If you are charitably inclined, there are tax-advantaged ways to make a gift to a favorite charity while enjoying the income from that gift for your lifetime. Many educational and charitable organizations offer plans that combine the benefits of an immediate income tax deduction and lifetime income from the charitable gift. In most cases, you can make the gift in cash or securities, and sometimes even with real estate. Here is a brief overview of the major types of deferred charitable gifts.
*Many educational and charitable organizations offer a pooled income fund (PIF). A PIF closely resembles a mutual fund. When you make a gift to a PIF, it is merged with gifts of other donors, and you receive your allocable share of the income earned by the fund. Distributions from the fund are usually made quarterly and are taxable as ordinary income. There is no guarantee as to the rate of earnings; that depends on the fund’s success. You get an immediate income tax deduction in the year in which you make a gift to a PIF. The amount of your deduction depends on a combination of your age and the fund’s highest rate of earnings in the previous three years. The deduction will be less than the full value of your contribution, because it represents the present value of the funds that the charity will withdraw from the fund after your death...
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Education Law Updates, Nonprofit Law Updates, Tax Law Updates
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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