And how are they structured?
Gifts to charitable organizations are made during a lifetime, or at death, and in either case are made outright to the nonprofit, or are subject to a non-charitable beneficial interest in addition to the charitable gift. The income tax, capital gains tax, gift tax, and federal estate (death) tax consequences will depend upon the subject matter of the gift as well as the nature of the donee, and also upon the structure of the gift.
During a lifetime, the most common forms of gift are:
- Outright, such as delivering a check, a work of art, or transferring title to real estate or securities with no interest retained by the donor or another person.
- By transfer to a Pooled Income Fund or similar arrangement maintained by the nonprofit organization. In this case the donor retains an income interest for life or for a set period of time, following which the nonprofit receives the balance.
- By the establishment of a Charitable Remainder Annuity Trust or a Charitable Remainder Unitrust whereby the donor or others retain an income interest for life or for a set period of time, following which the nonprofit receives the balance. These trusts are irrevocable. This type of arrangement is usually established through a trust company or bank trust department.
- By the establishment of a Charitable Lead Annuity Trust or Charitable Lead Unitrust, whereby the nonprofit first receives an income interest for a period of time, following which the balance is distributed to non-charitable beneficiaries, such as the donor's children. These trusts are irrevocable. This type of arrangement is also usually established through a trust company or bank trust department.
At death, the most common forms of gift are:
- Outright gifts of cash or transfer of other property, under decedent's will or trust.
- By the establishment of a Charitable Remainder Annuity Trust or Charitable Remainder Unitrust under decedent's will, whereby an individual or individuals are given an income interest for life or for a set period of time, following which the nonprofit receives the balance. These trusts are irrevocable. This type of arrangement is generally established through a trust company or bank trust department.
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