Types of Assets We Accept

One of the Community Foundation's goals is to help a wide variety of donors fulfill their philanthropic interests by providing an appropriate vehicle for giving that is easy, personally rewarding and cost effective. There are a variety of tax effective ways to give gifts and donors can choose how their charitable gifts will be used.

Outright Gift
The simplest way to make a big difference. You can make a gift of cash, stocks, bonds, real estate, or other assets to your community foundation. Most charitable gifts qualify for maximum tax advantage under federal law.

Cash and personal checks are simplest methods of donor giving. You can also make a donation using your credit card through Network for Good's secured site.

Gifts of Appreciated Stock
Turning stock market gains into community investment.
Everybody wins when you make a gift of appreciated stock to your community foundation. Your gains are put to good use. Your gift of stock is reinvested in your community, and it qualifies for an immediate tax deduction based on the full market value.

Example Donor Story

Generating a return for your community.
"Our stock returns provided the means for giving to our community," say Joanne and Gerald Johnson. That's why they joined the many people who choose to contribute appreciated stock to open a Donor Advised Fund. Last year, the Johnsons helped fund a local family outreach program, a homeless shelter, and a local theatre group. "Some of our charities are too small to accept direct stock gifts," says Joanne. "Giving through the community foundation eliminates that barrier." The Johnsons receive a tax deduction on the full market value of their appreciated stock, while avoiding the capital gains tax that would otherwise arise from the sale of this stock. Gerald says, "It's a simple, satisfying way to give."

There is so much more we'd like you to know. For more information and ideas on ways to integrate your financial planning with charitable giving, ask your financial advisor or contact the Ann Arbor Area Community Foundation at info@aaacf.org.

Gifts of Retirement Plan Assets
The gift of a lifetime.
You can use retirement plan assets to create a fund at the Ann Arbor Area Community Foundation for whatever purposes you specify. At present, it is far more tax advantageous to name AAACF in your will as a beneficiary of your retirement plan; when AAACF receives its distribution from the plan, income and estate taxes will be avoided. It may some day be possible to donate retirement plan assets without tax penalty while you're still living. At present, Congress is still debating this provision in the CARE Act.

Retirement plan assets (such as IRA's) make excellent charitable gifts. Qualified retirement plans enjoy favorable tax treatment prior to retirement but are severely taxed at the death of the plan participant. Qualified plans may be subject to income tax, estate tax, and excess accumulation tax, which can total 80% or more. In many cases it may be advantageous to leave other assets to heirs and to name the Ann Arbor Area Community Foundation as the beneficiary of the retirement plan in your will. That way you can avoid estate tax and income tax on these assets.

Gifts of Real Estate
A charitable gift unearthed.
Making a charitable gift of real estate through your community foundation can help you turn your property gains into community good. Gifts of real estate range from personal residences and vacation homes to rental properties, farmland, and commercially developed land - the value of which may exceed that of any other asset you own. With the help of your community foundation, you can use real estate to make a bigger charitable difference than you thought possible, avoid estate taxes, and minimize or eliminate burden placed on your heirs.

You may choose to give real estate outright and receive an immediate tax deduction, or retain the use of the property during your lifetime and make a planned gift to your community foundation. You may also choose to convert real estate into a stream of income for the rest of your life by establishing a Charitable Remainder Trust with the Ann Arbor Area Community Foundation. Doing this lets you transform a low-yield asset into a higher-yield, income-producing asset and claim a tax deduction for the charitable portion of the gift.

A gift of real estate must be professionally appraised to establish its fair market value. It is also assessed for compliance with our acceptance policies to make sure its resale will provide the appropriate value to community.

Example Donor Story

Real charitable value.
Sandra and Cliff Stewart owned a summer home and had no heirs interested in inheriting it. At first, the Stewarts planned to sell the home and give the proceeds to charity. But after talking with their local community foundation, they realized that giving the home directly to the foundation would create the biggest, most effective gift, while providing the greatest benefits to them as donors. "It was a great option - we could give our house to charity through the foundation and start any type of fund, not to mention the tax benefits," says Sandra. The Stewarts learned they could also retain use of the home for their lifetime. "This way," Cliff explains, "we can spend our summers enjoying the home for the rest of our lives. And after our lifetime, the community foundation will use the proceeds to make grants from the Sandra and Cliff Stewart Fund."

There is so much more we'd like you to know. For more information and ideas on ways to integrate your financial planning with charitable giving, ask your financial advisor or contact the Ann Arbor Area Community Foundation at info@aaacf.org.

Gifts of Life Insurance
Community as your beneficiary.
Life insurance provides a simple way for you to give a significant gift to charity and establish your legacy, with tax benefits that you can enjoy during your lifetime.

You can make a gift when life insurance is no longer needed for personal financial wealth replacement by either giving a paid-up policy or continuing to pay premiums. You may receive a number of tax benefits, including reduced estate and income taxes. And, if you choose to continue paying premiums through your community foundation, you will be entitled to a charitable contributions deduction of up to 50 percent of your adjusted gross income.

You can replace the dollar value of an asset transferred to your community foundation with a life insurance policy. Or, you can use regular payments from a Charitable Gift Annuity or Charitable Remainder Trust to establish an irrevocable life insurance trust. The trust can purchase insurance on your life to benefit your heirs. This way, you can make a gift to your community foundation and replace the value of this gift within your estate with life insurance proceeds.

