Frequently Asked Questions About Planned Gifts

  • Outright gifts generate a full income-tax charitable deduction. Outright gifts of appreciated securities are deductible at fair market value, with no recognition of capital gains—a great tax benefit!
  • Bequests do not generate a lifetime income tax deduction. They are exempt from estate tax.
  • Similarly, life insurance distributions are not income-tax deductible, but are exempt from estate tax. If you have made us the irrevocable owner and beneficiary of a policy during your lifetime, you may deduct annual gifts that offset premium payments (for more details on this point, see Question 4 below).
  • The charitable deduction for a gift that returns income to you, such as a charitable gift annuity or a charitable remainder trust, is the fair market value of the gift asset minus the present value of the income interest you retain.
  1. I want to set up a life insurance policy, name The Outdoor Circle as beneficiary, but retain ownership of the policy. Can I deduct the premium payments I make?
    No. The IRS would not consider that a “completed gift” – they’d say that, as the owner of the policy, you could change the beneficiary designation to a friend or family member.

    We must be made the irrevocable owner of the policy for gifts offsetting premium payments to be deductible.

  2. I’ve heard that transferring gifts of retirement-plan assets to charity is advantageous. Why?
    Qualified retirement plans such as IRAs, 401(k), 403(b), and Keoghs allow individuals to defer paying taxes on a portion of their income until the assets are withdrawn during retirement years. However, after a person’s death, these accounts are often exposed to income and estate taxes, at a combined rate that could rise to 75% or even higher on large taxable estates.

    The tax will be paid at some point—by your estate and your heirs unless contributed to charity. In other words, by giving retirement assets to charity you receive double benefits. Your estate and heirs will not be taxed on the portion that goes to charity and you will support The Outdoor Circle!

  3. Can I transfer my IRA to The Outdoor Circle to set up a life-income gift, and avoid income tax on the transfer?
    New legislation gives donors aged 70½ and older an opportunity to direct lifetime distributions from their IRAs to us without incurring income tax liability on the withdrawal. The provision will be in effect for just the 2006 and 2007 tax years. Distributions can total $100,000 per year, and must be made outright — they cannot fund a life-income gift.

    Donors younger than 70½ can make a withdrawal from their IRA or other type of retirement plan, pay income tax on the withdrawal, and donate the proceeds to us. These gifts can be made outright or can fund a life-income gift and will generate a charitable deduction for the donor.

  4. I’d like to donate a painting. Will you determine its value for my income tax deduction?
    The IRS requires that donors of artwork and collectibles secure an independent appraisal of the items to establish fair market value.

    The appraisal has to be related to the gift, too – an insurance appraisal won’t suffice. We can assist you on this point.

  5. I’m interested in establishing a charitable gift annuity. What financial provisions will you make for the income payments to me and my spouse?
    Your charitable gift annuity will be treated as a general obligation of The Outdoor Circle, backed by all of our assets.

    We have an unbroken record in making timely payments to our annuitants, and that ongoing responsibility is a key element in our financial policies.

  6. If I create a bequest or life-income gift, will you continue to ask me for annual contributions?
    Your planned gift is a significant addition to our long-term financial strength and our ability to meet the challenges and opportunities the future will bring.

    However, today’s efforts are supported through annual gifts and we greatly appreciate and encourage any annual support you may want to consider.