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Jewish Journal

Gift the Tree, Enjoy the Fruit

by Mark L. Hefter

December 1, 2005 | 7:00 pm

Most of us would give almost anything to ensure that Israel's future is secure. But what can one person do to help Israel thrive and grow?

Plenty, as it turns out. There is a financial strategy that allows you to help Israel -- and yourself. It can provide you or your loved ones with increased income for life, reduce your current tax burden and help you meet a variety of estate planning and personal goals -- all while leaving a lasting legacy.

Planned giving is a way to enhance your family's personal finances that will also benefit the charity of your choice. There are many types of planned gifts, and the type you choose will depend on your situation.

When you establish a charitable gift annuity (CGA), you transfer cash or marketable securities to a charitable organization. The charity pays you a guaranteed amount each year for your life, while using the remaining funds in the CGA toward a designation of your choosing, only upon your passing. The rates on a CGA -- which depend on your age -- are better than anything available in the marketplace. (The older you are, the higher the rates.) A $10,000 CGA, for example, will pay you 8 percent if you are 80 years old, and the payments are partially tax-free. You also receive an immediate tax deduction -- and if you fund the CGA with appreciated securities, you'll avoid the capital-gains tax you'd have to pay if you sold the securities outright. This is currently one of the most popular deferred giving vehicles.

A charitable remainder trust (CRT) is similar to a charitable gift annuity, but can be tailored to meet specific requirements. If, for example, you need special income payout rates, variable income, an inflation hedge payment schedule or income deferral, a CRT can meet these and other needs.

CRTs also offer great flexibility when it comes to the type of asset that funds the trust -- which includes residential or commercial real estate, life insurance, or art and collectibles. Of course, you can also make outright gifts of these assets and potentially reduce your income tax liability for this year and several tax seasons to come. Save for retirement, fund a child or grandchild's education or save for unforeseen events and long-term care. All can be accomplished with a CRT.

When the real estate is one of your primary residences or your vacation home, you may opt for retained life estate. This allows you to make a significant gift to charity while continuing to live in the house for the rest of your life without affecting your lifestyle. When you pursue this gift option, you will enjoy a charitable income tax deduction, avoiding capital gains and estate taxes later.

But the easiest way to support your organization of choice is by including it in your will. If you already have a will, your lawyer can simply add a codicil. The bequest can be in the form of a memorial or tribute to you or another individual you designate. In the codicil, you may also specify how you would like the funds to be used by the institution. In addition to the satisfaction you obtain from leaving a lasting legacy, a bequest may also significantly reduce your estate tax liability.

Organizations have different ways of recognizing those who have made bequests. At the American Technion Society, for example, we recognize bequests through induction into our Genesis Circle. Members of this prestigious group receive special recognition in their local chapter, are invited to meet with leading Technion researchers and receive regular updates of cutting-edge Technion developments in health, science and technology. Depending on the size of their gift, they're also invited to join us on our annual missions to the Technion and Israel.

Planned gifts help meet your most important financial and estate planning needs, as well as your philanthropic goals. Often, they allow you to make an impactful, positive change in your life and the charity's in a tax efficient manner, and they are the ultimate expression of commitment and caring concern for Israel's future.

Mark L. Hefter is director of planned giving at the American Technion Society, a national organization headquartered in New York City that supports the Technion-Israel Institute of Technology.

 

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