Charitable Remainder Trusts
Many philanthropic taxpayers will try to maximize the benefits to both the school and themselves. The Internal Revenue Code allows a donor or a donor’s estate to create a trust which will provide income for the life of the donor or member(s) of the donor’s family, or for a term of years, as well as a current charitable deduction. The donor may also avoid tax on the appreciation of the securities or real property contributed. Income payments can be made annually or more frequently, and at the death of the last beneficiary or the termination of the trust, the remainder amount would be left to Saint Dominic Academy to carry out its important mission.
Prospective donors should seek the advice of a qualified legal, estate and or/ tax professional to determine the consequences of your gift.
Other Methods of Donation
Life Insurance and Retirement Plans
You can name Saint Dominic Academy as a beneficiary of a life insurance policy or retirement plan asset. Contributions of life insurance policies that have a cash value may entitle the donor to a current income tax charitable deduction, in an amount roughly equivalent to the cash surrender value of the policy at the time of the gift. The gift must be irrevocable and designate the school as both owner and beneficiary under the policy. Consult your tax adviser to see if this type of planning makes sense for you and your loved ones.
Retirement plan designations can be a little more complex, but, simply speaking, designating the school as a beneficiary of an individual retirement account or other qualified retirement plan benefits can offer estate tax benefits. This is because amounts in an IRA are includible in the donor’s gross estate (although sometimes offset by certain deductions) and distributions from most IRAs are subject to income tax. Therefore, in a large estate, where a child or grandchild is the designated beneficiary, only a small portion of the IRA may remain after payment of both estate and income taxes. On the other hand, both the school and the family will benefit if the school is the beneficiary of the IRA and the family receives other assets. Again, if you are philanthropically inclined, your tax adviser can best recommend a course of action for you.