PLANNED GIVING GUIDE

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1 PLANNED GIVING GUIDE You can Create your Own Legacy Making a difference is important to you. Charitable giving is an important part of your life and your core values. Like many people, you d like to know that the causes and organizations you care about today will continue to thrive in the future. The good news is you don t have to be Andrew Carnegie or Bill Gates to start a meaningful philanthropic legacy. In addition to supporting the work of your favorite organizations through cash donations, consider making a planned gift. What is Planned Giving? Planned giving is a win-win approach to philanthropic donations that supports your favorite nonprofit organization and can benefit you now or in the future. Have you ever made a vehicle donation to benefit your favorite charity? If you have, you know that transferring assets is easy and it can provide tax benefits as well. Simply put, planned giving is the transfer of assets to a designated nonprofit organization during a lifetime or as part of an estate plan. This forward-thinking approach to giving is planned because often these assets are not liquid, have tax consequences and are generally transferred via a will or other written means. It s easy. Planned giving is easy to do and you don t have to be wealthy to do it. Whether it is naming your favorite charity in your will or trust for a modest amount, or a gift of house and property, there is an easy option that is right for you. It can involve assets you might never think of. A life insurance policy. Real estate. Stocks. Business holdings. A checking or savings account. These are all assets that can be leveraged in planned gifts. It can generate an income stream. In return for the donation of real estate, stocks or other assets, donors can receive a series of regular payments. It can provide generous tax benefits. Depending upon the type of gift, short-term and/or long-term tax benefits may apply. Donors at a variety of income levels can benefit. Be sure to consult with your financial or estate planner for more specifics. It can work in tandem with other family priorities. Planned giving is not an all or nothing option. Gifts can exist side-by-side with other beneficiaries and personal priorities.

2 It is long remembered. Designating a planned gift automatically makes you a member of Central Carolina Community Foundation s (CCCF) Legacy Society. Legacy Society members receive immediate recognition on our website, in publications and receive invitations to special events. Examples of Planned Giving Anyone considering a planned gift should consult a tax and/or legal advisors to determine the consequences of making a gift. To learn more about CCCF s Legacy Society or how to establish a planned gift at the Foundation, please contact Heather Sherwin, VP for Development, at , x331. Bequest By making a charitable gift to Central Carolina Community Foundation through your estate, you retain access to your gift asset, should you ever need it during your lifetime. A bequest may be right for you if: You would like to make a gift to CCCF. You want the flexibility to change your mind. You want continued access to your gift assets, should you need them. A current tax deduction for your gift is not important to you. 1. You make CCCF a beneficiary in your will, or a designated beneficiary of your retirement plan, life insurance policy or other asset. 2. CCCF receives your gift when your estate is settled. 1. Establish a fund to distribute grants to charities or interest areas of your choice after you are gone. 2. Make a larger gift than might be possible to make during your lifetime. 3. Retain access to your gift assets should you need them. 4. May save estate taxes and probate costs.

3 Outright Gift An outright gift is the simplest of all gifts to make and provides CCCF with the greatest and most immediate support. Most donors make outright gifts by writing a check, but outright gifts of other kinds of assets are certainly possible. An outright gift could be right for you if: You have cash or other assets that you want to donate. You want the largest possible tax deduction for your gift. You would like to make a gift to CCCF that has the greatest immediate impact. 1. You transfer cash, publiclytraded securities or other assets directly to CCCF. 2. You receive an income tax deduction. 1. Save taxes. 2. Gain the satisfaction of making a gift that will provide immediate support to the Foundation s work in the Midlands.

