Cash
A cash gift is the easiest way to give and is as simple as writing a check to the "CF Foundation". For making a monthly pledge a debit authorization can be setup by filling out this form and sending it to the CF Foundation with a voided check. Send or drop off all checks to the following address:
Attn: Wendy Warner, CFO
CF Foundation Inc.
3001 SW College Rd.
Ocala, FL 344 74
Cash gifts may be deducted on your federal income tax return up to 50% of your adjusted gross income (AGI). If, during any given year, your total charitable contributions exceed this limitation, you may carry over the remaining deduction for up to five succeeding tax years. With the assistance of your financial planners (attorney, CPA) and our staff, we can plan your gift to maximize your tax deduction and lower the "cost" of giving by creating tax significant savings.
If you have any questions please contact Wendy Warner at 352-873-5808.
Stocks and Securities
If you own a business or have privately-held stock, you may give this type of stock to the CF Foundation and receive a federal income tax charitable deduction for the full fair market value of the shares. Click here for an example
For example, say you own 60% of your company, ABC Industries. You decide to give the CF Foundation some of your stock, worth $25,000. (A qualified appraisal of closely-held stock is required by the IRS to support your claim of a charitable deduction for any value in excess of $10,000). Once you make your gift, you receive a personal income tax deduction for the fair market value of the stock (as determined by the appraisal) and you avoid a capital gain tax on the appreciation.
At a future date, the CF Foundation decides to accept ABC Industries' offer to buy the shares back. The company gives the CF Foundation $25,000 in exchange for the stock. In this example, you received a $25,000 deduction and the CF Foundation has received $25,000 in cash from ABC Industries; and, you have removed a significant asset from your taxable estate. The IRS allows this arrangement ONLY if the CF Foundation was not required by any prior agreement with the donor or the company to redeem the stock.
A similar arrangement can be made if a gift is made of soon-to-be-liquidated stock. If you make a timely gift of the stock prior to your company adopting a plan of liquidation, you can avoid tax on the capital gain when the shares given to the CF Foundation are redeemed.
The gift of highly-appreciated securities creates a charitable income tax deduction for the fair market value of your shares and enables you to avoid paying tax on the paper gain.
In effect, you save on taxes twice! With a gift of securities, your charitable deduction is limited to 30% of your adjusted gross income (AGI). Any unused portion of the deduction can be carried forward, subject to the same 30% of AGI limitation, for up to five additional years.
Another important advantage of using appreciated securities is that if you wish to make a substantial gift to the college, you can also retain an income stream from your assets to support yourself during your retirement. You can do this by establishing a trust or gift-annuity with a gift of appreciated securities. You may then be able to convert a highly-appreciated, but low- or non-income producing asset to one yielding higher income.
Making a gift of appreciated securities may enable you to use the cash you saved to purchase the same number of shares of the same stock. You will then have an increased basis, which may lower your capital gain tax if and when you sell the securities.
To take advantage of the tax deduction, you would need to transfer your securities to the CF Foundation. If you sell them then you will have to pay the capital gains tax, if we sell them you will not have any capital gains tax to pay. If you have securities that have depreciated in value, you should sell this type of security and then when you contribute the proceeds to the Foundation you can take then take a capital loss on the sale of this asset.
If you wish to make a substantial gift to the college using appreciated securities, you can also retain an income stream from your assets to support yourself during your retirement through a trust or gift-annuity. Click here for information on trusts and gift annuities.
IRA and Pension Plans
Making the CF Foundation a beneficiary of your individual retirement account, pension 401(k), or other retirement savings plan may save you and your heirs significant income and estate tax dollars. This type of asset is so heavily taxed, that you may find it advantageous to make a gift of your retirement plan assets while reserving for heirs other assets that are not as heavily taxed.
