Contact Information
106 East College Avenue
Suite 820
Tallahassee, FL 32301
888-838-ABLE
(toll-free in Florida)
850-224-4493 Voice or TDD
850-224-4496 Fax
Email:info@abletrust.org
Questions or Comments?
Email the webmaster.
Gifts to The Able Trust are deductible because they serve the public interest. A gift to a friend or family member is not considered to serve the public interest, and therefore, is not deductible. Gifts helping with relief efforts, education, medical services for the needy, social services or religious organizations are deemed to benefit the greater public interest and are deductible for income, gift or estate tax purposes. The Able Trust is considered a social service organization.
Gifts may be made for a designated purpose. However, the gift may not be subject to certain kinds of contingencies. For example, a gift transferred to The Able Trust requiring all staff to run a mile in four minutes would not be deductible.
However, a contingency that is extremely remote will not defeat the gift. If the gift is conditional upon The Able Trust remaining in existence, it will probably be considered negligible since The Able Trust has been granting for many years. In that case, if the contingency is minor, then the deduction is permitted.
Generally, gifts may be subject to reasonable designations or restrictions. A restriction may cause the charitable deduction to be lowered. When the gift of property that is subject to a conservation easement is given to The Able Trust, the gift may reduce the value of that property. In this circumstance, the charitable deduction would be reduced to reflect the actual value transferred to The Able Trust.
There are numerous types of gifts and different ways to structure the gift. Here is an example of someone wanting to leave a gift and still able to take care of their family in the process.
James Johnson has an estate of $4 million and has always wanted to do something to benefit citizens with disabilities. He owns an appreciated parcel of development land worth $400,000, and is considering giving that land to The Able Trust.
He is concerned that his nephews and nieces would not then receive the $400,000 as part of their inheritance. Fortunately, his tax advisor suggests that James replace the $400,000 through an irrevocable insurance trust.
James contacts his insurance agent and they work with his attorney to create an irrevocable life insurance trust, also known as ILIT. The trust acquires a life insurance policy with James as the insured, but not the owner. James then deeds the development land to The Able Trust.
Based upon a qualified appraisal, he receives a charitable deduction of $400,000. In his 35 percent tax bracket, his tax savings are $140,000 over a four year period. James transfers the $35,000 in tax savings each year for four years to the trust. Each of his four nephews and nieces holds a Crummey power that allows them, respectively, to withdraw 1/4 of the trust premium for a period of 30 days. After the 30 days passes, the power lapses and the funds may be used to acquire the insurance policy.
Since the irrevocable insurance trust is excluded from his estate and the life insurance will both increase in value and pay nontaxable proceeds to the nephews and nieces, James has created the “four-tax-benefit” plan. He bypasses the capital gain and receives an income tax deduction on the gift. The ILIT is free of both income and estate taxes. This plan allows James to make a major gift to The Able Trust and still provide a generous inheritance to nephews and nieces.
If you would like more information, please feel free to contact me at 888-838-2253 ext 231, e-mail mike@abletrust.org or visit www.myabletrust.org.
