IntroductionAs you will see from this basic material, there are many plans available for those who intend to make donations or bequests to the Foundation. However, we advise consulting with a personal attorney and financial advisors as this material does not cover every opportunity due to a contributor.
StockGiving securities is often more economical than giving cash. By making a contribution of highly appreciated stock to Lifeboat Foundation, you can claim a tax deduction for the full fair market value of the stock given and not pay capital gains tax on the appreciated value.
Lifeboat Foundation has experience managing gifts of stock and would be pleased to work with you on such a contribution. A contribution of appreciated stock could produce tax advantages for you while helping Lifeboat Foundation to continue and pioneer new frontiers in self-sustaining and space travel technologies.
If you need your appreciated securities to generate income, but would still like to reap the tax advantages of a charitable gift and support Lifeboat Foundation, you might consider contributing securities through a Planned Giving arrangement.
WillsVast sums have been transferred by wills. Here are some standard approaches to making bequests to the Foundation as part of a Will.
NOTE: The laws in your state may vary. These examples are not intended to be legal advice, but only suggestions. You should consult with your personal attorney to ensure compliance with all applicable laws.
1. Include a percentage bequest of your estate. Example: “I give, devise, and bequeath to Lifeboat Foundation, a non-profit organization currently located at 1638 Esmeralda Avenue, Minden, NV 89423, (or its properly constituted successor organization), ______ percent of my estate, both real and personal property of whatever kind and wheresoever situated.”
2. Include a residual bequest. This would cover any remainder of your estate once you have made your specific bequests. Example: “I give, devise, and bequeath to Lifeboat Foundation, a non-profit organization currently located at 1638 Esmeralda Avenue, Minden, NV 89423, (or its properly constituted successor organization), all (or ______ %) of the rest, residue and remainder of my estate, both real and personal property of whatever kind and wheresoever situated.”
3. Include an explicit bequest to the Foundation of money or specific items (stocks, bonds, land, or other real property). Example: “I give, devise, and bequeath to Lifeboat Foundation, a non-profit organization currently located at 1638 Esmeralda Avenue, Minden, NV 89423, (or its properly constituted successor organization), the sum of ______ dollars (or describe the specific property you intend to bequeath.)”
4. Include a contingent bequest to the Foundation based on whether one or more named beneficiaries do not survive you. Example: “If any of the above named beneficiaries should pre-decease me, I hereby bequeath his/her share of my estate to Lifeboat Foundation, a non-profit organization currently located at 1638 Esmeralda Avenue, Minden, NV 89423, (or its properly constituted successor organization).”
5. Include a life income bequest whereby after your death, income is paid to another individual for his/her lifetime. After that individual? lifetime, the Foundation will receive the principal. This type of bequest is often set up to provide for elderly parents, family members or friends in special circumstances. Example: “I give, devise, and bequeath unto ________________, all of my right and interest in the following property, _______________, for and during his/her lifetime, and upon his/her death, I give, devise, and bequeath said property to the Lifeboat Foundation, a non-profit organization currently located at 1638 Esmeralda Avenue, Minden, NV 89423, (or its properly constituted successor organization).”
6. Include a Lifeboat Endowment Fund Bequest. The Foundation’s main endowment fund, the Lifeboat Endowment Fund, is designed to generate funds for the operating expenses of the organization in perpetuity. Bequests received by Lifeboat will be placed in the Lifeboat Endowment Fund if the bequest is more than $1,000, and the bequest is not donor restricted. Any of the examples mentioned above can be modified to become a bequest designated for an endowment fund. Example: “I give, devise, and bequeath to Lifeboat Foundation, a non-profit organization currently located at 1638 Esmeralda Avenue, Minden, NV 89423, (or its properly constituted successor organization), the sum of __________ dollars for its Lifeboat Endowment Fund.”
7. Include a Supplementary Endowment Fund Bequest. This one is somewhat more complicated in that a new endowment fund to support a specific project such as an on-going lecture series, an annual contest prize, a research fellowship or other educational endeavors must be approved by the Lifeboat Board of Directors. It would be a good idea to consult with the Lifeboat national headquarters for assistance. In addition, the Lifeboat guidelines provide that a supplementary endowment fund for a specific project may be established only with donated assets of $10,000 or more. An endowment may be a “named” endowment that honors a specific individual, in which case the initiating donation must be $50,000 or more.
InsuranceInsurance has also been used as a standard method for the transfer of wealth. There are a variety of approaches that can be considered to make use of insurance to fund a contribution to the Foundation and several are mentioned below. Gifts of life insurance are deductible up to 50% of annual adjusted gross income, and there is a five-year carry-over for any excess. (As of the time this material was prepared.) The value of the estate or gift created by a life insurance policy is potentially much larger than the premiums paid to create the policy.
1. You can receive an immediate income tax deduction by transferring the ownership and changing the beneficiary status of a life insurance policy that is now fully “paid up” to the Foundation.
2. You can make the Foundation the beneficiary or co-beneficiary of an existing life insurance policy by contacting the insurance company that issued the policy and completing the necessary forms required by the company to accomplish the change.
3. You can purchase a new policy and name the Foundation as the beneficiary. Your annual insurance payments are deductible if the ownership and beneficiary status are transferred to the Foundation.
Savings and Retirement PlansVarious savings and retirement plan vehicles allow you to designate the disposition of these funds.
1. Savings accounts, certificates of deposit, as well as other banking programs allow you to make the Foundation a joint-owner of the account with the “right of survivorship” only.
2. You can make the Foundation the beneficiary of your pension plan, profit sharing plan, IRA, Keogh plan, tax-sheltered annuity, or other retirement vehicle. The correct notice or forms need to be completed in each situation.
