevocably place money or other property with a trustee, with instructions to pay you or someone else income, generally for life. Under an annuity trust, you or a designated beneficiary (or both) receive a fixed sum annually. The amount is agreed upon by the donor and the trustee at the time the gift is established.

The income payments you receive each year will be at least five percent of the amount placed in trust. The size of your tax deduction will depend on your age, payment percentage, and other factors.

CHARITABLE GIFT UNITRUST

Like the annuity trust, the CHARITABLE REMAINDER UNITRUST provides a gift that returns income. Under this arrangement the donor or other beneficiary receives a percentage of the fair-market value of the trust assets. Thus, the income from a unitrust may rise or fall from year to year.

Additions may be made to this trust, and a tax deduction is allowed, for a portion of each amount contributed. In light of the fact that IRAs and other retirement plans are now limited, the unitrust might be an alternative to provide for your retirement years.

CHARITABLE LEAD TRUST

Essentially the reverse of life income plans; the CHARITABLE LEAD TRUST pays income from the fund to the ARC of Martin County for the number of years you designate. At the end of the designated time period, the trust terminates and the assets are transferred to the person you name.

TESTAMENTARY BEQUESTS

The ARC of Martin County may be named as a beneficiary in your will. A testamentary bequest is a traditional way to provide for our programs. This method allows you to retain full use of your gift during your lifetime. Further, depending upon the value of your estate assets, the bequest may qualify as a deduction for estate tax purposes.

There are a number of common forms of bequest. For example, you might consider an outright gift of funds, either a specific dollar amount or a percentage of your estate. Alternatively, the ARC of Martin County might be named as secondary beneficiary to receive the residual of your estate.

WOULD YOU LIKE TO KNOW MORE?

The ARC of Martin County does not render tax or legal advice. For specific answers to your tax or estate planning questions, we advise you to consult with your attorney, accountant or other professional adviser.

Thank you for your interest in the ARC of Martin County, the Treasure Coast’s premiere provider of services to children and adults with developmental disabilities and other related health care issues. For further information on the ARC of Martin County, please contact Keith Muniz, CEO at (772) 283-2525 or by email at kmuniz@arcmc.org.