Help Farm Animals Now and Into the Future
It is essential to let your attorney, accountant, and/or estate planner know now that you wish to continue your life's work by way of an HFA bequest.
With a bequest to HFA, it is easy to continue your commitment to farm animal protection -- and to benefit your heirs as well.
By including in your will a bequest of cash or property to HFA, you can ensure that your wishes will be carried out as you specify. You can also take pride in knowing that your gift will help ensure the protection of farm animals and of the environment.
Your bequest can take the form of a cash gift, real estate, life insurance, securities, and/or other property. Often the tax advantages are such that the gift has little impact on the estate that your heirs will receive.
A bequest in your will can be for a specified sum or a percentage of the estate.
An unrestricted bequest is the simplest and most common form of testamentary gift to HFA. It is also the most useful because property bequeathed can be used at the discretion of HFA for the organization's most important needs, which may change from time to time.
Q: If I choose simply to leave a bequest in my will to HFA, do I have to specify an exact amount?
A: No. While in your will you may, of course, make a specific bequest of a specified sum to HFA, you may also choose to leave to HFA a percentage of the estate.
Q: Can I specify in my will how I want my bequest to be used?
A: Yes. Just as you can when establishing a Designated Fund or Endowment with HFA during your lifetime, you can designate your bequest for a particular program or service of HFA and direct that the gift be named in your memory and/or in honor of others whom you select.
HFA's Planned Giving Program
You can receive large tax advantages now and still receive an income from your property for the rest of your life with HFA's Planned Giving and Life Income Plans.
Tax Deductibility - Designated Funds & Endowments - Tangible Personal Property- Life Insurance - Charitable Remainder Trust - Charitable Gift Annuities - Gifts of Real Estate - Partial Interests In Property
A contribution provides a current income tax deduction. Additionally, no tax on the capital gain is required. Contributions generate different tax benefits depending upon the way in which they are made.
Q: When can I contribute and minimize my tax liability?
A: You may make a gift of cash or other property to HFA at any time. When you do, your tax savings include the following:
-You will be able to claim an immediate income tax charitable deduction.
-The value of the gift is excluded from your estate for federal estate tax purposes.
-If appreciated property is contributed, you will not be required to recognize the capital gain for income tax purposes.
-The net cost in making the contribution is reduced by your tax savings.
Q: Are contributions of property (stocks, bonds, real estate, etc.) to HFA fully tax-deductible?
A: Yes. The deduction for a contribution of long-term capital gain property to HFA is equal to the property's Fair market value, and there is no tax to pay on the capital gain. Gifts of tangible personal property (art, collectibles, heirlooms, etc) may be subject to a different set of rules with regard to the amount of the Deduction, but here again there will be no tax on the capital gain.
A gift of appreciated property, such as stocks, may be of greater economic advantage to you than would be a comparable gift of cash. For example, let's say you're filing a joint return with a taxable income of $120,000 (before the sale of property or charitable contributions). If you own appreciated long-term capital gain stock with a fair market value of $30,000 which you originally purchased for $10,000, the tax-wise approach is to give the stock directly to HFA. This approach will produce a tax savings of $7,000 more than it would have had the stock been sold and the cash proceeds donated instead.
Designated Funds & Endowments
Create a profound impact in areas and programs of interest to you.
Endowment Funds enable donors and their families to identify specific areas and programs of interest to them, areas in which they can create a profound impact for a term of years or in perpetuity.
Q: Do I have any say in how my contributions will be used?
A: Absolutely. HFA can establish "designated funds," allowing you to fund a specific program. Your contribution, whether made during your lifetime or through your will, can be designated for a particular purpose or program.
Q: Does HFA provide special long-term giving options?
A: Yes. A "perpetual endowment fund" may be established, with its income available to carry out the program you designate. In recognition of your concern and support, this fund will bear your name or the name of your family.
Tangible Personal Property
Contributing tangible personal property can generate significant tax and economic benefits. One of the wisest financial and tax planning decisions may be to contribute gifts of tangible personal property such as works of art, collectibles, jewelry, gemstones, or other valuables.
Q: What are tax benefits for contributing tangible personal property?
A: It all depends. There are tax rules that may restrict the amount of the deduction in certain circumstances. If HFA can make use of the donated property for its exempt purposes (e.g., apply the property to its specific programs to ensure the humane treatment of farm animals), then the amount of your charitable deduction will be for the property's full fair market value. If the use of the property is unrelated to HFA's exempt purposes or functions, the amount of your charitable deduction is limited to the original cost of the property. Tangible personal property can generate significant tax and economic benefits for an individual if contributed to a charitable remainder trust under the Humane Farming Association's Planned Giving Program.
A donated policy may reduce taxes at a relatively low cost to you.
The full cash value of a life insurance policy, when transferred to the Humane Farming Association, is a charitable gift which is deductible for income tax purposes by the donor in the year it is contributed. Where premiums remain to be paid periodically on the policy, the donor may make a tax-deductible contribution to HFA which may thereafter use its funds to pay the premium on the policy it then owns.
Q: Can I reduce my taxes by donating my life insurance policy to HFA?
A: Yes. And you can do so at a relatively low cost. For example, you can transfer to HFA an existing life insurance policy which you own. HFA would then become the owner and beneficiary of the insurance. You are able to deduct the cash value of the policy as a charitable contribution for income tax purposes.
In addition, the proceeds of such policies are excluded from the estate for estate tax purposes and used as a charitable contribution by HFA.
Charitable Remainder Trust
Life Income Plans can be designed to achieve a variety of personal goals while simultaneously supporting charitable causes.