You also can arrange for lifetime income to be paid from retirement funds to a family member after your death, with a gift to the CF Foundation at a later date. Your retirement plan probably accounts for significant assets in your estate. At the same time, your pension plan assets could be subject to taxes to over 70% when the proceeds go to family members, with your heirs receiving only a fraction of the value of your retirement plan after the payment of the taxes. This is caused by the imposition of both the estate tax and a tax on income in respect of a decedent, commonly referred to as IRD. IRD is income that was earned by the plan participant but was not taxed to that individual before death. As a result, any of your heirs receiving distributions from your retirement plan assets after your death, must pay an income tax on the proceeds. If your assets are left to one of you children, for example, your children would be required to pay personal income tax on the funds they receive and the amount of their inheritance could be reduced by more than 45% (combined individual state and federal rates).
To make the CF Foundation a beneficiary of a part, or all, of any of the above mentioned options, is easy to accomplish. We will be pleased to provide you with the appropriate language to use, and your employer, attorney or other financial advisor can assist you in making the necessary changes in your beneficiary designation.
Life Insurance
By transferring actual ownership of an existing paid up insurance policy to the CF Foundation, or by purchasing a new policy naming CF the beneficiary, you will be able to receive an income tax charitable deduction.
Life insurance enables you to leverage in the future your actual cash gift today. Life insurance can combine with other gifts to replace dollars for your heirs that you decide to give to the CF Foundation. For example, by combining a charitable remainder trust and an irrevocable insurance trust, you can make a charitable gift to the CF Foundation and replace the assets with life insurance for the benefit of your heir. To accomplish this, you would simply use all or part of your trust or annuity income, and any tax savings that resulted from the gift, to buy an insurance policy for an amount equal to the charitable gift. By naming a spouse or child as the beneficiary, you can pass an asset of equal worth to your heirs while still accomplishing your philanthropic objectives.
Deferred Gifts
You may wish to make a significant gift to the CF Foundation but feel it is important to retain income from your assets to support yourself during retirement. Many types of special and unique vehicles are available to assist you in your planning (e.g. "deferred gifts," "planned gifts" or "life income gifts"). They can give you the satisfaction of helping CF serve our students and community, while providing you with cost-saving financial-planning options that serve you and your family.
Click on the link below for detailed information on a specific planned gift. Click on the link to close the section.
Will or Living Trust
Including the CF Foundation in your will or living trust is also a very simple and easy way to make a significant gift to the college. Adding a simple statement to your living trust or will is all that you need to do; in many cases, you can simply add a codicil to an existing document.
Although this gift creates no immediate income tax benefits, it will be 100% deductible for estate tax purposes. If you are unable to make an immediate outright gift, but would like to provide a gift to help us in the future, this is an ideal vehicle to accomplish that objective.
Your will can easily be the cornerstone of your estate plan. In Florida, the state will determine what will happen to your funds and property unless you have made a formal will. The will enables you to determine how your property and money will be divided and distributed; it can also provide security for family members, minimize taxes and estate costs, and direct charitable gifts according to your wishes. A living trust may be used as a substitute for a will or in conjunction with one. If you wish, you can design your will so the proceeds to the CF Foundation can be deferred while lifetime income is paid to a family member.
There are several types of bequests through wills and living trusts:
- A specific bequest is a particular parcel of real estate, stock or other identified item.
- A cash bequest states that the CF Foundation, Inc. would receive a specified amount or percentage of money from your estate for either undesignated use or a use recommended by you.
Residuary bequests are made from the assets remaining in your estate after all specific and cash bequests, taxes, settlement costs and debts are satisfied. You may leave all the residual assets of your estate to the CF Foundation, Inc., or a percentage, if you choose to divide the remainder of your estate among different beneficiaries.
Your bequest may be unrestricted enabling the CF Foundation Board of Directors; in consultation with the college to use, your gift for the highest needs at the time your gift is received. You may also designate your gift for a specific program such as student scholarships, or endowed chairs. Your gift may be made in your name or to memorialize a loved one.
If you have made or are planning to include the CF Foundation in your estate plans, please contact us. We can provide some guidance to you or the professionals helping you plan your estate. We can help identify gifts that would be eligible for match funds, and the greatest college needs, and can arrange for a named opportunity for you and/or your family.
