Insuring That Your Generosity Endures

There are so many ways to create an endowment, a permanent charitable fund that provides annual income forever to a donor’s favorite charity, but finding the right technique to maximize dollars to achieve the best tax deduction and philanthropic objective takes education.

Here are five ways you can leverage your assets to leave a significant impact tomorrow while reaping rewards today.

Life Insurance
“Using life insurance to create an endowment allows someone to get a big bang for their charitable buck. It thrills me to know that the passion I have for the Jewish community will live forever through this endowment,” explains Margot Benstock of Pinellas.

A donor can pay an annual premium to purchase a life insurance policy. The payment of premiums will provide a tax deduction since the policy is owned by a charity, TOP Jewish Foundation. Premiums will continue until there is enough cash value in the policy to make it self-supporting.

A person can also transfer and donate an existing policy by naming TOP Jewish Foundation as the policy’s owner and/or beneficiary. With this approach, an individual can receive an income tax deduction for the cash value of the policy and future gifts that cover premium payments.

Cash
“The future of the annual campaign is dependent on endowment because without it, the annual campaign will not grow to meet the growing needs of the Jewish people,” outlines Thelma Rothman of Pinellas.

Gifting of cash is the easiest way one can make an immediate charitable gift and reap immediate tax deduction rewards. Donating appreciated assets are even more beneficial because a donor bypasses the payment of capital gains taxes while increasing the overall tax deductibility of the charitable gift.

IRA or Pension Funds
“Being married to a CPA, I heard about how my heirs can lose 60% or 70% of the total value of an Individual Retirement Account (IRA) or tax-sheltered annuity (TSA) in taxes. So I donated my TSA monies to TOP Jewish Foundation creating an endowment. Now my charitable interests win, I win, and my kids win. Most of all, I really love the idea of Uncle Sam not getting a penny of my retirement funds,” explains Barbara Chasnov of Orlando.

Gifts of qualified retirement plans like IRA, 401(k) or Keogh plans, might be tempting to leave your family but that creates one huge downfall: the IRS can actually tax these benefits twice or even three times after your death losing sometimes 70-80% of the assets in taxes.

Charitable contributions of retirement plan proceeds are popular because they escape both estate and income taxation. Generally, if your estate is large enough to provide an inheritance for your loved ones and make charitable gifts, your best strategy is to give the individuals your non-retirement-plan assets and leave your retirement plan proceeds for charity.

Charitable Gift Annuity
“Through the gift annuity I can help charity and myself at the same time. I enjoy the fixed income, along with having an income tax deduction on the funds donated to the Foundation. At the same time, I have comfort in knowing my Federation endowment will help knit together a community working for the common interest of the Jewish people,” shares Rita Bornstein of Orlando.

A charitable gift annuity can offer a donor, or one or two beneficiaries a donor designates, with a fixed stream of income for life and a charitable tax deduction. The rate in effect when an annuity is acquired never changes, it is guaranteed for life and can provide a higher rate of return than a certificate of deposit or money market can offer.

Payment rates will depend upon the age of the beneficiary(ies) at the time of acquisition. The older the beneficiary(ies) is at the time of the gift, the greater the fixed income amount. The payment may also continue after death to the donor’s surviving spouse. If a donor creates an annuity for only one life, no estate tax is due at death. If spouses establish a two-life gift annuity, no estate tax is due at either death.

Bequest
“Leaving a bequest in your estate plan allows a person to have access to the asset during their lifetime and have the self-satisfaction that they have made a significant gift to charity after their gone,” explains Henrietta Katzen of Orlando who endowed her Lion of Judah gift to the Federation through her estate plans.

An outright bequest in a will may add to an existing fund held at or establish a charitable fund in the name of the donor at TOP Jewish Foundation. Financially; a charitable bequest is deductible in determining the amount of an estate subject to death taxes. If a will is already is place, a simple codicil can be written.

To establish this type of gift, simply direct in your will that a specific amount of money or property will go to TOP Jewish Foundation to establish an endowment that will support your favorite charity or cause. A typical provision in a will may state:

“I leave ($--) or (---% of my estate) to Tampa Orlando Pinellas (TOP) Jewish Foundation, Inc. to create a (name of endowment, donor advised philanthropic fund, support foundation or other form) for the benefit of (list purpose of gift to benefit specific charity or cause).