GIVING TO LATHROP
AN AFFILIATE OF THE
Lathrop's Gifts and Bequests Committee, led by a resident and whose membership
is comprised of residents from both communities, has developed a brochure which
will shortly be distributed to all residents. This is the beginning of a
"New" Gifts and Bequests Campaign for Lathrop.
The document outlines numerous opportunities for residents and
their families to contribute to Lathrop to enable current and future residents
to benefit from quality programs and services.
Below is the content of the brochure:
I. Why does Lathrop Community, Inc. (LCI) need gifts and
Charitable giving to LCI helps our community to be stronger financially, more
affordable and more responsive to the needs of residents.
Lathrop's income is derived from several sources: monthly fees paid by
residents, net proceeds from sales when units are resold, income from invested
funds and, finally, gifts and bequests. It is this last source of income that
is addressed in this brochure.
The purpose of the Gifts and Bequests Committee is to help improve LCI's
financial position and, by so doing, to improve the quality of life at Lathrop
for current and future residents. One way to moderate the fee increases paid by
residents and to insure LCI's long term financial stability is to increase
Lathrop's income -for example, from gifts and bequests. Gifts to LCI, a 501(c)
(3) organization (under IRS rules), are tax deductible to the donor.
II. In what areas does Lathrop most need our support?
Areas being considered include establishing a fund to provide financial support to
those residents who need assistance with payment of their fees, construction of
capital projects, resident activities, and certainly a fund for general or
The support of these projects and activities through donations reduces Lathrop's
dependence on debt financing and will significantly improve the quality of life
Since LCI's beginning
more than eighteen years ago, residents have donated cash or stock
shares to Lathrop; others have bequeathed a portion
or all of their entrance fee refund to Lathrop and some have established
Charitable Life Annuity Trusts.
Over the years, residents have voluntarily supported Lathrop in a variety of
ways, such as the donation of goods at bake sales, tag sales and Thrift Shop
sales. They have also donated assets, such as a fine new piano. They have given
their time, labor and energy to conduct exercise classes, the construction of
woodland walking trails and performances at concerts.
III. How does one give?
A. Outright Gifts
There are many assets that may be given to the Lathrop
Community to advance its mission. Gifts of cash, appreciated securities,
tangible personal property, or paid-up life insurance policies give Lathrop the
benefit of having the money almost immediately to support whatever purpose the
donor may choose. Outright gifts often provide the largest tax benefit to
the donor. For those individuals who choose to support Lathrop with appreciated
assets, such as securities, there is an added advantage. Their federal
charitable deduction will be equal to the fair market value of their gift, not
their basis. By giving the property the donor will avoid all capital gains tax.
B. Planned (or deferred) gifts - A unique partnership
Planned gifts (sometimes also referred to
as "life income gifts") are ways for a donor to provide future support to an
organization while insuring that his or her own financial security - or that of
a loved one, remains intact. There are many varieties: annuities, pooled income
funds and charitable remainder trusts, to name a few. While planned gifts may
differ, all share some common benefits for the donor:
A lifetime income for a
designated beneficiary (or, in some cases for a term of years, up to 20)
A federal charitable
income tax deduction for some portion of the gift
An ability to avoid
capital gain tax when the gift is funded with appreciated property, such as
real estate or tangible personal property
The security of knowing
the high quality of gift administration by Lathrop
The potential to reduce
estate taxes, and
The knowledge that the gift will help
contribute to the quality of life for residents in the community
Planned gifts may be funded with a variety of assets, including cash,
appreciated securities, real estate as well as other assets that hold value. If
created under a will to benefit a loved one, assets such as those from a pension
plan may also be used.
Regarding the advantages noted above, there are differences in the details and
the tax characteristics. With some basic information, such as the birthdates of
the beneficiaries and the fair market value of the asset to be contributed, it
is possible to generate information specific to any donor's situation.
Bequests are a popular way of carrying out one's intentions after protecting
one's assets during a lifetime. A bequest can be for a specific amount of
money, a specific financial asset, such as a pension plan or real estate, or
tangible personal property, such as a painting. There are other forms, as well,
such as a residual bequest, providing LCI with whatever remains after other
gifts have been made. A bequest provision may also be contingent upon some
other event, such as the premature passing of someone named under the will.
