A Guide for Gifts & Bequests for Loma Linda Contributors
Ways of giving: outright gifts
- Gifts of cash
- Gifts of securities
- Gifts of real estate
- Gifts of personal property: art, books, and similar items
- Gifts of life insurance
- Online giving with a credit card
When making gifts of cash, securities, real or personal property or life insurance to Loma Linda University, Medical Center, or Children's Hospital, it is good to plan thoughtfully. The result of planning may be a gift that is greater than otherwise thought possible, at a minimum cost to you, the contributor, your family, or your heirs.
Gifts of cash
The most popular way of contributing to Loma Linda is to make a cash gift--currency, check, money order, or bank draft. For those who itemize deductions on their tax returns, actual out-of-pocket cost can be significantly less than the dollar amount of the gift because of the allowable income tax deduction. The maximum amount (of cash gifts to Loma Linda) you can deduct per year is usually 50 percent of the contributor's adjusted gross income, with a carry-over of any excess deduction for up to five succeeding tax years.Depending on the institution that you would like to benefit through your donation, gifts by check should be made payable to:
Benefiting institution: Check payable to: Mail to: Benefiting institution: Check payable to: Mail to: Benefiting institution: Check payable to: Mail to:
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Gifts of securities
Appreciated securitiesGifts of long-term appreciated securities often provide more advantages to the contributor than outright cash gifts.
Gifts of long-term appreciated stocks or bonds entitle a contributor to two benefits: There is no capital gains tax payable, and the contributor may use the securities' fair market value on the date of the gift to compute the income tax charitable deduction. Contributors who give appreciated property, such as stocks and bonds, may claim a resulting charitable deduction of up to 30 percent of their adjusted gross income in the gift year, with carry-over of any excess deduction for up to five succeeding tax years.
EXAMPLE: Mrs. Smith gave 100 shares of long-term appreciated stock for which she paid $10 per share 15 years ago. The stock had an average market value of $50 per share on the gift date, for a total gift to Loma Linda of $5,000. Because her cost was $1,000 ($10/share x 100), the capital gain, had she sold the stock, would have been $40 per share, or $4,000. A gift is not a sale. There is no capital gains tax, and the charitable deduction is the average fair market value of the gift of $50 per share--or $5,000.
The deduction also increases Mrs. Smith's spendable income, because her income tax is less in the gift year and in any year to which the deduction is carried over.
Mrs. Smith's adjusted gross income in the year of the gift was $21,000. Mrs. Smith could apply the entire $5,000 deduction in the gift year, because she could deduct up to $6,300 ($21,000 x 30%). If her adjusted gross income was only $15,000 in the gift year, she could apply $4,500 ($15,000 x 30%) in the gift year and carry over $500 to the following tax year.
Depreciated securities
Securities that have depreciated in value will benefit the contributor most if they are sold first and the proceeds contributed to Loma Linda. One can thereby claim a capital loss for the amount of the depreciation. If the securities were given directly, the gift deduction would be the same, but no capital loss could be claimed for tax purposes.
How to give securities
Gifts of securities may be mailed or delivered to the benefiting institutions as previously indicated.
Hand delivery: Gifts of securities may be hand-delivered to a staff member at each institution's respective advancement office. Each certificate or issue involved in the gift should be accompanied by a stock assignment form (stock power) signed by the owner(s) of the securities, exactly as each name appears on the certificates. (The signature on the stock power form must be guaranteed by a bank or registered broker before mailing.) As a second choice, the certificate(s) may be assigned to the benefiting institution (Loma Linda University, Loma Linda University Medical Center, or Loma Linda University Children's Hospital) with an endorsement on the back of the certificate(s) when the gift is made.
Delivery by mail: Gifts of securities mailed to Loma Linda also require signed stock assignment forms. The recommended procedure is to send the stock certificate(s) and the signed stock powers in separate envelopes. Each stock power form should be signed exactly as each name appears on the certificates. Send certificates via certified mail, with a return receipt requested. A separate stock power form is required for each issue or certificate of stock included in the transaction. Remember: the signature on the stock power form must be guaranteed by a bank or registered broker before mailing.
Delivery by broker: Many contributors prefer to deliver securities through a broker. When using this method, you should deposit gift securities with your broker for the Loma Linda University, Medical Center, or Children's Hospital account. Please instruct your broker to call the Loma Linda University Foundation office immediately at (909) 558-4534 for acceptance of the gift and for further instructions. The Loma Linda University Foundation accepts all security stock gifts that will benefit the University, Medical Center, or the Children's Hospital.