4 Charitable Flip Unitrust A flip unitrust can be an excellent way for you to give an asset that may take time to sell and receive substantial payments for life once the flip unitrust sells your asset. You might also be interested in using a flip unitrust to make a gift now that will supplement your income in the future, such as when you retire. A flip unitrust could be right for you if: You want to give an asset that is hard to sell (such as real estate or closely-held stock). You want to supplement your retirement income. You want to save income taxes or capital gains taxes. You are considering a gift amount of $100,000 or more. 1. You transfer cash, securities, real estate, or other property to your flip unitrust. 2. During its term, your flip unitrust makes payments each year to you or others you name. At first, it will pay you a percentage of its value or its net income, whichever is less. After your flip unitrust "flips", it will pay you a percentage of its value each year, regardless of how much net income it earns. 3. When your flip unitrust ends, all of its remaining assets will be used to support CCCF. 1. Save taxes. 2. Receive payments each year, typically for life. 3. Defer payments until you need them. 4. Unlock the value of an asset that may take time to sell. 5. Avoid the effort and responsibility of selling the asset yourself. 6. Establish a fund to distribute grants to charities or interest areas of your choice after you are gone.

5 Charitable Lead Unitrust Make a substantial gift to CCCF in the form of annual payments and pass assets to your family or other heirs at reduced tax cost. A charitable lead unitrust may be right for you if: You have substantial assets not needed for your own financial security. You would like to provide for your family or other heirs. You would like to save gift taxes, estate taxes and probate costs. You want your gift to make a difference at CCCF starting immediately. You could consider a gift of $100,000 or more to benefit CCCF and your heirs. 1. You transfer cash, securities or other property to a trust. You receive a gift tax deduction. 2. During its term, the trust pays a percentage of its value each year to CCCF. 3. When the trust ends, its remaining principal passes to your family or other heirs you name. 1. Transfer assets to your family or other heirs. 2. Save taxes. 3. Gain the satisfaction of providing annual support to the Foundation s work in the Midlands.

6 Charitable Lead Annuity Trust Make a substantial gift to CCCF in the form of fixed annual payments and pass assets to your family or other heirs at reduced tax cost. A charitable lead annuity trust may be right for you if: You have substantial assets not needed for your own financial security. You would like to provide for your family or other heirs. You would like to save gift taxes, estate taxes and probate costs. You want your gift to make a difference at CCCF starting immediately. You could consider a gift of $100,000 or more to benefit CCCF and your heirs. 1. You transfer cash, securities or other property to a trust. You receive a gift tax deduction. 2. During its term, the trust pays a fixed amount each year to CCCF. 3. When the trust ends, its remaining principal passes to your family or other heirs you name. 1. Transfer assets to your family or other heirs. 2. Save taxes. 3. Gain the satisfaction of providing annual support to a specific interest area or the community fund.

7 Charitable Remainder Annuity Trust A charitable remainder annuity trust can help you maintain or increase your income for life while making a significant gift to CCCF. The trust payments are the same amount each year, offering the security of fixed income. A charitable remainder annuity trust may be right for you if: You want to maintain or increase your income. You want the security of predictable payments for life or a term of years. You want to save income taxes or capital gains taxes. You want to choose the person who administers your gift and guides its investments. You are considering a gift amount of $100,000 or more. 1. You irrevocably transfer cash, securities or other property to a trust. 2. You receive an income tax deduction and pay no capital gains tax. During its term, the trust pays a fixed amount each year to you or to anyone you name. 3. When the trust ends, its remaining principal passes to CCCF. 1. Save taxes. 2. Receive predictable payments each year, typically for life. 3. Gain the satisfaction of making a significant gift to establish a fund to distribute grants to charities or interest areas of your choice after you are gone.

8 Charitable Remainder Unitrust A charitable remainder unitrust can help you maintain or increase your income while making a significant gift to CCCF. If your unitrust grows, your payments will grow too, providing a hedge against inflation. A unitrust provides more flexibility than other life income plans. A charitable remainder unitrust could be right for you if: You want to provide income for yourself or others. You want the possibility of income growth. You want to save income taxes or capital gains taxes. You want to choose the person who administers your gift and guides its investments. You are considering a gift amount of $100,000 or more. 1. You irrevocably transfer cash, securities, or other property to a trust. 2. You receive an income tax deduction and pay no capital gains tax. During its term, the trust pays a percentage of its value each year to you or to anyone you name. 3. When the trust ends, its remaining principal passes to CCCF. 1. Save taxes. 2. Receive payments each year, typically for life. 3. Payments grow when unitrust value grows, offering a hedge against inflation. 4. Gain the satisfaction of making a significant gift to establish a fund to distribute grants to charities or interest areas of your choice after you are gone.

