The path to creating your own legacy.
A Planned Gift to Backus Can:
- Increase your life income
- Reduce income and estate taxes
- Possibly eliminate capital gains taxes
- Provide for Backus Hospital for generations to come Leave a Legacy Today
Creative ways to make your gift to Backus
The basis for outright gifts to the Campaign is a three- to five- year pledge. By carefully planning a multi-year pledge, most individuals can make a gift that is many times more meaningful than any single year commitment.
While the most common type of outright gift is cash, other forms of outright gifts, which might provide additional tax advantages to the donor, should be considered.
Some examples are:
- Appreciated Securities
- Closely held stock
- Paid-up life insurance policies
Future gifts are those in which the donor retains an interest, and the charitable gift to Backus is deferred to some future time.
These gifts may provide current income tax and or/estate tax advantages to the donor, as well as a source of income.
Some examples are:
- Naming Backus as beneficiary of a retirement/pension account
- Charitable Gift Annuities (donor receives an income)
- Charitable Trusts (also can produce income)
Some individuals and families may find it advantageous to consider both an outright and a future gift. Gifts may be designated to meet the Hospital’s greatest needs or to a specific program or department. Additionally, the above vehicles may be used to create an Endowed fund.
Endowed funds give long lasting support to Backus in that the initial gift is held in perpetuity while the interest from the investment of the funds goes to support the Hospitals greatest needs.
The minimum requirement to establish an endowed fund is $50,000.
Donors are strongly encouraged to consult with their own financial advisors as to which vehicle may best help achieve their personal philanthropic goals.
There are distinct tax advantages to considering gifts of appreciated securities such as stocks, bonds and mutual funds.
The donor incurs no capital gain tax on appreciated securities given for charitable purposes and can claim a charitable income tax deduction up to 30% of annual adjusted gross income (with a five-year carry-over). The valuation of marketable securities given for charitable purposes is the mean value between the highest and lowest selling prices on the date of the gift.
Closely Held Stock
A charitable gift of stock in a closely held corporation with no ready market price requires a partial appraisal summary or in the case of gifts over $5,000, a qualified appraisal to determine the value of the gift.
The donor receives a charitable deduction based on the appraised value of the stock, incurs no capital gain tax liability and can claim a deduction equal to 30% of annual adjusted gross income (with a five-year carry-over.)
The use of life insurance policies for charitable giving is another option to consider when planning a major contribution.
A paid-up policy yields a charitable income tax deduction approximately equal to the policy’s replacement value. If premiums remain to be paid, the value of the gift is slightly in excess of the policy’s cash surrender value. In order to qualify for the charitable deduction, the donor must relinquish all incidents of ownership in the policy and irrevocably designate Backus Foundation as beneficiary.
A gift by will to Backus Foundation offers estate tax savings and creates a living legacy to help ensure a secure future for Backus Hospital and the health of the community.
Charitable Gift Annuity
The Charitable Gift Annuity is essentially an annuity contract. The donor transfers assets to the institution and in return the institution agrees to make regular, fixed payments to the donor for the rest of his or her life.
The transaction is both a purchase of an annuity and a charitable contribution. The benefits include guaranteed, specified, regular income, part of which may be tax-free, an immediate tax deduction, possible estate tax savings and, if appreciated property is given, favorable tax treatment on the gain. The amount of the income tax deduction depends on the amount of the gift, the age when the annuity is purchased, life expectancy and whether the annuity is for one life or two. Backus Foundation policies provide for the acceptance of gift annuities of $10,000 or more from individuals over age 65.
Deferred Charitable Gift Annuity
The Deferred Charitable Gift Annuity makes it possible for the donor to get an immediate income tax deduction yet defer the receipt of income for a term of years.
The donor can determine the date the annuity payments start. When payments begin, they will be at a much higher level than for an annuity that is not deferred. This plan can have the advantages of a tax shelter, because the donor can receive a deduction in a high income year and defer income until a later year when their income and tax bracket may be lower.
Current and deferred charitable gift annuities may be established with at least $10,000. Additional gift annuities may be established with at least $5,000. Under IRS regulations, there may be no more than two annuitants. Each beneficiary should be at least 65 years old at the time the gift annuity is funded or, in the case of a deferred annuity, at the time the annuity is to start.
Charitable Remainder Unitrust
The Charitable Remainder Unitrust is an individual trust established to provide a fixed percentage of income (not less than 5%) from the trust to the donor and/or a designated beneficiary for life or number of years not to exceed 20.
The actual amount of income paid by the trust varies and is determined by annual valuations of the trust. Donors receive a current income tax deduction based on the present value of the unitrust’s remainder interest.
Charitable Remainder Annuity Trust
Similar to a unitrust, the income paid to the donor and/or a designated beneficiary from a Charitable Remainder Annuity Trust is based on a fixed dollar amount (not less than 5%) regardless of the trust’s actual earnings.
Donors receive a current income tax deduction based on the present value of the annuity trust remainder interest.
The minimum amount needed to fund a unitrust or an annuity trust is typically $100,000 assuming Backus Foundation receives 100% of the remainder. A unitrust must have a minimum payout rate of 5%. An annuity trust must have an annual payout of at least 5% of the initial funding value of the trust. Additions to a unitrust shall be in the amount of at least typically $5,000. Income payments of any amount may be contributed back to a unitrust. Additions to an annuity trust are not permitted by law. Payments from a unitrust or an annuity trust may be made quarterly, semi-annually, or annually so long as the payment dates correspond to calendar quarter ends.