Valuation of gifts of stock: The gift value is the average of the high and low selling prices quoted for securities regularly traded on a major exchange on the date of the gift. For over-the-counter securities, the average between the closing bid and asked prices on the date of gift is the gift value.
Date of gift: The date of gift is determined in one of the following ways: Split certificates: If you wish to contribute fewer shares than the number represented by the certificates, the Loma Linda University Foundation will have the certificate split and sell or keep the contributed shares. The remaining shares will be reregistered and handled according to your instructions.
Please include the Social Security number and address for each individual in whose name each new certificate is to be registered.
Regardless of which method you choose for transferring gift securities, you or your agent should advise us that you are making the gift, and you should indicate its terms, purpose, and the names to be used when recording a gift (for example, sharing recognition with a spouse through a joint gift).
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Gifts of real estate
The Loma Linda University Foundation often receives gifts of real property with the intent of benefiting the University, Medical Center, or Children's Hospital. Generally, it is preferred that real estate gifts be made in a manner that does not restrict the Foundation's right to sell and realize proceeds when and if the Foundation cannot use the property. A contributor of such property can designate the proceeds for a particular program, school or department within the University, Medical Center, or Children's Hospital or permit those benefiting entities to determine their best use.There are favorable tax advantages for gifts of long-term appreciated real property: The contributor pays no capital gains tax on the appreciation. A charitable contribution deduction is allowed for the fair market value of real estate given on the day it is transferred by deed. The value of the deduction may be applied to as much as 30 percent of a contributor's adjusted gross income in the gift year. If the contributor cannot deduct the entire amount in the gift year, the excess can be carried over for up to five succeeding tax years.
NOTE: This is a general description. Any real property that has depreciation attributes or a debt payable on it should be considered on a case-by-case basis. Also, any gift of real estate must undergo a thorough environmental evaluation before acceptance by the Loma Linda University Foundation.
EXAMPLE: In 1980, Mrs. Johnson inherited from her husband a 100-acre farm he had bought in 1940. At his death, the farm was valued at about $150,000. Since then, Mrs. Johnson had watched it more than double in value, with a corresponding increase in her real estate tax. She decided to contribute the farm to Loma Linda since she also had other holdings that provided her with an adequate annual income. She also designated that proceeds from her gift and the eventual sale of the farm be used to support scholarships in the names of her husband and herself.
Using a qualified appraisal (made not earlier than 60 days before the gift transfer date and prior to the due date for filing of the donor's income tax return), she established the fair market value of her farm at $350,000 and could therefore claim the same amount as a charitable income tax deduction. Even though there had been a $250,000 capital gain in the farm's value, giving it to Loma Linda relieved her of all capital gains tax liability.
Also, Mrs. Johnson no longer had any real estate taxes to pay on the farm. In fact, she had increased her spendable income by about $4,200 during the gift year and each of the five succeeding tax years because her taxable income bracket percentage was 28 percent and her allowable annual deduction was $15,000. She also removed the value of the farmland from her estate, which will ultimately reduce federal estate taxes and state inheritance taxes.
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Gifts of personal property: art, books, and similar items
The Loma Linda University Foundation is often the channel for arranging gifts of art, books, computer software, or equipment that represent significant acquisitions or additions to existing University, Medical Center, or Children's Hospital property. Gifts of this kind also are given favorable treatment as charitable contributions under existing tax laws. However, special requirements must be met to ensure that treatment.A gift of such property held by the contributor on a long-term basis (more than one year) can be deducted at fair market value on the date of the gift, subject to one important condition: The gift must be "related to the institution's exempt function." Generally the exempt function means that the gift of tangible personal property must be put to use by the institution and not sold at the time of the gift. Because of this rule, the University will arrange for gifts of books to be made directly to the Del E. Webb Memorial Library, and for other tangible personal property to be made directly to the appropriate academic or clinical department within the University, Medical Center, or Children's Hospital.
If such gifts are not considered to be related to the function of the institution, the allowable charitable deduction is reduced to the gift's original cost to the donor.
Gifts of tangible personal property held on a short-term basis (less than one year) are deductible only to the extent of the donor's cost basis. (The conditions outlined above apply only to gifts of tangible personal property made during the contributor's lifetime, not gifts by will).
Appraisals of real and personal property
Under certain circumstances, the Internal Revenue Code requires that the value of non-cash gifts be established by a "qualified appraisal." This is necessary when either the claimed value of the donated property (other than a non-publicly traded security) is more than $5,000, or, in the case of a non-publicly traded security, when the claimed value is more than $10,000. A "publicly traded security" is a security for which a market quotation is readily available on an established securities market.