Real EstateReal estate is often overlooked as a possibility for charitable contribution, but in fact it can be among the most advantageous contribution vehicles for a donor. Personal residences, rental or commercial property, farms and ranches, and undeveloped land are among the possibilities for a contribution of this nature.
Here’s an example of how a real estate gift can work to your advantage. If you purchased a property for $20,000 that is now worth $100,000, you can give this property to Lifeboat Foundation and avoid capital gains taxes on the appreciation. At the same time, you can claim the full $100,000 the fair market value as a charitable tax deduction. You may also qualify for estate tax benefits. Of course, making this contribution also relieves you of maintenance costs, management concerns, and property taxes.
Like any transaction of this nature, making a contribution of real estate requires careful consideration. However, Lifeboat Foundation has experience managing contributions of real estate and would be pleased to work with you. A contribution of real estate could produce tax advantages for you while helping Lifeboat Foundation to continue and pioneer new frontiers in self-sustaining and space travel technologies.
Planned GivingIf you need your real property to generate income, but would still like to reap the tax advantages of a charitable gift and support Lifeboat Foundation, you might consider contributing real estate through a Planned Giving arrangement.
Planned giving can provide support for Lifeboat Foundation while realizing significant tax savings for the donor. Many planned giving vehicles can also provide donors with guaranteed income for life. The following is one example of how a planned giving strategy might be used to make a contribution to Lifeboat Foundation:
Mr. and Mrs. Smith would like to make a major contribution to support the work of Lifeboat Foundation. However, the Smiths’ financial circumstances require that their assets continue to earn interest income to support them in their retirement.
By creating a charitable remainder trust with Lifeboat Foundation, the Smiths will receive guaranteed interest income for life and may claim an income tax deduction for a substantial portion of their initial contribution. If the Smiths set up the trust by giving appreciated securities, they will also avoid capital gains taxes. If the Smiths create the trust by giving real estate, they will avoid capital gains taxes, qualify for potential estate tax benefits, and eliminate the costs and obligations of managing a property. When both Mr. and Mrs. Smith are deceased, the trust will be used to support the work of the Institute in a manner designated by the Smiths.
There are many other ways of using planned giving strategies to both support the work of Lifeboat Foundation and realize your financial planning goals. A bequest, for example, allows the Institute to be named as primary or partial beneficiary in a will, thereby reducing or eliminating estate taxes after the donor’s death while not affecting a donor’s financial situation while living.
In these and other circumstances, planned giving creates a “win-win” situation for the donor and for Lifeboat Foundation.
Other OptionsOf course, the easiest way to make a contribution to the Foundation would be to just to write a check. However, there may be those of you who prefer to retain control of the majority of your assets until you are sure you will no longer need them.
Trusts are legal arrangements in which property or other assets are held by one person for the benefit of another. A trust should be drawn up with the assistance of an attorney familiar with trust documents. By putting assets into trusts, probate of an estate can be avoided, and there can be considerable tax benefits, either for the person who sets up the trust or his or her heirs.
1. Living Trusts allow all the proceeds of the trust to be distributed outside of your estate and probate costs will be avoided. You can change or cancel the trust at any time. Property and income can be managed through the trust and any current gifts you wish to give to the Foundation could be made through the trust. You can also list the Foundation as the beneficiary or co-beneficiary of the trust.
2. Lead Trusts cannot be revoked once established. In the case of a lead trust you place an amount of money, stock, or property into the trust. While the trust is in effect, the Foundation receives an annual donation based on the value of the trust. At the conclusion of the trust, the principal passes on to your heirs without any gift or estate tax even if the assets have appreciated in value. It is generally not recommended to set up this type of trust with less than $100,000 in assets.
3. Life Income Trusts come in several forms; including the Charitable Remainder Unitrust and the Charitable Remainder Annuity Trust. You put a specific amount of money, stocks, or property into the trust. It is generally not recommended to set up this type of trust with less than $100,000 in assets. These trusts are also irrevocable once established. You will receive a set amount or a set percentage of the value of the trust as payments each year for life, or the duration of the trust, as income. In addition, you are entitled to an income tax deduction in the year that you establish the trust. After your lifetime, or at the conclusion of the trust, the principal in the trust will revert to the Foundation.
4. A Charitable Gift Annuity is another option that can be used to establish a fund that provides annual payments for the rest of your life. You are entitled to a federal income tax deduction in the year in which you make your gift. You can also create a joint charitable gift annuity naming yourself and someone else as the annuitants to receive income throughout both lifetimes. To receive immediate payments the annuitant(s) must be 60 years or older at the time the trust is established. If the annuitant(s) are 55 years or older it is possible to establish a deferred program with payments not being received until the retirement age.
SummaryAs mentioned at the beginning, there are many ways to make donations to the Foundation. Here are some other ideas you may not have previously considered.
1. Memorial/Honor Gifts are a way to give tribute in memory of someone who has passed away or in honor of a person who is still living. Birthdays, anniversaries, weddings, retirements, and other special occasions offer opportunities where gifts could be directed to the Foundation. The Foundation acknowledges gifts of $20 or more. If you wish to make this type of gift be sure that the person(s) who sends contributions also sends the pertinent information including the name and address of the person honored or the loved ones of the person memorialized.
2. If you are thinking about making a donation of any size to the Foundation, be sure to check if your employer has a Matching Gift Program. Many such programs match the employee contribution dollar for dollar.
Hopefully this outline has provided some helpful information on the opportunities available to those considering making donations to Lifeboat Foundation. These methods can also be considered if you wish to contribute to the Lifeboat Endowment Fund or create a new supplemental endowment fund. The Lifeboat headquarters staff is available to assist you as you move forward with your gift planning. Please feel free to call, or send an email to [email protected] in order to get any questions you may have answered.