Another attractive gift plan for real estate is the retained life estate: you give OBU your home, then continue to live there for the rest of your life. We will own the house, but you will continue to be responsible for its ongoing taxes, structural maintenance, and upkeep. And, we mutually agree upfront about what we will do if you no longer wish to live in the house, or become physically unable to continue living there. You will receive a charitable deduction based on the fair market value of your home minus the present value of the life tenancy you have retained. With a retained life estate, you make a significant gift to OBU with the most valuable asset you hold, without disturbing your cash flow or your living arrangements.
Did you know that life-income gifts offer one of the most significant tax benefits that the IRS still provides to individuals? OBU offers gift plans that pay you income and save you taxes. Our life-income gifts feature one of the most attractive tax benefits that the IRS still provides: if you contribute appreciated securities or real estate to fund your gift, no upfront capital gains tax is applied to the appreciation. The entire amount of your contribution is thus put to work earning higher income for you. In addition, you'll receive an income tax deduction based on the full fair market value of the asset you gave us, reduced by the present value of the income interest you retained. After the death of your beneficiaries, the balance remaining in your life-income gift account is applied to the OBU program of your choosing.
Charitable Gift Annuities
A Charitable Gift Annuity is a simple contract providing for our payment to you (and an optional second beneficiary) of a fixed income for life in return for your contribution. The gift annuity offers you the assurance of an income that will not fluctuate, a modest minimum gift of $1,000, and payments that are secured by all the assets of OBU.
You will receive a charitable income tax deduction for your gift annuity, based on the full value of the assets you contributed minus the present value of the life-income interest you retained. If you fund your charitable gift annuity with appreciated securities, no upfront capital gains tax is payable. Only a portion of your capital gain will be reportable, and the tax will be spread over your annuity payments.
A third tax benefit of a gift annuity is the treatment of your income payments: part of each payment will be treated as the tax-free return of principal. This increases the effective yield of a gift annuity, and is not available on other types of life-income gifts. (The IRS provides that the capital gain and tax-free income benefits are in effect during your lifetime -- if you live longer, the entire annuity payment will be taxed as ordinary income.) Your gift annuity can start paying you once you make your contribution (an immediate-payment gift annuity), or payments can commence at a later date selected by you (a deferred gift annuity). The deferral of income allows us to offer you a higher payment rate and gives you a larger charitable deduction.
Many younger donors create a series of deferred gift annuities over multiple years, jointly timed to begin income payments when they retire. To fund their gifts, they use assets they've already designated for retirement savings. Their deferred gift annuities give them an income tax deduction when they most need it and secure an additional source of retirement income for their later years.
Charitable Remainder Trusts
If you are interested in maximum flexibility and effectiveness from your gift, consider OBU's charitable remainder trusts (CRT's). Our unitrust pays you and/or other beneficiaries income as a fixed percentage of the principal. The unitrust is revalued annually, and income in excess of the percentage payout is reinvested. Our annuity trust pays you and your beneficiaries a fixed income.
CRT's may pay income to multiple beneficiaries, for life or a term or years. A unitrust may be structured to invest solely for growth for a term of years, an attractive way to help provide for future retirement or tuition needs while also making a substantial gift to OBU. An annuity trust may hold tax-free securities and pass tax-free income through to the beneficiaries. You, your financial institution, or OBU may serve as the trustee of a CRT. We presently ask for a minimum gift of $25,000 if we are to serve as trustee.
Did you know that you can partner with us to deliver years of income to OBU and increase your estate for your children? The Charitable Lead Trust generates income for OBU now, while reducing your tax costs for transferring assets to the next generation. The lead trust holds gift assets for your lifetime or for a term of years, and pays annual income to us. OBU benefits from the assured income stream from the lead trust, while your family enjoys tax advantages: (1) The gift assets placed in the lead trust are frozen in value for transfer-tax purposes as of the date the trust is formed. When the trust terminates and the assets pass to your family, all intervening appreciation will escape gift or estate tax; (2) Our income interest further reduces the taxable value of the trust assets when they pass to your family. This feature makes the lead trust especially useful if you are holding assets likely to appreciate significantly before they are transferred to the next generation.