• Increase annual income
• Supplement retirement income
• Reduce income taxes
• Reduce or eliminate capital gain tax
• Diversify invested assets
• Manage invested assets
• Reduce estate taxes
• Replace gifted assets for heirs

Your plan can include several beneficial components. Three of the most popular are major lifetime gifts, life-income agreements and "legacy" gifts.

If you like the idea of making your hard-earned savings and property work even harder — benefiting everyone with better health through biomedical research, establishing your legacy, and providing a secure future for you and your heirs — consider including the NRI Medical Research Foundation in your planning.

Lifetime Gifts

If you have assets that have increased in value (and that you have held for more than one year), giving them during your lifetime to the NRI Medical Research Foundation or other nonprofits may be most beneficial.

As a donor, you’ll receive a double tax benefit: you can usually deduct the fair market value of the donated asset on your income tax return, while avoiding the potential capital gain tax that would otherwise be due when selling the asset. Some people may also find that it’s beneficial to remove the asset from estate taxation.

Appreciated Stock and Securities: Many people have investment assets that are now worth more than their original cost. Among these are listed securities, mutual fund shares or even closely held business interests.

Real Estate: Farms, commercial property, residential real estate and second homes have often greatly appreciated in value. At the same time, building depreciation deductions may have lowered your cost basis, creating a large potential tax liability when you sell the property. That’s why well-advised donors often contemplate using real estate as a charitable contribution.

Personal Property: Artworks, stamp and coin collections, automobiles, musical instruments and other personal property may be considered for lifetime giving. As with real estate and closely held business interests, larger gifts require an appraisal. These gifts are generally deductible at their full value if put to a related use by the charity.

Life Insurance: Many donors find that they no longer need the protection provided by an old policy. If so, it may make an excellent way to support a nonprofit organization. Others purchase a new policy, donating its ownership to the charity.

Life-Income Agreements

Donors who make an irrevocable gift to the NRI Medical Research Foundation or other nonprofits may be able to use tax-favored gift annuity or trust arrangements to create tax benefits and income today, while benefiting one or more of their favorite charities at their death or a predetermined date.

In the meantime, the donor may increase his or her income, receive an income tax deduction, and avoid and/or defer payment of capital gain tax. Estate tax savings may also apply for wealthier donors.

These agreements are often funded with highly appreciated assets (those now worth more than their original cost) including real estate and stock.

Charitable Gift Annuity: Typically the donor makes an irrevocable gift to NRI or other charities, then receives fixed annuity payments over the course of his or her lifetime (and possibly the lifetime of a spouse). Rates — generally following an age-based table suggested by the American Council of Gift Annuities — are most favorable to older individuals. Donors receive an income tax deduction for a portion of the donated asset’s valueIn addition, income beneficiaries receive partially tax free income, and the donor receives capital gain benefits if the gain is funded with appreciated assets.

One popular variation is the deferred gift annuity. Here, the income payments begin at a later date, usually with a higher rate of return. Donors may choose to have the income commence at retirement.

Charitable Remainder Trust: Donors make a substantial irrevocable gift to a trust they have established, then receive annual payouts based on either a fixed amount or a fixed percentage of the trust's year-end value. The charities favored by the donor usually receive the trust assets either upon the death(s) of the income beneficiary(s) or after a selected number of years.

Some donors utilize part of the enhanced income they receive from their trust, along with their tax savings, to purchase life insurance to replace the donated asset’s value for their heirs’ benefit.

Leaving a Legacy

Donors who want to maintain control over their assets throughout their lifetimes often choose to make revocable commitments to the charities of their choice through their wills.

These gifts, which the donor can change at any time, offer no income tax advantages. They do sometimes create estate tax benefits.

Bequests: Many Americans give a portion of their assets to charities as their final act of philanthropy, either through the bequest of specific assets, a fixed dollar amount or a percentage of the residual value of their estates. It’s important to maintain an up-to-date will or living trust document to insure that your assets will be distributed according to your wishes at the time of death.

Beneficiary Designations: Many assets can be directed at death through arrangements that avoid probate. Retirement accounts, life insurance proceeds, financial accounts and other assets often pass through beneficiary designation. Changing your designated beneficiary to include NRI and other charities, all or in part, is a simple but compelling way to direct your assets for the public good.

Beneficiary designations on retirement plans (including IRAs and 401(k)s) allow you to give all or a portion of your retirement funds to the charity of your choice at death. You can also name a charitable remainder trust to receive retirement fund assets, naming your spouse as the trust’s income beneficiary. In either case, you have directed an asset to charity, an asset on which your heirs otherwise would have to pay income taxes in years to come.

North Dakota Tax Credit For Planned Gifts

The 2005 North Dakota State legislature has given a boost to ND taxpayers and the charitable organizations they support. Senate Bill 2391 was passed overwhelmingly and creates an individual income tax credit for planned charitable gifts made to North Dakota charitable organizations if completed after July 31, 2005.

The amount of the credit is 20% of the Federal income tax deduction allowable for the planned gift. The maximum credit amount is $5,000, which can be used to offset the North Dakota individual income tax in the year of the gift, plus a two year carryover.

It is important that charitable trusts and gift annuity agreements contain conforming language to follow the Legislation's specifications and allow such gift arrangements to qualify for the credit.

"Planned gifts" for purposes of this credit include:

• Charitable Reminder Trusts
• Charitable Lead Trusts
• Charitable Gift Annuities
• Charitable Pooled Income Funds
• Charitable Life Estate Agreements
• Certain paid-up life insurance policies