Planned giving plays a role in estate plans

Family farmers at a crossroads

The largest exchange of wealth in world history is occurring as the aging make final decisions about their legacy. But, with the possible return of the death tax and the changing future of farming in California, which road should be taken? Ag Alert® delves more deeply into this important and timely topic:

Philanthropy is an important part of many people's lives. It's their way of supporting causes close to their hearts and--if properly planned--it's a way to structure their estate plans to help meet the future needs of their families and subsequent generations.

For California farmers and ranchers who've devoted their lives to agriculture, helping ensure a better understanding of what they do is an important goal. Increasingly this interest results in philanthropic gifts included as part of their estate plans.

The California Foundation for Agriculture in the Classroom is one of the many non-profit organizations prepared to put philanthropic gifts to good use. The foundation is devoted to increasing the awareness and understanding of agriculture among California's educators and students.

Planned gifts to Ag in the Classroom help people not only meet their family's financial planning goals, they also help provide for the well-being of future generations, said CFAITC Executive Director Judy Culbertson. Building a better understanding of agriculture helps ensure there will always be a place for farming in the nation's No. 1 agriculture state.

"We strive to be the keystone in the arch linking agriculture and education," Culbertson said. "We work with classroom teachers throughout the year to help them incorporate an understanding of agriculture through literacy and science."

Each year the foundation holds a statewide conference for educators that draws 300 to 400 classroom teachers. The foundation's information-rich Web site is tapped by more than 8,600 visitors each month. And, some 50,000 educators and school volunteers keep abreast of agricultural events and opportunities through the foundation's newsletter. More than 9,000 volunteer ambassadors serve as links to California schools.

"When people discover the scope of our work and its effectiveness in supporting both California agriculture and children, many people ask how they can help," Culbertson said. "Planned giving, whether during a person's lifetime or after they are gone, is an important way to do that."

There are many ways to include philanthropic gifts into an estate plan, Culbertson said, but only the individuals developing the plan and their professional advisors can say which approach is best.

Tax benefits depend on several factors: the type of gift, the time at which it is made and whether it is outright or deferred or has any income payments attached.

Here are some general guidelines:

Outright gifts generate a full income tax charitable deduction.
Outright gifts of appreciated securities are deductible at fair market value, with no recognition of capital gains--providing a valuable tax benefit.
Gifts of personal property, like art, books and collectibles, are fully deductible as long as they are relevant to the foundation's mission.
Bequests do not generate a lifetime income tax deduction. They are, however, exempt from estate tax.
Likewise, life insurance distributions are not income tax deductible, but are exempt from estate tax.
The charitable deduction for a gift that returns income to the benefactor, such as a charitable gift annuity or a charitable remainder trust, is the fair market value of the gift asset minus the present value of the income interest retained.

The benefits of planned philanthropic gifts vary from one situation to the next, Culbertson said.

"You should consult your tax, legal and financial professionals for a complete explanation of potential benefits."

For information on CFAITC's many educational programs, go to www.cfaitc.org.