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.
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.
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 remainder trust, is the fair-market value of the gift asset minus the present value of the income interest you retain.
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.
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.
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.
