Mrs. Kroc’s Remarkable Legacy

One of the largest charitable gifts in history was the $1.5 billion charitable bequest of Joan B. Kroc, widow of the founder of McDonald’s Corporation.  But it must be noted that Mrs. Kroc’s generosity is matched regularly, on a smaller scale, by thousands of thoughtful people who decide to include worthwhile causes in their estate plans.  Such gifts represent some the largest contributions ever received by organizations.

What motivates people to make bequests from their wills, living trusts, life insurance, IRAs, brokerage and financial accounts?

It’s the right time.  People are rightfully careful about their finances, especially in their retirement years, and find estate gifts to be most practical: “I won’t need the money anymore.”

I’d rather assist worthwhile organizations than owe a lot of death taxes.  Bequests to qualified organizations generally escape all federal estate taxes and state death taxes, as well.  Leaving retirement accounts and U.S. savings bonds avoid the income taxes heirs would pay.

I can help my family and charity with the same bequest.  Several gift plans allow you to benefit our programs but first pay a lifetime income to a spouse or other family member.  Important tax savings may result, which can actually improve your family’s security.

I want to create a memorial.  Gifts from estates can be structured to memorialize one’s own life, or the life of a parent, spouse, friend or anyone important in your life.

I want to leave a legacy.  At the heart of all estate giving lies the notion of “giving something back” – of leaving the earth a better place than you found it.  Like Mrs. Kroc, you may have particular programs or objectives you wish to further.  Most organizations are also happy to receive gifts that will be applied wherever the need is greatest.

Your will or living trust enables you to make a thoughtful bequest for our future.  And in a well-planned estate, the cost of such a bequest can sometimes be surprisingly modest.  If you wish to restrict your bequest to a specific purpose, please feel free to consult our staff about the many opportunities available. Please call our office if you would like more information.

 

 

Advantages of Giving Real Estate

You have many options as to what you contribute when you make charitable gifts.  You can give cash, stocks, bonds, collectibles, land, buildings or virtually anything of value.  The choice of what property to contribute depends on your personal goals and circumstances.  However, in making this choice, you should be aware of the special incentives Congress has created to encourage certain forms of private philanthropy, especially gifts of real estate.   Benefits of giving real estate may include:

• Reduced income taxes
• Reduced estate taxes
• Reduced property taxes
• Lower insurance and upkeep costs
• Avoidance of capital gains taxes
• Financial security for loved ones
• Increased lifetime income
• Continued use of the contributed property during your life

An immediate gift of appreciated real estate can generate income tax benefits that will substantially reduce the after-tax cost of the gift.  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 escapes capital gains tax on the profit that would have been taxable if the property had been sold.  The donor may also save estate taxes because a lifetime gift of real estate removes the property from estate tax.

 

 

Gifts of Real Estate with Retained Benefits

You may prefer to leave real estate through your will, retaining all the rights and privileges of ownership during your life.  If you own your home or farm – or even a vacation home – you additionally can make an immediate gift of the property, obtain an immediate income tax deduction and still continue to use the property for the rest of your life (or for the lives of you and another).  Ask us for an illustration.

An ideal way to use real estate to accomplish your financial objectives and make a gift as well is to set up a charitable remainder unitrust.  This is a trust in which you irrevocably place property, but retain a specified income, usually for life.  At the end of the trust, the trustee distributes the property to organizations you select.  But because you set up the trust now, rather than leave the property through your will, you are entitled to a substantial income tax charitable deduction. 

By setting up a unitrust you can:

• 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;
• get rid of the financial and personal burdens of property management;
• make a magnificent charitable contribution.

 

 

Asset Giving Guide to Real Estate

Residences, office buildings, apartments, vacation homes, agricultural property and undeveloped land all may be attractive assets for giving.

Investors who have done well over the years trading property on a tax-deferred basis – so-called “like-kind exchanges” – may own land with a very low cost basis.  Such people face severe capital gains taxes if they sell.  But charitable gifts make such taxes disappear, even where donors keep lifetime income from their gifts. 

Commercial real estate owners generally have taken depreciation deductions on their buildings, and therefore face expanded capital gains taxes – at a 25% rate – upon sale.  A unitrust can avoid these taxes when the property is sold and provide donors with lifetime income and significant charitable deductions. 

Gifts of real estate can be extremely satisfying, but they require careful planning.  We hope you will contact our office to explore the potential that your real estate may have for making a meaningful contribution to our future.

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