The following article was written by one of the Board members, Colleen Sinclair Prosser, Attorney.
SinclairProsser, Attorneys at Law
Colleen Sinclair Prosser, Attorney
How to Help MTRC. Inc.
There are many ways each of us can help MTRC, Inc. However, some ways are better suited to certain donors while other methods make more sense for other donors. Following just a few of the many ways that you can use to help MTRC thrive.
- Give cash outright to MTRC. This is the easiest and most common method. However, for larger donations, this typically is not the best method for the donor.
- Name MTRC the beneficiary of an IRA, annuity, or other tax deferred account. The entire amount in the account passes to MTRC without the payment of deferred income taxes.
- Give appreciated property to MTRC. If done properly, you get a deduction for the full fair market value of the property. If you were to sell the asset, normally you would pay 20% of the gain to the IRS. So, if you had an asset for which you paid $10 and you sold for $100, you would have a gain of $90 and pay $18 in tax. After sale and taxes, you would have $82. However, if you contribute the property to MTRC, you get a charitable deduction for the full $100, even though you would have received only $82 after the sale and taxes. Essentially, you get a deduction for the gain on which you never paid taxes.
- Set up a lifetime Charitable Remainder Trust with MTRC as the remainder beneficiary. With a lifetime Charitable Remainder Trust you contribute property to a trust and you receive a fixed dollar amount or a fixed percentage of the value of the trust each year. At the end of your life, or at the end of a term up to 20 years, the property remaining goes to MTRC. You get a current income tax deduction for the value of the interest that eventually goes to MTRC. You can control how the assets of the trust are invested. This can be particularly important when the asset is stock in a family business.
- Give a remainder interest in your home or farm. You can give MTRC the right to have your home or farm after your death. You have full rights to live in the home or use the farm. MTRC has no right to use the property until your death. You get a current income tax deduction for the value of the interest going to MTRC. The value of the interest going to MTRC is calculated by using your life expectancy at the time of the gift of the remainder interest.
- Set up a Charitable Remainder Trust at your death with MTRC as the remainder beneficiary. This is similar to a lifetime Charitable Remainder Trust. However, your children or other beneficiaries would receive the income stream and then the assets would go to charity after their deaths or the specified period of time. Your estate would receive an estate tax charitable deduction for the value of the interest that ultimately would pass to charity.
- Set up a Charitable Lead Trust during your lifetime with MTRC as the beneficiary. This is the reverse of the Charitable Remainder Trust. MTRC gets the income stream during your life or the fixed period of time, and then at your death the remaining assets go to your children or other beneficiaries.
- Set up a Charitable Lead Trust at your death with MTRC as the beneficiary. Again, this is the reverse of the Charitable Remainder Trust. You would set up a trust that would be funded at your death. MTRC typically would receive the income stream for a fixed period of time and then the remaining assets would go to your children or other designated beneficiaries. This is a way to reduce the estate tax on assets passing to your heirs.
- Give of your time and expertise. This can be a great way to help in a very personal way. While it helps MTRC, it also can provide you with a sense of accomplishment. However, you will not receive a tax deduction for this type of giving.
As you can see, there is a wide range of options. A qualified estate planning attorney can help you select the method which maximizes the income tax, estate tax, and personal advantages of the contribution to MTRC.
