Gifts That Reduce Taxes

The Merinos
“We had already planned to include City of Hope as a beneficiary of our trust, but it was only after the Campaign started that we finally made it happen … I see how City of Hope has grown, with industry support, from a small hospital to a world-class institution, and I know our money will be put to good use.”
– Bruce and Marielena Merino
Hardware/Homebuilding Industry supporter
and Industry Challenge leaders

With new tax laws in effect at the start of this year and more changes possible in the near future, smart City of Hope supporters are working with their advisors to identify strategies for dampening the financial impact of the new laws. The good news is that a wide variety of charitable gifts can help.

If you have stocks that you have held for more than a year and have increased in value, you can use them to fund a City of Hope charitable gift annuity and you will bypass a significant portion of the capital gains tax. The remaining gain will be apportioned over several years of your annuity payments rather than being taxed all at once. Plus, you will enjoy the other benefits of a gift annuity — eligibility for an immediate income tax deduction and a fixed annual payment for life — at an attractive payment rate.

Evelyn, age 82, establishes a $50,000 charitable gift annuity with stock that she originally purchased for $10,000. In addition to an annual payment of $3,600 for as long as she lives and an income tax charitable deduction, more than $19,000 of her capital gain on the stock’s appreciation will never be taxed.*

*Based on payment rates as of July 2017 and a capital gains tax rate of 15%. Based on the maximum capital gains tax rate plus the investment tax.

A charitable lead trust is a way of making a gift to City of Hope that enables you to reduce gift and estate taxes while controlling the timing of passing assets to your children and grandchildren.

You contribute securities or other appreciating assets to a charitable lead trust. The trust makes annual payments to City of Hope for a period of time. When the trust terminates, the remaining principal is paid to your heirs.

Benefits to You:

  • The present value of the income payments to City of Hope reduces your gift/estate tax.
  • All appreciation that takes place in the trust goes tax-free to your heirs.
  • The amount and term of the payments to City of Hope can be set so as to reduce or even eliminate transfer taxes due when the principal reverts to your heirs.
  • You have the satisfaction of making a significant gift to City of Hope now that reduces the taxes due on transfers to your heirs later.

A charitable remainder unitrust with City of Hope can provide you and/or other beneficiaries with income for life or for a fixed number of years. For your donation, which can be appreciated securities or real estate, you receive an immediate income tax deduction for a portion of your contribution to the unitrust and savings on capital gains taxes, too. You will also have the satisfaction of making a significant gift that benefits you now and City of Hope later. If you have low-yielding assets; you desire to:

  • reduce or eliminate capital gain, estate and/or gift taxes;
  • diversify your investments; and
  • create a source of income for loved ones and city of hope

a charitable remainder trust (CRT) may be right for you.

Another CRT benefit is that along with traditional assets that can be donated to create the trust,, many less commonly considered assets may also be used. These include, but are not limited to, real estate, LLC, S corporation or other limited partnership interests and privately held C corporation stock.

Joan and David, both age 70, have a vacation home that has become a burden to manage and maintain. Giving the property to one of their children isn’t an option. The property is worth $350,000, but they paid only $20,000 and are concerned about capital gains taxes. Donating the property to City of Hope would provide them with income, reduce their capital gains tax, and enable them to reduce the estate tax bill their children will inherit.

*Based on payment rates as of July 2017.

Because retirement plans are taxed differently than most assets, they may actually become a tax liability. Naming City of Hope a beneficiary of your retirement account can be an attractive option for leaving a legacy and reducing income and possibly estate taxes for your loved ones.

*Tax Rates shown here reflect 2017 tax law changes.
Estate tax is not shown because it applies infrequently.

Making City of Hope a beneficiary of a retirement account is easy. Simply ask your plan administrator for a beneficiary designation form and include City of Hope as beneficiary of a specific percentage of the account value or as a contingent beneficiary.

An immediate gift of real estate. Donating property outright to City of Hope frees you from the costs and responsibilities of ownership. If you have owned the property more than a year, you will enjoy a charitable income tax deduction equal to the property’s full fair market value. You will eliminate any capital gain and the gift reduces your future taxable estate.

A gift of real estate by bequest. You can include a gift of real estate to City of Hope in your will or living trust and you will be eligible for a charitable estate tax deduction upon your death.

A gift annuity funded with real estate. Convert your real estate investment into a predictable income flow and realize capital gains and other tax benefits.

When you give appreciated securities, you may receive an immediate income tax charitable deduction as well as savings on capital gains taxes. Your gift of stock or mutual funds can also be used to generate income for life through a charitable gift annuity. You can make a gift of appreciated securities to City of Hope while diversifying your portfolio and/or securing a stream of income. For direct information about gifts of stock, please call 800-232-3314 or email us at plannedgiving@coh.org. Click here for more information about establishing a charitable gift annuity with appreciated securities.

;