A qualified appraisal must be made by a professional trained to make appraisals of the donated property who is neither employed by nor related to the contributor or the recipient. It must be made not more than 60 days before the date the property is transferred to Loma Linda and must meet the requirements of IRS Form 8283.
The Internal Revenue Service has ruled that appraisal fees incurred by the donor in determining the fair market value of contributed property qualify as miscellaneous itemized deductions for income tax purposes.
Should you choose to claim a non-cash deduction of more than $500 for your contribution, federal law requires you to file IRS Form 8283 with your federal income tax return. The Appraisal Summary is required for non-cash gifts of more than $5,000.
NOTE: On gifts of real estate, current Loma Linda University Foundation policy requires that an environmental evaluation be completed on the property to be transferred.
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Gifts of life insurance
When properly arranged, life insurance offers an attractive way to benefit the receiving institutions at a relatively low cost to the contributor. Persons wishing to support Loma Linda through a gift of life insurance will find numerous advantages.- Life insurance permits the contributor to provide a substantial planned gift with relatively modest annual payments. Life insurance can be an especially attractive planned gift for younger alumni because of the relatively low premium expense.
- The proceeds from the policy are paid promptly to the benefiting entity eliminating the delays caused by the estate administration process.
- A fully or partially paid-up policy, originally taken out when family responsibilities were greater, often provides for an advantageous gift from a tax and estate planning standpoint later in life.
How to give life insurance
To make a gift of life insurance, a contributor should assign all incidents of ownership of the life insurance policy to the benefiting institution (Loma Linda University, Loma Linda University Medical Center, Loma Linda University Children's Hospital), using the correct corporate title. For the contributor to receive income tax considerations, the benefiting entity must become the irrevocable beneficiary and the policy's owner. The policy is usually retained by the Loma Linda University Foundation and may be delivered to the Foundation office in person, by mail or through the donor's insurance agent. Upon maturity of the policy, Loma Linda University Foundation will distribute the cash value of the policy to the benefiting entity according to the donor's wishes.
Methods of premium payment
Contributors may choose to pay the insurance premiums directly to the insurance company, or they may send Loma Linda University Foundation the cash contribution for the premium amount due at least 30 days prior to the premium due date. In this way, the Foundation can make the premium payment on time.
Individuals wishing to make premium payments directly to the insurance company should notify the company or their insurance agent that annual premium notices should be sent to their home or office even though the owner and beneficiary is the Loma Linda University Foundation. Failure to request this service will result in the premium notice being sent to the Foundation which would cause premium payment delays. In addition, those who make payments directly to the insurance company should notify the Foundation when each premium payment is made and include the amount paid so that gift credit for the amount of the premium can be recorded.
Those who wish to make contributions to the Foundation for insurance premium payments should send the amount due to the Foundation with the Notice of Premium Due or a note including the premium information.
In both payment methods the premium is tax deductible, and the Foundation will issue a receipt and an acknowledgment of the gift.
Types of insurance gifts and related tax considerations
There are several basic types of life insurance gifts:
- The contributor may name the Foundation (or a specific benefiting entity) as owner and beneficiary of a new or existing policy and take a current charitable income tax deduction approximately equal to the policy's cash surrender value. If the contributor elects to continue premium payments on the policy after it is paid up, the payments also will be deductible charitable contributions when paid.
- The contributor may name the Foundation the contingent beneficiary of an insurance policy. If the primary beneficiary dies before the policy holder, the Loma Linda University Foundation or the designated benefiting entity (University, Medical Center, Children's Hospital) will receive the policy's benefits. There are no income tax benefits for this type of gift, but an estate tax deduction will be allowed if the proceeds are paid to Loma Linda.
NOTE: The form of life insurance preferred by Loma Linda University, Medical Center, and Children's Hospital (when the contributor is establishing a new policy) is the single premium policy. With this type of insurance, a contributor makes a one-time premium payment that pays the policy in full. Another preferred form is what is commonly referred to as a "vanishing" or "diminishing" premium payment policy. With this type of insurance, a donor pays annual premiums for a specified number of years, usually five to ten. Following this defined period, determined by the amount and type of policy being used, the dividends earned by the policy will pay the premiums. Thereafter, the donor is not required to continue payments unless: (a) he or she wishes to increase the death benefit of the policy, or (b) the amount of the dividend on the policy is less than the annual premium amount.
Official designation on insurance policies
Depending on the donor's wishes, the assignment of the ownership of gift insurance policies and beneficiary designations should be made to: Loma Linda University, Loma Linda University Medical Center or Loma Linda University Children's Hospital Foundation.
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