9 Retained Life Estate Your home is one of your most valuable assets. With a retained life estate, you can give your home to CCCF now, but continue to live in it for as long as you wish. Make a greater gift than you might have thought possible and receive immediate tax benefits without changing your living situation. A retained life estate may be right for you if: You want to continue to live in your home. You do not plan to pass your home on to family or other heirs. You want to save income taxes now. You want to make a significant gift to CCCF. 1. You transfer the deed to your home to CCCF, subject to CCCF real estate acceptance policy. 2. You continue to live in your home for as long as you wish. You remain responsible for upkeep, taxes, and other expenses during this time. 3. When the plan ends, CCCF will become the sole owner of your home. Typically, we will then sell your home and use the proceeds. 1. Save taxes. 2. Continue to live in your home. 3. Enjoy the satisfaction of making a significant gift to establish a fund to distribute grants to charities or interest areas of your choice after you are gone.

10 Bargain Sale Receive immediate cash and make a gift to Central Carolina Community Foundation by selling to us a valuable asset, such as real estate, for less than it s worth. A bargain sale may be right for you if: You want additional cash now. You want to save income taxes and possibly capital gains taxes. You own a valuable asset that you are willing to sell for less than it is worth. You want to make a gift to CCCF. 1. You sell real estate or other property to CCCF for less than it is worth. 2. You receive immediate cash equal to your sale price. Your property becomes ours to use or sell. Receive an immediate cash payment. Save taxes. Transfer responsibility for maintaining or selling your property. Description A bargain sale is a simple agreement in which you sell property, such as real estate or some other valuable asset, to CCCF for less than the property is worth. Eligible Property It is possible to sell any sort of property to us for a bargain price. In addition to real estate, you can complete a bargain sale arrangement with collectibles such as artwork or antiques, other personal property or securities. Please contact us about the property you are considering so that we can discuss whether we would be interested in acquiring the property for a bargain price. Tax Benefits You will receive an income tax charitable deduction in the year of your gift. The amount of your deduction will equal the difference between the fair market value of the property you donate and your sale price. You will also avoid capital gains tax on a portion of your capital gain in the gift property. For example, if you sell your property to us for one third of its fair market value, you will pay capital gains tax on

11 just one third of your capital gain in the property. By removing your property from your estate, you may also reduce estate taxes and probate costs when your estate is settled. Special Considerations If you are interested in selling us real estate or tangible personal property at a bargain price, you will need to establish the value of your property by obtaining a qualified independent appraisal. To be valid for claiming your charitable income tax deduction, your appraisal must be conducted no more than 60 days before the bargain sale is completed and no later than the due date, including extensions, of the tax return for the year in which you make your gift. If you are considering a gift of real estate, our organization requires the following additional steps before we accept your gift: 1. Independent of your appraiser's valuation, we will need to examine your property and conduct our own analysis of its value. For example, we will want to know if there are any debts, taxes, or liens owed on your property. 2. Once we accept your gift of real estate, we become responsible for cleaning up any environmental problems your property may have. This sort of cleanup could be very expensive. Therefore, before we accept any gift of real estate, we routinely conduct a review to make sure the property has no environmental issues. Example George Smith, a devoted supporter of CCCF, owns vacant land that he purchased years ago for $15,000. The land was recently appraised for $250,000. George would like to make a major contribution, but he is planning improvements to his home and he needs about $50,000 to finance his project. George is thrilled to learn that a bargain sale arrangement will allow him to make the contribution he envisions and give him the cash he needs to complete his home improvement project. He's also pleased with his $200,000 income tax deduction that will more than offset the small amount of capital gains tax he'll need to pay. Facts Value of land: $250,000 Cost of land: $15,000 Capital gain: $235,000 Sale price: $50,000 Benefits Income tax deduction: $200,000 Capital gain to report: $47,000 Capital gain avoided: $188,000 Income tax 28%: $56,000 Capital gain 15%: - $7,050 Net tax savings: $48,950 Cash to George: + $50,000 Total benefit to George: $98,950