We understand that you may wish to remain "anonymous" and we certainly will respect your wishes. However, knowing about your gift will enable us to help you plan and use it in a way that accomplishes the greatest good. In addition, it will give us an opportunity to thank you.
Life Income Plans
Charitable remainder unitrusts, annuity trusts, pooled income funds, and gift annuities are a few of the life income arrangements available for different circumstances. You and your family may benefit in particular from a life income plan if you are:
- Thinking about selling highly appreciated assets such as land, real estate or securities that will be subject to substantial capital gains tax.
- Looking to establish a steady source of permanent income for yourself and/or your spouse.
- Desiring to convert a highly appreciated, but low- or non-income producing asset, to one yielding higher current income.
Life Income Gifts and Bequests can provide you with income tax deductions, avoidance of capital gains taxes, reductions in your estate taxes; freedom from investment worries, and usually, increased income that can help you during your retirement years. Deferred gifts can also preserve your asset values and make considerate arrangements for children, grandchildren and other loved ones.
Charitable Lead Trust
This trust offers you the chance to substantially reduce your gift and estate taxes, and in some cases eliminate them entirely, by placing funds in a charitable lead trust for up a given period of time, usually a minimum of 10 years up to a maximum of 20 years. While your funds are in trust, the CF Foundation receives the annual income to provide direct support to help the college. This income may be matched as well.
To implement this type of trust you might want to consider using income-producing property (those that have the potential to increase are best). This property is then transferred to a trust for an agreed-upon number of years for the benefit of the CF Foundation. When the period for the trust ends, the property or other assets revert to you or goes to family members or other beneficiaries, as determined by you. You receive an immediate annual income tax deduction, and receive the asset back (or heirs receive the asset) at likely an appreciated value while saving the annual taxes during the period it was in the trust.
Charitable Gift Annuity
If you want a vehicle that is simple and easy then the charitable gift annuity may be one you wish to consider. The annuity is a contract between you and the CF Foundation and is backed by the "full faith and credit" of the CF Foundation. The arrangement calls for the Foundation/College to pay you a specified amount annually. Gift annuities may provide for one or two life-income beneficiaries (e.g., husband and wife) or it may be used to provide financial support to a friend or family member.
We determine gift annuity rates based on the age(s) of the beneficiary (ies). The rates range from 5 percent to 12 percent or more. A portion of each income payment you receive may be tax-free. Since a gift annuity is viewed for tax purposes as part gift and part purchase of an annuity, a portion of each payout is treated as return of principal and therefore is free from income tax. Gift annuities are especially valuable if you want to enhance your retirement income.
If you find yourself "locked-in" because you have securities that are now highly appreciated and pay low dividends, you may want to consider this option. If you sell your securities you will have a large capital gains liability, but transferring these assets to the CF Foundation will enable you to realize a full fair market value and to then receive a tax deduction, avoid most capital gains taxes, and save on estate taxes as well. The final result will be you receiving higher dividends.
You will receive an income tax deduction for the remainder, or gift, portion of the annuity; this contribution is deductible in the year that the gift is made, with an additional five-year carry-forward period.
Charitable Remainder Unitrust
If you want a long-term income with inflation protection over time, the charitable remainder unitrust is a good vehicle to accomplish your goal. It is also a way to provide the Foundation with resources to help the college while satisfying your personal and family financial needs.
The CRU is a plan in which you irrevocably place cash, securities or real property with a trustee, such as the college, with instructions to pay income to you and/or other designated beneficiaries, usually for life. The income is a fixed percentage of the trust's value; the percentage payout is established with you when the trust is created. The law requires that the payout must be at least 5% annually. After the lifetimes of the beneficiaries, the remaining assets ("remainder interest") are then transferred to the CF Foundation to serve the college.
The income paid by a unitrust is variable. The unitrust assets are revalued annually and the income paid to you is determined by multiplying the current market value by the previously established percentage payout rate. If actual income earned is less than the stated amount, capital gains and principal are used to make up any shortfall. Any income in excess of the stated payout amount is added to principal so that the trust corpus can grow over time. Selecting a relatively low unitrust, payment will enable your principal to grow at a faster rate and may provide a hedge against inflation. As the unitrust principal grows, so does the annual payment.
