Giving Wisely

AARP Foundation relies on charitable gifts to meet its daily needs and to support its future. We take our responsibility to be good stewards of the money entrusted to us seriously and apply those dollars wisely and with purpose to AARP Foundation's needs.

Your gift can take multiple forms and can help you address your personal financial goals. Do you want to make a significant gift during your lifetime, or would a gift as part of your estate work better? Do you have a particular asset that you are thinking of donating? Do you want to increase your retirement income, or is your primary goal estate preservation? Are you carrying surplus life insurance or a large balance in your retirement plan?

We will be pleased to work with you and your advisors to help you craft the gift plan that works best for your goals and dreams. Here are some places to start as you consider your options:

• Travel through Plan-a-Gift® to help you decide what plan will best meet your needs.
• Which life-income plan works best for you?
• Discover which gift plans can help you meet your goals.
• Compare gift plans.
• Assets you can use to make a gift.

Use the following guide to help you weigh your options.

• Give now, or give later?

  A significant lifetime gift will allow AARP Foundation to meet its immediate objectives. In turn, it will give you maximum tax benefits, especially attractive if you are in high earnings years. It can also be the simplest gift to arrange.

  You may, however, prefer to leave your assets and cash flow undisturbed until your death, and instead make your gift through your estate. Estate gifts are critically important for AARP Foundation's long-term financial strength and will ensure its ability to meet the opportunities and challenges of the future. Estate gifts are typically provided through a will or living trust, a retirement plan, or a life insurance policy.

• What assets to give?

  Appreciated securities. Get the same tax deduction as if you had given cash, but use stocks or bonds that cost you less than they are currently worth. Your deduction is based on market value, but you incur no capital gains liability on the transfer to us. It's one of the best tax incentives left, and we can work with your broker to make a gift of securities simple.

  Real estate. Gifts of land, vacation homes or income-producing properties can provide wonderful benefits to AARP Foundation. You can give real estate outright, transfer it in a part sale/part gift arrangement, use it to fund a life-income gift, or give your residence and reserve the right to continue to live there. We have to review each gift proposal carefully, and sometimes it's not practical for us to accept the gift.

  A retirement account. The balance remaining in your retirement account after your death is potentially subject to double taxation if it passes to your heirs: it's taxed both as income and as an estate asset. In some cases, over 75% of the account value may be owned in taxes. If you designate the remainder of your account to AARP Foundation Foundation, and then use other assets for gifts to your family, you will avoid both taxes on your plan assets

  Tangible personal property. You may be holding tangible personal property like books, artwork or equipment that you no longer wish to own. These assets could bring real benefit to AARP Foundation if we're able to put the assets to good use.

• How can a gift pay me back?

  Some gifts allow you to benefit AARP Foundation later but receive a steady payment stream now. You can receive fixed or variable income, take payments for your lifetime or for a term of years, and even direct income to other beneficiaries. In essence, you make a contribution yet retain benefits from what you gave away. Such gifts include charitable remainder trusts and charitable gift annuities.

  Your charitable deduction is based on the full market value of the assets you gave, minus the present value of the income interest you retained. The higher the income payout, the lower the deduction.

  These flexible gifts can address a variety of your financial family and philanthropic planning objectives, and they help solidify AARP Foundation's long-term financial strength.

• What are my choices in life-income gifts?

  A charitable gift annuity is the simplest; in return for your gift, you and/or another beneficiary received a fixed annuity for life. The annuity rates and the charitable deduction tend to be higher with a gift annuity than with other life-income gifts. There is also an attractive reduction in the taxation of annuity payments. This gift plan is most appropriate if you are risk-averse in your investing and if long-term fixed income is an attractive strategy for you.

  A deferred gift annuity postpones for at least a year the annuity payments to the beneficiaries. In return for this delay, beneficiaries receive larger annuity payments, and the donor receives a larger charitable deduction. If you are currently in high-earnings years, looking for tax deductions and new sources of retirement income, a deferred annuity with income set to start when you turn 65 may fit your needs well.

  A charitable remainder annuity trust is another option if you are seeking fixed income. Annuity trusts provide more planning flexibility than charitable gift annuities. An annuity trust can pay income to multiple beneficiaries, while the gift annuity is limited to two individuals. It can pay income for a term of years (up to 20) while a gift annuity must pay for a life expectancy. Under certain circumstances an annuity trust can pay some or all tax-free income. However, Gift annuities are contracts between you and AARP Foundation, with payments made as an obligation of the foundation. The annuity trust - an individually managed trust - provides you a bit more flexibility, but your payments will be backed only by the assets in the trust.

  The charitable remainder unitrust is the most flexible life-income gift, and it also pays you variable income. The amount received by beneficiaries is based on a fixed percentage of the value of the principal, which is revalued annually. This means that the unitrust's income rate can be applied against an increasing principal over time. The unitrust can pay multiple beneficiaries and can pay income for lifetime or a term of years. Like the annuity trust, the unitrust is individually managed.

• My goal is to keep my estate intact, not increase my income ...

  Consider a charitable lead trust. It works essentially in reverse from the life-income gifts discussed in Questions 3 and 4, above: your gift is placed in a trust that pays income to us for a term, then returns the principal to beneficiaries you designate.

  The lead trust can be an effective tool to remove a portion of your assets and estate from tax liability and pass appreciation to your children free of transfer tax.