Example Donor Story

A gift that pays.
When his two daughters were young, Zachary Ding bought a life insurance policy to provide for his family in the event of his death. Now, he's 65, and things have changed. "My daughters are both grown and doing very well for themselves, and over the years, my wife and I have become fairly comfortable - she will no longer need the death benefit from my policy," says Zachary. The Dings support and volunteer for a youth mentoring program, as well as their local museum. "We've always planned to leave something for important community organizations when we pass," says Zachary. After talking with their financial planner, Zachary decided to give his life insurance policy to his local community foundation. "After giving my policy, I received a significant charitable tax deduction," says Zachary. "We had owned the policy for so long that we could choose to stop paying the premiums and maintain a sizable death benefit." The Ding Fund will be established with proceeds from the insurance policy to benefit youth development and other community organizations.

There is so much more we'd like you to know. For more information and ideas on ways to integrate your financial planning with charitable giving, ask your financial advisor or contact the Ann Arbor Area Community Foundation at info@aaacf.org.

THERE ARE MORE WAYS TO GIVE …

Several types of deferred giving arrangements can be established that may take effect either while you are living or through your will. Some arrangements can be structured to provide a life income for you or your loved ones. Click here for more information about making a planned gift.

OTHER kinds of property that may also be accepted by the Community Foundation, such as tangible personal property, shares in mutual funds, and remainder interests in a life estate. Contact the Ann Arbor Area Community Foundation for more information: info@aaacf.org

Charitable Lead Trust
Giving back to community and your loved ones.

A Charitable Lead Trust helps you build a charitable fund with the Ann Arbor Area Community Foundation during the trust's term. When the trust terminates, the remaining assets are transferred to you or your heirs, often with significant transfer-tax savings.

You transfer assets into a trust, which pays the community foundation an annual amount to build a charitable fund. During its term, the trust can be managed expertly by experienced trust professionals, which may help your trust investments grow over time. When the trust terminates, either upon your death or after a specified number of years, its final assets are transferred to those you designate; any growth in the trust passes to recipients, often with significant transfer-tax savings.

A Charitable Lead Trust entitles you to a number of financial benefits. It shelters investment earnings from tax, and it offers gift, estate, and generation-skipping tax benefits. For example, trust assets are removed from your estate for estate tax purposes. You may also capture future gift tax deductions. However, at the time your trust is established, you may owe gift tax on the present value of your gift to the final beneficiary.

You have several options when establishing your trust. You can create a Charitable Lead Trust during your life or through your will. The trust contributes to charity through your community foundation - either for a number of years or for your lifetime. And, you select one of two types of Charitable Lead Trusts. A Charitable Lead Unitrust makes annual distributions of a fixed percentage of the trust assets to the charitable fund you establish. If you create a Charitable Lead Annuity Trust, the charitable fund you establish will receive a fixed dollar amount each year.

Example Donor Story

A lifetime gift for two.
Annette Bernack wanted to create a fund to support her favorite charitable interests for years to come. At the same time, she wanted to provide an inheritance for her daughter in a way that created the least tax burden. "My attorney told me that creating a Charitable Lead Trust and designating my community foundation as the beneficiary would allow me to give to the community now and provide for my daughter later," says Annette. Using a regular distribution from the trust, Annette has already begun to build a fund at her community foundation, which is, in turn, making grants to her community in areas important to her. The trust will continue to build the Bernack Family Fund until her death, after which the rest of the trust will transfer to Annette's daughter. "By giving through a Charitable Lead Trust," says Annette, "I am doing more for both my daughter and the community… and my estate will owe less in taxes."

There is so much more we'd like you to know. For more information and ideas on ways to integrate your financial planning with charitable giving, ask your financial advisor or contact the Ann Arbor Area Community Foundation at info@aaacf.org.

Charitable Remainder Trust
Planning for the future - for you and your community.

Giving through a Charitable Remainder Trust allows you to receive income for the rest of your life, knowing that whatever remains will benefit your community.

You transfer assets into a trust, and the trust pays you or a beneficiary you designate regular income payments. Upon the beneficiary's death or after a defined period of years, the remaining assets in the trust transfer to the community foundation.

You may choose to receive a fixed income or one that changes with market conditions - income from the Charitable Remainder Trust you establish may add up to more than interest and dividends you earned from holding the assets. You can use it to supplement your own lifestyle or that of someone other than yourself: a sibling, a dependent parent, a friend, or a former employee. You can start receiving annuity payments immediately, or defer them to increase your charitable income tax deduction.

A portion of the income may be a tax-free return of principal, while some is taxed as ordinary income or capital gains. The amount of annuity paid and the tax deduction received depends on the age of the recipient and the current annuity rate (as established by the Internal Revenue Service).

You can pick one of these options for your Charitable Remainder Trust:

• Annuity trust pays you a fixed dollar amount.
• Standard unitrust pays you an amount equal to a fixed percentage of the net fair market of the trust and is recalculated annually.
• Net income unitrust pays you the lesser of the fixed percentage specified by the trust agreement or actual trust income; some net income unitrusts allow you to make up deficiencies in past years.
• Flip unitrust is a net income unitrust that converts to a standard unitrust upon a triggering event, such as the sale of an asset used to fund the trust.

A gift that pays.
James Assad was retired and in his late seventies. The stocks he owned had high market values, but they paid limited dividends. In addition to increasing his personal income, James was interested in giving to the community in which he had lived his entire life, so he decided to transfer the securities to a Charitable Remainder Trust that eventually would create a fund with his local community foundation. "The income I received from the trust is more than what I was collecting in annual dividends - by thousands of dollars. If I would have sold the stocks, I'd have paid a fortune in capital gains tax," says James. James also receives an immediate charitable tax deduction and pays less tax on trust distributions. "Plus," he says, "I know that when I pass, I've done something good." In time, James' gift will create the Assad Family Unrestricted Fund to address ever-changing community needs.

There is so much more we'd like you to know. For more information and ideas on ways to integrate your financial planning with charitable giving, ask your financial advisor or contact the Ann Arbor Area Community Foundation at info@aaacf.org.