Some Lathrop residents have bequeathed to Lathrop some or all of their entrance
D . Real Estate
Real estate provides
an especially attractive option. A resident may donate a house
or marketable real property to Lathrop either outright, in a trust
to provide income or while retaining the right to use the property
for life. In all cases there may be significant tax benefits.
E. Life Income Gifts
1. Charitable Gift Annuity
A charitable gift annuity is a simple contract with a
charitable organization, such as LCI. In exchange for an asset such as cash, or
appreciated securities, LCI guarantees that it will pay the beneficiary
(usually the donor) and/or another beneficiary a fixed and guaranteed income
for life. The rates are highly competitive and are established by a national
organization. The exact rate is a function of the age(s) of the designated
income beneficiaries. Donors can increase their income significantly by
funding the annuity with low-yielding assets. The table below illustrates the
rates that are currently in effect, as well as the deductions to which a donor
would be entitled, based upon a $10,000 gift. The current minimum for
participation in a charitable gift annuity is $5,000.
Charitable Tax Deduction
One life (70)
Two lives (72+70)
One life (75)
Two lives (77+75)
One life (80)
Two lives (82 + 80)
 The rates quoted in these examples are
currently in effect. Before entering into a gift annuity agreement it is
important to determine the rates in effect at the time.
A Lathrop resident, age 75, decides to fund a charitable
gift annuity with stock worth $11,000 that was bought 18 years ago for $1,000.
The stock currently earns a mere 1.5%.
The stock is given to Lathrop which sells
it for $11,000 in order to fund the promised income stream for the resident.
The annuity would yield 7.1%
income, or $781.
A one-time income tax
deduction of $4,876 can now be claimed as a charitable gift.
A large portion ($449) of the annuity income
is taxed at a capital gains tax rate while a smaller portion ($45) is received
free of any tax obligation.
So this gift to Lathrop increases the donor's income, avoids the capital gains
tax from the sale of the stock and the individual is entitled to claim a
charitable tax deduction. In turn, Lathrop received funds to support an
improved quality of life for all Lathrop residents - the proverbial "win-win"
2. Pooled Income Fund
A pooled income fund provides an opportunity for many, similar gifts to be
commingled and invested to provide the beneficiaries with a lifetime of income.
Like a mutual fund, each beneficiary is assigned "shares" of the fund and will
receive income on a pro rata basis. They are highly sensitive to the economy.
All of the income a beneficiary receives is taxed at ordinary income rates.
Additionally, they may be created with particular investment objectives, such
as a high income fund or a balanced income fund allowing for both income and
growth over time. LCI does not currently offer a pooled income fund; however,
if there is sufficient interest LCI will explore all available options.
3. Charitable Remainder Trusts
These are separately invested trusts (minimum contribution of $100,000) which
provide annual payments of a fixed amount (annuity trust) or fixed percentage
(unitrust) of the value of the trust to the beneficiary or beneficiaries.
Income will be provided for either a specified term of years or until the death
of the last income beneficiary. These trusts can be used creatively to provide
for the education of a grandchild or multiple grandchildren, to meet the needs
of supplemental retirement income or to provide for more than two individuals.
They can be funded with a variety of assets, including cash, appreciated
securities - even real estate.
Choosing Among The Options
If you are considering making a gift to Lathrop,
either outright or planned, we urge that you consult with your financial or
Lathrop's Committee on Gifts and Bequests will be glad to
answer any questions that you may have and will hold your inquiry in the
strictest of confidence. We welcome your comments.
Gifts and Bequest Committee:
Harry Colt, Chair ( Lathrop Easthampton resident)
Homer Perkins (Treasurer)
Ralph Bailey (Lathrop Northampton
Kathy Rice ( Amherst Branch Mgr., Greenfield Savings Bank)
Addison Cate ( Lathrop Easthampton
Frank Conant, ( Lathrop Easthampton resident)
Ex-officio: Audrey Bozzo (President,
Board of Directors, Northampton resident)
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