Q: Is it possible to contribute property to HFA and still retain income from it for the rest of my life?
A: Yes. That is what's known as a Charitable Remainder Trust. You may make a gift of cash, securities, real estate, tangible personal property, and/or certain other property interest to a Charitable Remainder Trust. You can retain the right to a fixed annuity in a specific sum or as a percentage of the initial value of the gift for a term of up to 20 years or for your lifetime. This right to income may include a survivor as well. Tax benefits from a Charitable Remainder Trust include:
-An income tax charitable deduction for the value of the property or cash contributed to the trust reduced by the value of the income interest based on IRS tables.
-Continued enjoyment of fixed income from the contributed assets often at rates higher than were received on the property before contribution.
-Avoidance of recognition of any capital gain on the contribution of appreciated long-term capital gain property.
-Removal of the contributed property from your taxable estate.
Q: Is it difficult to establish a Charitable Remainder Trust?
A: Not at all. An HFA representative will work with you and your professional advisors to help you establish a Charitable Remainder Trust. What's more, you'll be able to take advantage of two different types of Charitable Remainder Trusts:
-An Annuity Trust pays an annual fixed amount of income of the donated asset's value when contributed to the Trust. Once established and funded, there can be no further contributions to an Annuity Trust, nor can there be any adjustments to the annuity payments as a consequence of market
-A Unitrust pays a fixed percentage of the Trust principal as annually revalued.
As the Trust principal grows, the payment of income grows proportionately at the stated rate as a hedge against inflation in the value of the Trust.
Q: Does a Charitable Remainder Trust offer any other benefits?
A: Yes. You can generally achieve greater overall economic benefits by contributing an asset to a Charitable Remainder Trust than you can by retaining it in the estate for distribution to your heirs. Since you might have originally intended that the contributed asset go to your heirs, you can take advantage of the financial and tax benefits which result from the creation and operation of the Trust by replacing the value of the asset for your heirs, perhaps through the use of a life insurance product. Often, your heirs, who may receive this replacement asset free of both gift and estate taxes, will receive a distribution of greater value than they would have had they inherited the property directly from you. This often enables a family to have a "win-win" result from the use of a Charitable Remainder Trust.
Q: Can I use a Charitable Remainder Trust as a planning vehicle to shield my retirement plan from the large amount of potential taxes to which it may be exposed at my death?
A: Yes. You can withdraw all or a portion of your retirement plan after you reach the threshold age and place the net amount (which, after taxes, is reduced by the deduction from the use of the Charitable Remainder Trust) in a Trust. The Trust may be able to pay you tax-free income for the rest of your (and your survivor's) lifetime, and you may choose to use this income, free of estate and other taxes, to replace a substantial portion of the value of the withdrawn plan for the benefit of your heirs. You can also accomplish this by creating a Charitable Remainder Trust through your will, funding it with assets in your qualified retirement plan and save considerably on estate and income taxes.
Charitable Gift Annuities
An annuity may also be purchased with tax-deductible dollars.
Q: Can I contribute to HFA and receive an annuity without creating a Charitable Remainder Trust?
A: Yes. You can enter into a Gift Annuity Agreement with HFA for the payment to you beginning at age 65 (or immediately if you are over 65) of a fixed annuity.
Q: How is the amount of the annuity determined?
A: There are tables that are used to determine the amount of the annuity depending on the age of the applicant. The tables also state the amount of the charitable deduction and the portion of the annuity payments that you will be receiving that are tax-free.
Q: Is there any advantage to a Charitable Gift Annuity over a Charitable Remainder Trust?
A: In addition to ease of application (there is no trust agreement to be prepared and executed), Charitable Gift Annuity rates often can be higher than rates fixed in Charitable Remainder Trusts, particularly for older individuals.
Gifts of Real Estate
A gift of your home can be of personal and economic benefit to you.
Real estate can be donated to the Humane Farming Association in various ways to benefit both HFA and the donor. The contribution may be in the form of a remainder interest in one's residence or a complete or partial interest in other property. The gift may be of property owned in the form of a partnership or corporate interest.
A Primary Or Secondary Residence
Q: Are there arrangements for gifts of real estate that have the same results as Charitable Remainder Trusts-that is, may I donate my house to HFA yet continue to use it during my lifetime?
A: Yes. In fact you may donate your primary or secondary residence to HFA and still retain uninterrupted use and occupancy for the rest of your (and your survivor's) lifetime. The tax benefits, however, are immediate. This gift to HFA of a future interest in your home generates a current income tax charitable
deduction for you and excludes the property's value from your estate for estate tax purposes.
Q: Is it possible to receive an annuity in addition?
A: In certain circumstances you may have a future annuity provided for in the gift agreement. This can allow you the flexibility to move to another residence and receive a generous annuity to assist in your future costs of living. This can also be tailored to provide income in the event of your need for long-term health care in order to protect your other assets for the benefit of your heirs.
Partial Interests In Property
Q: Is it necessary to contribute the entire property in order to take advantage of the tax benefits?
A: No. You can contribute a partial interest in real estate. In that case, you retain ownership of the balance of the interest in the property equivalent to the amount in which it is used. For example, if you use a vacation home for three months of the year (and it remains unoccupied and unused for the balance of the year), you can transfer the three-fourths interest (nine months) to HFA. You will then receive an immediate income tax charitable deduction equivalent to three-fourths of the fair market value of the property while continuing to enjoy the property for the same three months of the year in which it is presently used.
For further information, please contact us.
The information contained above is not intended to represent legal or tax advice or to substitute for such advice. We urge you to consult with a professional advisor when considering charitable planned giving transactions. Thank you.