Songs of Love Foundation | Planned Giving
Listen to Songs of Love on Spotify! We provide personalized songs, free of charge, for children battling serious illness and lifetime disabilities.
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Planned Giving

 

plannedgivingNEWGive and You Shall Receive
Philanthropy is a characteristic that differentiates the United States from the rest of the world. In 2006 Americans gave an estimated $295 billion dollars to their favorite charities and causes.

Everyone has their own motives for making charitable gifts. But the true meaning of your gift is to make the lives of others better, plain and simple.

The Songs of Love Foundation (SOLF) is a nonprofit organization providing original personalized songs to chronically and terminally ill children locally and across the country. These special compositions have been bringing tremendous joy and smiles to thousands of little patients in more than 150 hospitals nationwide. Hospitals have been using these songs as therapeutic tools to help children cope with serious illness. Your donations will help us reach out to many more seriously ill children with their very own song.

SOLF has helped over 19,000 children in all 50 states and has been awarded the Independent Charities Seal of Excellence for our efficiency in allocating our financial resources.

By carefully crafting your charitable giving plan, you can protect those who depend on you and at the same time achieve your philanthropic goals.
Popular Planned Giving Options

Cash Donations
Cars
Stock and other Appreciated Property
Life Insurance
Annuities
Charitable Gift Annuities
Charitable Trusts
IRAs and Retirement Plans

Lifetime Gifts v. Bequests

Many of the popular planning techniques can be completed during your lifetime, or they can be set up to be put in motion after you are gone.

Stock and other Appreciated Property

Virtually any property can be donated to charity. The “fair market value” of the property can be deducted on your income tax return, subject to certain limitations. Some deductions are limited to your “cost basis” rather than the true market value.

Certain types of property receive “enhanced” treatment. One type is gifts of appreciated long-term capital gains property – capital assets held longer than one year. Depending upon your particular situation, you can receive very favorable tax treatment.

Making a gift of appreciated stock can avoid a capital gains tax. For example, if you gift stock which you purchased at $50,000, which is now worth $100,000, you could avoid paying the capital gains tax on your “profit.” This results in a larger charitable gift than if you had sold the stock, paid capital gains tax, and gifted what was leftover to SOLF. And, depending upon your individual tax situation, you may be able to deduct the entire $100,000 amount on your income tax return.

Life insurance

By making a charitable donation through a life insurance policy, you can create a legacy that will live long past your lifetime. Using life insurance to make your charitable gift could result in your gift becoming more valuable than an annual cash contribution of that same amount.

Building a charitable plan that includes life insurance could provide some of the following benefits:

• A substantial contribution can be made to SOLF at a relatively low cost
• Your gift may increase in value with the use of lifetime benefits in life insurance
• Assets intended for your family are protected, since SOLF receives a legacy through life insurance
• You can realize income and other tax savings

Strategy A – Gift an Existing Life Insurance Policy to SOLF

You may have existing life insurance that no longer is needed for family protection. In this instance, you should consider gifting this policy to Songs of Love. By giving the contract to charity you are surrendering all rights to the contract and cannot reverse the gift. Because the charity receives all of the policy rights, including rights to the cash value, you may receive a current income tax deduction equal to what you have put into the policy.

Strategy B – Name SOLF as Beneficiary of an Existing Life Insurance Policy

A simple method of using life insurance for charitable giving is to name SOLF as the beneficiary of a life insurance policy you already own. By naming SOLF as the beneficiary, you remain the owner of the policy and have the ability to change the
amount that is passed on to SOLF should circumstance warrant. You would also continue to have access to any policy cash values available. You will not receive an income tax deduction, however, since you still own the policy.

Strategy C – SOLF Buys a Life Insurance Policy

And by using cash value life insurance, Songs of Love will have access to cash value during your life, and receives a death benefit creating a legacy at your death.

Strategy D – You Buy a Life Insurance Policy

If you buy a new life insurance policy, you can name SOLF as the primary or contingent beneficiary the policy.

Strategy E – Use Life Insurance to Replace Gifts to Songs of Love

If you are concerned about the “reduced inheritance” for your family, life insurance can be utilized to replace the property gifted to charity. If this is the case, you would purchase life insurance on your life for your family to replace the assets that are given to charity. And if you have or may have an “estate tax problem,” you can combine this life insurance with a “wealth replacement trust,” discussed in more detail below, to avoid estate taxes.

Annuities

You can name SOLF as the beneficiary of your annuity. By naming us as beneficiary, you remain the annuity owner, and retain the ability to change the amount that is passed on to SOLF, should circumstances warrant. You will not receive an income tax deduction because you can still own the annuity. But you can provide a potentially larger gift to charity by leaving a legacy with any death benefit payable under the annuity.

