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Gift of Cash, Securities, Insurance, Annuities, Real Estate, Etc.
This section provides a number of planned giving ideas that take into consideration recent changes in the Federal income, gift, and estate tax laws. These plans are designed to show you how you can give cash, securities, insurance, annuities, or real estate to the Visalia Educational Foundation and at the same time reduce your income tax or estate tax burden. The examples illustrated take into account only Federal and California State tax laws.
All planned giving decisions should be formulated and discussed with family members as well as your financial consultant, attorney or accountant. A well-designed plan will ensure that your loved ones' financial security is enhanced, that your charitable wishes are fulfilled, and that you and your loved ones receive all of the tax benefits possible under the law.
About the Visalia Education Foundation
The Visalia Education Foundation is a not-for-profit founded in 1983 that has as its mission "to identify and secure resources to promote educational excellence for the students of the Visalia Unified School District." The Foundation carries out its mission through community fundraising to make available:
Although we have come far, much remains to be done. The fight to make sure every Visalia student has access to up-to-date technology, is able to attend college and becomes a productive member of society is only just beginning. More than ever before, students need your help to ensure a brighter tomorrow.
Gifts of Cash
Most donors prefer this type of gift. The amount can be deducted in the year that the gift is made, provided that you itemize your deductions and meet other income tax criteria. Current tax laws allow you to deduct up to 50% of your adjusted gross income. If your gift exceeds the 50% figure, you may deduct the difference over the next 5 years.
The actual cost to the donor making a cash contribution depends on his/her income tax bracket--the higher the bracket, the lower the cost of the contribution.
EXAMPLE: Mr. Jones is in the 28% tax bracket. His cash gift of $1,000 saves him $280 in taxes making his out of pocket cost of the contribution $720.
If Mr. Jones itemizes deductions on his California State income tax return, he will realize additional tax savings.
Gifts of Securities
Appreciated Value: It is usually in the donor's best interest to make a gift of appreciated property rather than the proceeds from its sale. If the gift qualifies as "long-term property" you can avoid the capital gains tax and legally deduct the full market value, generally subject to a limitation of 30% of your adjusted gross income.
EXAMPLE #1: Mrs. Smith wishes to make a gift of $2,000 to the Education Foundation for scholarships. She has decided to sell stock with a market value of $2,000 which was originally purchased for $500 several years ago. The transaction will result in taxable income of $1,500. Assuming she is in the 28% tax bracket, the Federal tax incurred would be $420 ($1,500 x 28%). She would only realize $1,580 ($2,000- $420) from the transaction after taxes which would leave her short of her desired goal. The $1,580 realized would be reduced further by the amount of her State income tax.
EXAMPLE #2: If Mrs. Smith were to donate the same appreciated stock to the Foundation, she would be entitled to a charitable deduction of the $2,000 fair market value. The advantage of this option is obvious.
The Foundation receives the full $2,000 and Mrs. Smith does not have to pay any capital gains tax and can now deduct the full amount for tax purposes, thus realizing a Federal tax savings of $560 ($2,000 x 28%) plus any applicable State taxes. This example is based on the assumption that Mrs. Smith's adjusted gross income is in excess of $6,667.
When giving "long-term property" that has appreciated in value, the donor may be subject to the minimum tax. We recommend that you consult with your tax advisor prior to making donations of appreciated property.
Depreciated Value: A donor who wishes to give property that has decreased in value would be better served by selling it. The donor would then be able to claim a capital loss on taxes and receive the benefit of a charitable contribution.
Gifts of Real Estate
Tax rules and income tax benefits are generally the same as for Gifts of Securities.
Gifts via Individual Retirement Accounts and Annuities
IRA and/or Annuity accounts offer extraordinary tax-free savings opportunities for almost every working American. In addition to naming a loved one as a beneficiary, the Visalia Education Foundation can be designated as a successor or final beneficiary.
EXAMPLE: Mr. Brown has an IRA worth $500,000 at the time of his death. Mrs. Brown continues to draw money as the primary beneficiary until her death. The Education Foundation, as final beneficiary, receives tax free any remaining IRA or annuity funds.
Gifts of Life Insurance
New Policies: A donor who takes out a life insurance policy and makes the Visalia Education Foundation the owner and beneficiary can take a charitable tax deduction for each premium payment made during each calendar year.
