Gift Plans:
How to Fund Your Family Foundation

A family foundation charitable account can be funded with cash, stock, real estate, or other assets. Assets can also be placed into any number of special gift plans or trusts that will later transfer into a family foundation.

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Outright Gifts
If you want your gifting to be more personalized and if you want to be more involved with your philanthropy on an ongoing basis, you are much better served gifting to your own family foundation at The American Foundation of Utah. A cash donation is the easiest and most direct way to start a family foundation. Cash, stock, real estate, and other assets can be gifted to The American Foundation of Utah and then transferred directly into a family foundation account. This achieves the maximum tax advantages for the donor while providing continuing charitable involvement. Most people don't fully realize the double, and sometimes triple, deduction benefit of a lifetime gift. Making a charitable gift while you are living gives you both a current income tax deduction and an estate tax deduction.  And In some cases, you can also get the equivalent of a third deduction by avoiding capital gains taxes.

Gifts of Cash - If you itemize, you can lower your income taxes simply by writing a check to The American Foundation of Utah which then goes into the family foundation charitable account. If your name is John Smith, all you need to do is simply write a check to The American Foundation of Utah with a note on the message line for "The John Smith Foundation".   You can start a family foundation with a minimum deposit of $5,000. Gifts of cash are fully deductible-up to a maximum of 50% of your adjusted gross income. For example, if your adjusted gross income for this year is $50,000, up to $25,000 of cash gifts may be deducted this year. Any excess deductions can generally be carried forward and used over as many as five subsequent years. Anything that you move from a personal or living trust to a family foundation essentially transfers assets from a taxable account to a non-taxable account.

Gifts of Stock - It is often more tax-wise to contribute stock than cash into your family foundation. Gifts of appreciated stock can offer the equivalent of a triple tax deduction. First, you receive an income tax deduction for the full fair market value of the stock at the time of the gift (if held for over one year).  Second, you avoid paying any capital gains tax when your family foundation sells the stock. And third, the stock is removed from your estate, which is equal to a full estate tax deduction. Gifts of appreciated stock are 100% income tax deductible -- usable up to 30% of your adjusted gross income for the first year with the balance deduction carried forward for five additional years.

Gifts of Real Estate - A gift of real estate to your family foundation can also be tax-wise. Similar to a gift of appreciated stock, real estate also offers the above-described three-fold tax savings. First, you receive an income tax deduction for the full fair market value of the real estate at the time of the gift. Second, you avoid paying any capital gains tax when your family foundation sells the real estate. And third, you reduce your estate and save estate taxes.

Gifts of Life Insurance - A gift of life insurance can provide a significant charitable deduction. You could purchase a new policy or donate a policy that you currently own but no longer need. To receive a deduction, designate your family foundation as both the owner and beneficiary of the life insurance policy. Check with our office or your insurance agent for more details.

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