The unitrust provides several significant tax advantages. Any sale of appreciated assets through a unitrust is exempt from capital gain tax, allowing you to use the appreciation in your securities or real estate, and convert it to income for life without paying a capital gains tax.
By establishing a unitrust, you also create an immediate income tax deduction for the value of the remainder interest, or gift portion, which represents the discounted present value of the remainder that will be distributed to the CF Foundation at the end of the trust's term. The removal of a sizable asset from your estate may also yield estate-tax savings. You can make additional contributions to your trust at any time in the future.
Net Income Unitrust
One option to the standard unitrust is the "net income unitrust." This type of unitrust provides for annual fixed percentage payments of the trust's annual value, or the net amount of income actually earned by the trust in any given year, whichever is less. This type of unitrust can only pay out "income." You might want to consider using a net income unitrust if you are considering real estate gifts, which may take some time to sell and thus temporarily provide no income to the trust. Your annual payments begin once the real estate is sold, with no immediate capital gains tax liability, and the unitrust is allowed to reinvest in income-producing assets.
The "net income with makeup unitrust" operates the same way as the net income trust, with the exception that in the years during which the trust's earnings exceed the stated, fixed percentage, the excess earnings are used to make up for any payments that were less than the fixed percentage in earlier years.
Flip Unitrust
The "flip unitrust," starts out as a net income trust and later "flips" to a standard unitrust. Such a trust is established as a net income trust, or net income trust with makeup, when it is funded at least 90% with assets that are difficult to sell, such as real estate.
The "flip" or switch is triggered by the sale of the asset, and once flipped, the trust may begin to make payments as a regular unitrust in the next taxable year. During the taxable year in which the asset is initially sold, the trust operates as a net income trust, with donors receiving a payment of a fixed percentage of the trust's annual value as established when the trust is created, or the net amount of income earned by the trust, whichever is less. The flip trust enables you to eventually enjoy the more beneficial payout terms of the standard unitrust even while initially funding the trust with "unmarketable" assets.
Charitable Remainder Annuity Trust
If you are in need of dependable fixed income, a charitable remainder annuity trust may be an option you want to consider. This type of trust may be funded using cash or securities. Real estate is not usually considered an appropriate asset for this type of plan.
The annuity trust pays a set annual percentage. All assets placed in the trust are valued at the time of transfer and the established percentage payout (at least 5 percent) is then applied to determine the fixed dollar payout to be paid each year throughout the term of the trust. When income is not sufficient to meet this payout, principal will be used. This income is not guaranteed, but will be paid as long as any principal remains in the trust.
If you want certainty of amount, then this trust is one to consider. It is important to remember that while your income will not decrease during the life of the trust, neither will your income grow as the underlying principal increases in value. The result is that there is not a hedge against inflation. Younger donors tend to consider a standard unitrust instead, while senior donors may prefer the certainty of payout.
The annuity trusts offers significant income tax benefits including avoiding capital gains taxes, an immediate income tax charitable deduction (based on the remainder value of the trust) and estate tax savings.
Charitable Deferred Gift Annuity
This annuity offers the option of allowing you to defer the receipt of annual payments until a later time, e.g. as when you retire. By deferring your income, you will receive a larger income tax deduction as well as greater income once the payments begin. If you are not able to deduct contributions to an individual retirement account or pension plan, the deferred-payment annuity may be an option you want to consider.
Generally, stocks, securities, bonds and cash are the best assets with which to fund a charitable deferred gift annuity.
Testament Trust
Please note that all of the life income gifts listed can also be designed to help the college and take effect after your death. You can create this arrangement in your will, and will serve as a deferred gift for the CF Foundation and its service to the college after you have taken care of your beneficiaries. Your gift, now or in the future, can make a tremendous difference in the lives of our students and the community we serve.
For further questions or comments, please contact:
CF Foundation
Phone: 352-873-5808
Fax: 352-291-GIVE
