Legacy Giving

Leave a legacy for future generations by including the VMC Foundation in your will or estate plan. The VMC Foundation’s Legacy Society is a group of devoted donors who have included our organization in their estate planning. Legacy Society members are planning for their own futures, and for the future of SCVMC.

Making a major gift to a non-profit provides a wonderful level of satisfaction and sense of community.  Additionally making such gifts allows the donor to ensure they are used for the intended purposes, not those determined by the government or a future generation.   Such gifts can also provide significant tax advantages and should be a component of well-conceived tax and estate plans.  The advantages can be realized today and in the future, and can be constructed in multiple ways.

The First Consideration: Your Legacy

Your first thought when considering a major gift should be how you wish to be remembered.  How you are viewed by the community and how you are remembered can be greatly influenced by the gifts you make and how they are memorialized.  Having a room at a hospital, a piece of art, or a building attributed to your donation can create a lasting memory of your generosity and commitment to the community.

The Basics

  • A gift to a non-profit is tax deductible offsetting the donor’s taxable income.
  • Gifting highly appreciated assets not only provides a tax deduction, also allows the donor to avoid capital gains tax

I bought 100 shares XYZ stock at $10 per share and it is now worth $100 per share.  If I donate these shares to a recognized charity I receive a tax deduction for today’s full market value ($100/share x 100 shares = $10,000).  If I sold the share myself, I would pay capital gains taxes on $9,000, the appreciation of the stock since I bought it.  The charity pays no capital gains taxes as it is tax exempt.

Some Gifting Strategies

  • Bequests: Naming a non-profit in a will or trust ensures that those assets benefit the charity you choose. There are no tax advantages to this strategy, but it allows you to determine how your estate is used.  Your heirs, the government cannot revoke those bequests if they are made correctly.
  • Charitable Remainder Trusts and Charitable Remainder Annuity Trusts (CRTs and CRATs): These strategies allow you to donate assets to a charity, but to keep an income stream from them for a specified time or your lifetime.  Upon your passing or the expiration of the trust, the remaining assets go to the specified charity.
    • You receive a current tax deduction for the gift to the CRT, but note that the gift must be “irrevocable” for the IRS to recognize it.
    • You can still receive income from the assets (within certain constraints) so you can make a larger gift without impacting your lifestyle.
    • The assets are out of your estate, so your exposure to estate taxes is lowered.
  • Charitable Lead Trusts (CLTs): A CLT is essentially a reverse CRT in that the trust pays income to the named charity while the grantor specifies a non-charitable beneficiary or beneficiaries.  If the CLT expires prior to the grantor’s death, the grantor can be the beneficiary.  A CLT has more complex tax implications than a CRT, but also must be irrevocable for those advantages to be realized.
  • Other Approaches: There are multiple variations to these strategies that a tax professional can explain.

What is the Best Strategy for You?

Any major charitable gift should be a part of an individual’s overall tax and estate planning.  Consult with tax and estate planning professionals to create a strategy which meets your specific needs.  Be certain you understand all the implications of any recommendations and “stress test,” your plan before you implement it.  Determine if today’s plan will adequately survive inflation and market volatility.

To learn more about the Legacy Society and planned giving, please contact Ralph Dickman.

Click here to download our one page information sheet “Charitable Giving and Taxes”