The Mahogany Legacy recognizes donors investing in the community by naming CFVI as a beneficiary of their estate plans. Estate plan funds can benefit the territory in perpetuity, by becoming a legacy for our community’s future.
Too often, such gifts go unrecognized because they come at the end of the donors’ lives. The Mahogany Legacy provides a way to recognize and thank donors during their lifetimes.
Members of the Mahogany Legacy are special people who have provided for the future of our region through the Community Foundation of the Virgin Islands.
There Are Many Goals and Benefits:
- Maximize your deduction; minimize the gift details
- Afford a larger gift to CFVI – and avoid capital gains liability
- Make a gift for CFVI’s future that doesn’t affect your cash flow or portfolio now
- Retain income benefits from the assets you give to CFVI – thus afford a larger gift
- Reduce high tax liability now; gain additional income later
- Tap one of the most valuable assets in your portfolio to make a gift to CFVI
- Reduce gift and estate taxes and control the timing of passing assets to your children and grandchildren
- Avoid capital gains liability on the transfer of a business or partnership interest
- Locate an overlooked asset that you can easily give to CFVI
- Make an endowment gift from income rather than capital
- Use cash to make your gift to CFVI
- Give appreciated stock or bonds held over one year
- Put a bequest in your will (cash, specific property, or a share of the estate residue)
- Create a charitable gift annuity or a charitable remainder annuity trust or unitrust
- Establish a deferred gift annuity
- Use real estate to make your gift to CFVI
- Create a charitable lead trust which supports programs at CFVI for a fixed, finite period with the principal going to your heirs.
- Contribute the partnership interest or closely-held stock to CFVI
- Name CFVI as a beneficiary of your retirement plan; leave other assets to family
- Create a new life insurance policy, or donate a paid-up policy whose coverage you no longer need
- Claim your deduction against a larger portion of your adjusted gross income and make an immediate impact on CFVI
- Buy low and give high – make a gift that costs you less than the benefit it delivers to us while avoiding capital gains tax
- Today – a gift that costs you and your family nothing. Tomorrow – an estate tax deduction
- Receive income for your lifetime; receive a charitable deduction; diversify your holdings
- A larger deduction and a higher income rate than other life-income gifts offer
- Avoid capital gains tax, receive an income tax deduction – and have the option of a gift that doesn’t affect your lifestyle
- Reduce gift and estate taxes, and freeze the taxable value of growing assets before they pass to your heirs
- Avoid capital gain liability, receive an income tax deduction, and utilize a gift asset you may have overlooked
- Eliminate income tax on retirement plan assets; free up other property to pass to your heirs
- Increase your ability to make a significant gift to CFVI
The Most Frequently Asked Questions
What assets can I use to make a gift to the Community Foundation of the Virgin Islands?
Generally speaking, during your lifetime you can make an outright gift or cash securities, or other property (e.g., real estate, personal property.)
Through your will or with a distribution from a retirement plan or life insurance policy, your gift can be designated to the Community Foundation of the Virgin Islands in accordance with your wishes.
What sort of gift plans also return income to me?
You have the option of making a gift that returns income to you, your spouse, or other individuals, such as a charitable gift annuity, or charitable remainder unitrust, or annuity trust.
What tax deduction will I receive for my gift?
Your tax benefits will depend on several factors: the type of gift, the time at which it is made, whether it is outright or deferred or whether it has any income payments. The general guidelines are:
- Outright gifts to CFVI generate a full income tax charitable deduction. Outright gifts of appreciated securities are deductible at fair market value, with no recognition of capital gains — a great tax benefit!
- Gifts of personal property, such as art, books, and collectibles, are fully deductible as long as they are relevant to our mission. We can advise you on this point.
- Bequests do not generate a lifetime income tax deduction. They are exempt from estate tax.
- Similarly, life insurance distributions to CFVI are not income tax deductible but are exempt from estate tax. If you have designated CFVI as the irrevocable owner and beneficiary of a policy during your lifetime, you may deduct annual gifts that offset premium payments (for more details on this point, see Question 4 below).
- The charitable deduction for a gift that returns income to you, 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 you retain.
I want to set up a life insurance policy, name the Community Foundation of the Virgin Islands as beneficiary, but retain ownership of the policy. Can I deduct the premium payments I make?
No. The IRS would not consider that a “completed gift” – they’d say that, as the owner of the policy, you could change the beneficiary designation to a friend or family member. We must be made the irrevocable owner of the policy for gifts offsetting premium payments to be deductible.
I’ve heard that transferring gifts of retirement plan assets to charity is advantageous. Why?
Qualified retirement plans such as IRAs, 401(k), 403(b), and Keoghs allow individuals to defer paying taxes on a portion of their income until the assets are withdrawn during retirement years. However, after a person’s death, these accounts are often exposed to income and estate taxes, at a combined rate that could rise to 75% or even higher on large taxable estates. The tax will be paid at some point – by your estate and your heirs – unless contributed to charity. In other words, by giving retirement assets to charity you receive double benefits. Your estate and heirs will not be taxed on the portion that goes to charity and you will support the causes you care about through CFVI!
Can I transfer my IRA to the Community Foundation of the Virgin Islands to set up a life income gift, and avoid income tax on the transfer?
New legislation gives donors aged 70 1/2 and older an opportunity to direct lifetime distributions from their IRA’s to us without incurring an income tax liability on the withdrawal. Distributions can total $100,000 per year, and must be made outright – they cannot fund a life income gift. Just e-mail us and we’ll be happy to give you more information about this new charitable incentive.
Donors younger than 70 1/2 can make a withdrawal from their IRA or other types of retirement plan, pay income tax on the withdrawal, and donate the proceeds to us. These gifts can be made outright or can fund a life income gift and will generate a charitable deduction for the donor.
I’d like to donate a painting. Will you determine its value for my income tax deduction?
The IRS requires that donors of artwork and collectibles secure an independent appraisal of the items to establish fair market value. The appraisal has to be related to the gift, too – an insurance appraisal won’t suffice. We can assist you on this point.
I’m interested in establishing a charitable gift annuity. What financial provisions will you make for the income payments to me and my spouse?
Your charitable gift annuity will be treated as a general obligation of the Community Foundation of the Virgin Islands, backed by all of our assets. We have an unbroken record in making timely payments to our annuitants, and that ongoing responsibility is a key element in our financial policies.