Frequently Asked Questions
- What Kind of Gifts Can I Give to Germantown Academy?
Generally speaking, during your lifetime you can make an outright gift of cash, securities, or other property. Upon your death you can make a gift through your estate plan or with a distribution from a retirement plan or life insurance policy. You could also plan a gift that returns lifetime income to you, your spouse, or other individuals, such as a charitable remainder unitrust or annuity trust.
- What Sort of Assets Can I Use to Make a Gift?
Germantown Academy gratefully accepts various kinds of gifts such as cash, publicly traded securities, life insurance, or the balance of your retirement account. Other assets can be very valuable but are more complicated to administer and must be reviewed by us before we can accept them as gifts.
- What Tax Deduction Will I Receive for My Gift?
It depends on the form your gift takes:
- Outright gifts to Germantown Academy generate a full income-tax charitable deduction. Outright gifts of appreciated securities are deductible at fair-market value, with no recognition of capital gain—a great tax benefit!
- Bequests do not generate a lifetime income-tax deduction. They are exempt from estate tax, however.
- Similarly, life insurance distributions to Germantown Academy are not income-tax deductible but are exempt from estate tax. If you have made us the irrevocable owner and beneficiary of a policy during your lifetime, you may deduct annual gifts that offset premium payments (for more details on this point, see the next question).
- The charitable deduction for a gift that returns income to you, such as a charitable gift annuity or a charitable remainder trust, is the fair-market value of the gift asset minus the present value of the income interest you retain.
- Can Germantown Academy Serve as the Executor of My Estate?
No. State law, the limitations of our corporate powers, and our internal policies prevent us from taking such a role in your affairs.
- Life Insurance Question
No, you may not set up a life insurance policy, name Germantown Academy as beneficiary, but retain ownership of the policy, nor deduct the premium payments you make.
The IRS would not consider that a "completed gift"—they'd say that, as the owner of the policy, you could change the beneficiary designation to a friend or family member. Germantown Academy must be made the irrevocable owner of the policy for gifts offsetting premium payments to be deductible.
- Can I Transfer My IRA to Germantown Academy to Set Up a Life-Income Gift and Avoid Income Tax on the Transfer?
Under present law, any lifetime distributions from an IRA are included in your taxable income, even if these funds are transferred to us. You do, however, receive a current charitable deduction when you establish a life-income gift, which would partially offset the amount included in your taxable income. Proposed legislation would make the transfer tax-free, however. Watch our Web site for updates.
- If I Create a Bequest or Life-Income Gift, Will Germantown Academy Continue to Ask Me for Annual Contributions?
We will, because the commitments address two different needs. Your planned gift is a significant addition to our long-term financial strength—our ability to meet the challenges and opportunities the future will bring. Today's teaching, however, is supported through your annual gift.
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