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A brief explanation of lifetime gifts, deferred gifts and after death gifts
Lifetime gifts may take the following forms:
* cash or cash equivalents
* publicly traded or closely held securities
* Israel bonds, corporate bonds, zero coupon bonds
* real property or personal property
* partial interests, remainder interests and notes receivable
Lifetime gifts enjoy multiple tax deductions. You may take an immediate charitable deduction from income taxes, and the assets contributed are excluded from your estate for estate tax purposes. Appreciated assets gifted are not subject to capital gains tax either by you or when sold by the Foundation.
Deferred gifts are lifetime gifts that will mature or come to fruition at a later time. Deferred gifts may take the following forms:
* A charitable remainder trust – a trust from which you or another designated person receives a lifetime income. Thereafter, the community receives the remaining trust assets.
* A charitable gift annuity – a lifetime income provided by the Foundation in return for your charitable gift.
The amount of the income depends upon your age. Typically, the annual income from a CRT and a CGA is substantially higher than commercial annuities or fixed income investments. The income may be partially tax-free, resulting in an even higher effective rate.
* Life-insurance policy – you may either assign an existing policy or take out a new policy for the benefit of the Jewish community. Both the value of the policy and the payment of future premiums is tax deductible.
* Real estate subject to a remainder interest – you may contribute a residence and retain the right to live in it for your lifetime.
* Charitable lead trust – A trust that first makes annual payments to the Foundation for a term of years and thereafter passes its assets back to you or to your children or grandchildren. Such a trust will substantially reduce the gift and estate tax cost of transferring assets to your heirs.
* Assignment of retirement benefits – It is particularly advantageous to assign retirement accounts to the Foundation, as they will be highly taxed when received by your heirs. Assigning them to the Foundation avoids all taxation.
Deferred gifts also provide multiple tax deductions. The income tax deduction is the present value of the future charitable remainder, which depends upon the vehicle selected and the manner in which it is structured. Appreciated assets used for deferred gifts are not subject to capital gains tax. The assets contributed may also be excluded from your estate for estate tax purposes.
You may give upon death anything that could have been given during your life through a simple bequest in a will or trust. Such charitable bequests are excluded in their entirety from your estate for estate tax purposes.
You may also create a testamentary charitable lead or remainder trust in your will to support heirs, which will reduce the tax cost of transferring assets to heirs.
You may name the Foundation as “residuary beneficiary” or as an “alternative contingent beneficiary” in case any of the primary beneficiaries predecease you.