Over the years, I—and many others—have written in LifeDate about the basic ways to leave an estate or planned gift to ministry. Examples include a bequest of cash or real estate, designating what’s left in an IRA or other tax-deferred account, a percentage of the death benefit from your life insurance policy, setting up a charitable trust, and so on. All of these options make sense and certainly are encouraged. But is that all there is? Is there nothing else that can be done, or at least something out of the ordinary or “unusual” that can be given? The answer is yes, and they can be donated either as a current or estate gift. Let’s look at some.
U.S. Savings Bonds – If you’re like me, you may have one or more of these which have fully matured in your safe deposit box. Last fall, Lutherans For Life received the proceeds from a bond from a gentleman I’ll call “Martin.”
In December 1994, Martin purchased a $75.00 face value Series EE Savings Bond for $37.50. In January 2012, the bond matured, reaching the full $75.00 which Martin continued to hold. In September of last year, Martin redeemed or “cashed in” the bond for $88.77. The total interest earned was $51.27. (Ordinary income tax for the latter amount will be owed for 2016.) Martin then donated the proceeds of $88.77 to LFL. (He will likewise take an itemized tax deduction in 2016 for the same.)
Alternatively, Martin could have continued to hold the bond as it would have earned interest for 12 more years. Let’s say, however, that he decided instead to bequeath the bond to LFL as a future estate gift. In doing so, Martin would have to include either in his will or living trust the date it was issued, face dollar value, and serial number, and designate to whom it was issued (i.e. Martin).
Now, let’s say Martin is then called home to heaven the same year the bond quits earning interest (2024). In this case, the $150 valued bond would pass to LFL tax free as so bequeathed. What would happen if Martin instead leaves the bond to family? Similar to an inherited IRA, they would owe ordinary income tax on the interest accumulation ($112.50).
Of course, this is an example of a small donation using a bond. But the variables above would apply also to gifts of larger bonds or multiple small bonds which collectively add up to much more.
Grain – The main advantages here are, first and foremost, benefiting ministry and avoiding ordinary income tax from selling the crop. (Note: there is no charitable deduction because related costs are deducted as a business expense.) The donation steps are as follows: The donor delivers grain to the elevator, and the elevator is advised that it is a gift for Lutherans For Life (or another ministry) and that it should be placed in their name. (If expenses will be incurred related to the transfer/storage, arrangements should be made for the donor to cover these before the gift is made.) Since it is owned by Lutherans For Life (or another ministry), the elevator shouldn’t sell the grain until they have permission. Once this is done, the ministry receives the proceeds.
Current Gift of an Existing Life Insurance Policy – Here two approaches can be taken. A: You can direct the dividends be paid to the ministry and you would receive a charitable deduction for the donated dollar amount. B: The policy (which has cash value) can be donated to the ministry (with no rights retained by the donor). The recipient ministry should then value the gift at its interpolated terminal value shown on Form 712 as issued by the insurance company.
Precious Metals – Donating precious metals is generally considered to be a gift of “tangible personal property.” As such, the charitable deduction is limited to its “cost basis” (whether “coin” or “bar”). However, the donor avoids paying a 28% “collectables rate” tax on any gain if they had decided to sell the piece instead. (Note: precious metals can also be bequeathed via a will or living trust.)
Other Personal Property (valued at up to $5,000) – There are two important considerations here: Can the ministry actually use the item donated? If not for use, can the ministry easily convert the item into cash (and are you OK with that)?
In either case, if the item donated is worth less than $5,000, an acknowledgment from the ministry stating value is needed for a deduction (which hopefully the ministry is comfortable providing). If it is worth more than $5,000, a written appraisal should be done and Form 8283 completed.
Likewise, personal property can also be left as an estate gift via a will or living trust. I would strongly suggest contacting the ministry in advance to make sure one of the above considerations apply.
If you are interested in making an estate or special gift to Lutherans For Life, feel free to contact me (in complete confidence) at 512.468.9777 or email@example.com.
Many thanks and may God bless you today and always.