There can be significant tax advantage to naming SOLF as the beneficiary of an annuity: the proceeds of annuities payable to SOLF will not be subject to income taxes, whereas individual heirs may pay income taxes on amounts received under annuity contracts.

Gift Annuities

Another option is to “purchase” a charitable gift annuity from SOLF. In a charitable gift annuity, you give cash or property to SOLF in exchange for our promise to pay you an annuity or fixed payment for life. A charitable gift annuity is easy to establish. You may receive an income tax deduction equal to the value of amount gifted less the value of your annuity stream.

Charitable Trusts

Charitable Remainder Trusts

You may wish to set up and transfer assets to a charitable remainder trust to provide an income stream for you or family members while ultimately benefiting SOLF. You or a family member (or friend for that matter) receives an “annuity” for a term of years that you select. You choose the amount of the annuity payment – within limits set by the tax laws. Whatever is left in the trust at the end of that term goes to SOLF.

In many situations, appreciated assets – such as stock or real estate – are a great asset to gift to a charitable remainder trust. That’s because of potentially valuable income tax benefits. Typically, you recognize to capital gains tax upon gifting the asset to the trust. And, being a tax-exempt entity, the trust can sell that asset and pays no capital gains or income tax – leaving more in the trust to support the annual payment to you.

Many people who create a charitable trust in this manner also choose to purchase a life insurance policy on themselves to reimburse their family for the assets that are ultimately transferred to the charity. The life insurance can be used in conjunction with a wealth replacement trust.

Charitable Lead Trust

A charitable lead trust is an irrevocable trust that provides current income payments to a charity followed by payment of the remainder interest to a non-charitable beneficiary. It is in one sense the “opposite” of a charitable remainder trust.

A Charitable Lead Trust is a planning tool permitted by federal gift and estate tax laws that allow donors to fund a trust which provides a stream of income for a term of years (not to exceed 20) to SOLF. At the end of the term of trust, the remaining in the trust passes to your heirs.
Many use charitable lead trusts to significantly reduce or even eliminate estate taxes. They may also use life insurance in a wealth replacement trust to provide funds to family members while they “wait” for the charitable lead trust to end.

If you are concerned about the “reduced inheritance” for your family, life insurance in a wealth replacement trust could be used to replace the property gifted to charity. In that case, you would create a trust which is used to purchase life insurance on your life for your family to replace the assets that are given to charity.

IRAs and Retirement Plans

Lifetime Gifts

The federal income tax rules were liberalized in 2006 to permit charitable contributions to be made directly from an IRA to the charity. This new law is limited to taxpayers who attained the age of 70 ½ during the year of the gift, and gifts are limited to $100,000 per year. Contributions are made directly to the charity from the IRA. Donors do not have to include the contribution in taxable income – because of this there is no income tax deduction (except in limited situations). However, the new rules produce potential enhanced income tax benefits, based upon elimination of the interplay between the income resulting from the IRA distributions and the limitations charitable contributions deductions.
Under current law, these contributions can only be made in 2006, 2007, 2008 and 2009.

Testamentary Gifts

You can name SOLF as beneficiary, co-beneficiary or contingent beneficiary of your IRA, Keogh Plan, 401(k), 403(b), or other qualified plan, Your estate will receive a charitable deduction for the full amount of the gifted to SOLF.

If you are concerned about the “reduced inheritance” for your family, life insurance in a wealth replacement trust could be used to replace the property gifted to charity. In that case, you would create a trust which is used to purchase life insurance on your life for your family to replace the assets that are given to charity.

Important tax information about charitable giving

The details of the tax deduction rules are beyond the scope of the information we can provide here, but if there is a charitable planning options that appeals to you, please contact us and we can get you to someone who can provide more information specific to your tax situation.

Income tax deductions

Gifts to “qualified charities” – which includes SOLF – can be deducted on your income tax return. These deductions, however, are subject to limits. The income tax deduction depends in part on the type of gift made. For example, a gift of only a “partial interest” in property – such as with a charitable gift annuity or charitable remainder trust – will result in only a “partial” deduction.

The charitable organization pays no taxes on the gift

In most situations, charitable organizations pay no income tax on the earnings of donated property or tax on the receipt of a lifetime gift or bequest.

Your gifts may be exempt from federal gift and estate taxes

In most cases there are no federal gift taxes due on donations to a qualified charity. Also, gifts to such charities may reduce your federal estate taxes. Currently, there is no limit on the amount of the gift and estate tax charitable deductions.

This information is being provided with the understanding that it is not intended to be interpreted as specific legal or tax advice. Neither the Songs of Love Foundation nor any of its employees are authorized to give legal or tax advice. The information provided herein may not be relied on for purposes of avoiding federal tax penalties. You are encouraged to seek tax or legal advice from an independent tax advisor.

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