EXAMPLE: Ms. White purchases a new $100,000 policy and makes the Visalia Education Foundation the owner and beneficiary. The annual premium payment would then be paid to the Foundation which allows the amount to be claimed as a charitable contribution by the donor. The Foundation in turn pays the required premium to keep the policy in effect.
Paid-up Policies: The donation of a paid up life insurance policy to the Foundation entitles the donor to an income tax deduction for the cash value of the policy up to 50% of his/her adjusted gross income. If the value of the policy exceeds 50% of adjusted gross income, the donor can deduct a part of the value of the policy in the year of the gift and the remainder over the next five years.
Policies with Premiums: A donor who makes a gift of a life insurance policy with premiums to be paid is entitled to an income tax deduction equal to the estimated cash value of the policy and the amount of the annual premium subject to the 50% of adjusted gross income limitation.
EXAMPLE: Mr. Marquez donates his $50,000 life insurance policy with a $20,000 cash value to the Visalia Education Foundation. The Foundation is now the owner and beneficiary of said policy. The annual policy premium of $1,000 is paid by Mr. Marquez to the Foundation which allows him to claim a charitable tax deduction for that amount. The Foundation in turn pays the premium to keep the policy in effect. In addition, Mr. Marquez can deduct the current cash value of the policy, $20,000, from his gross income for tax purposes.
Corporate Gifts and Matching Grants
If you own a business that is incorporated, you can make a charitable gift to the Foundation through your corporation; up to 10% of your corporation's net income is deductible for tax purposes. Two other tax deductible corporate options include Employee Matching Grant Programs to benefit the Foundation and, if pre-approved by the Foundation, gifts of surplus inventory to the School Store.
Gifts of surplus inventory generally qualify for an additional deduction for the basis plus 1/2 of any appreciation in its value, not to exceed twice the basis of the donated inventory.
Charitable Provisions through Estate-Planning
A well-written will may meet all of your estate planning needs. When properly thought out, and with the assistance of legal counsel, you may be able to greatly reduce or eliminate your Federal and State estate taxes through provisions made in your will.
Bequests can be made to provide full financial security to your family, serve as a memorial to yourself or a relative, and benefit students for generations to come. Your estate can deduct, for Federal estate tax purposes, the total dollar value of any property passing to the Visalia Education Foundation under your will because of the tax exempt status of the Foundation.
Another option is to have your estate establish a trust under which income from a particular asset would be paid to the Visalia Education Foundation for a fixed period, after which the asset would be returned to your designated beneficiary. Your estate would receive substantial tax benefits.
Then there is the "Double Duty Will." Your Will could direct a certain percentage of your estate or a specific amount to your children and grandchildren. The rest of the assets would be put in a fund to provide income for the life of your surviving spouse. When your spouse passes away, the remaining funds would be turned over to the Visalia Education Foundation. Because the balance of the funds are designated for charitable purposes by you, your children's and grandchildren's inheritance will be larger because of their reduced exposure to estate taxes.
Your financial planner can help provide you the means to extend your generosity beyond today and into the realm of eternity. Your tax deductible gift or gifts will assist the Visalia Education Foundation in providing the building blocks necessary for brighter tomorrows for all our students. With your help, we can look forward to graduating better-prepared students who will help ensure Visalia's continued quality of life for now and the generations to come.
The Visalia Education Foundation is in its thirty-fourth year of finding resources to encourage educational excellence and benefit Visalia students in ways beyond the reach of the school district budget. Examples of Foundation activities include:
If you would like additional information about donations to the Visalia Education Foundation, CLICK HERE.
If you would like to make a donation to the Visalia Education Foundation, CLICK HERE.
Donations from Employees
Signing up is simple. If you are a Visalia Unified School District employee, please fill out and return a simple form to the Visalia Unified Payroll office or call the Visalia Education Foundation office at (559) 730-7518. With other employees' or friends' contributions, your contribution of $5.00 or $10.00 per month has the power to help purchase musical instruments, make more teacher mini-grants, and student scholarships available. For pennies a day, you could really make a difference!
CLICK HERE for Visalia Unified Employee Payroll Deduction Form
Thank you for your support!