Some types of gifts can help you deal with highly appreciated property or a growing family business as your needs and lifestyle change. They can help protect against taxes that might consume much of the value you have worked so hard to grow. The following are two of the most popular types of gifts that can save taxes and allow you to make a gift to Community of Christ.
- Life Estates
- Charitable Lead Trusts
You may desire to leave your home or farm to Community of Christ at your death, but would like to receive a current charitable tax deduction. A life estate can help you do that.
How a Life Estate Works
You can deed your home or farm to Community of Christ but keep the right to use the property for the rest of your life. You will be able to make a current gift to Community of Christ and maintain use of your home or farm.
Benefits of a Life Estate
You receive a current federal income tax deduction for the present value of the remainder interest in your home or farm. You preserve your lifetime use and are able to use and control the home or farm while you are alive. The life estate can last for your life or your life and another person's life. It is possible for you to make a gift of your property even though there is a mortgage upon the residence. You remain responsible for the maintenance, insurance, and taxes on the property.
Charitable Lead Trusts
Charitable Lead Trusts allow you to pass on some of your assets to your family while reducing or eliminating gift or estate taxes.
How it Works
You make a contribution of your property to fund a trust that pays Community of Christ income for a number of years. You receive a gift or estate tax deduction at the time of your gift. After a period of time, your family receives the trust assets plus any additional growth in value.
Zero Tax Plan
It is even possible to set up a lead trust that will allow you to transfer assets to your family with zero transfer taxes. The IRS assumes that a lead trust is only earning at the current low federal rate. If the actual investments of the trust produce a higher return than the payments made to Community of Christ over the term of the trust, then the full value of the trust may be transferred to family with zero gift tax.