SDNHM: Live Oaks Society

Publicly traded securities with an appreciated value should not be sold and then used to fund a gift to the San Diego Natural History Museum. A well-meaning donor would have to pay a capital gains tax on the gain from the sale of the stock. Instead we recommend giving the stock directly to us and let us sell it. We are exempt from paying the capital gains tax. You would get the deduction based on the fair-market value of the securities and you would not owe any capital gains tax.

Specific issues of securities may be named as a bequest to the San Diego Natural History Museum. For example, “I leave all my XYZ stock to the San Diego Natural History Museum” or “I bequeath to the San Diego Natural History Museum my bond portfolio.” Consult your tax advisor before designating a bequest of closely held stock (not publicly traded) or “S” corporation stock to charity.

Appreciated securities and cash may be given to the San Diego Natural History Museum and you would receive a guaranteed fixed payment for the rest of your life. You would get an income tax deduction. Part of your payment would be tax-free for a number of years. If cash is used to fund the gift, the entire payment to you is tax-free for a number of years. Cash would also increase how quickly you could use the income tax deduction. This is called a charitable gift annuity and the payment is guaranteed. Gift annuities are registered with the State of California.

Example Charitable Gift Annuity
Examples of Gift Annuity Percent Payment at Ages 60 to 90
Gift of $50,000 of stock or cash

Age	Annuity %	Income
60	5.7	2,850
65	6.0	3,000
70	6.5	3,250
75	7.1	3,550
80	8.0	4,000
85	9.5	4,750
90	11.3	5,650

Frequently a charitable remainder trust is able to increase the income that is normally received from stock dividends. With a charitable trust you are permitted by law to select the percentage of income you may receive. You are permitted to choose an income that will pay the same dollar amount each year or one that will pay a percentage of the yearly value of the trust. You may also pick the investments and the trustee. You may bypass all the capital gains tax and receive an income tax deduction.

The charitable remainder trust that allows you to select a fixed dollar income is the annuity trust. An annuity trust is normally funded with cash, stocks or bonds.

The charitable remainder trust that will pay a percentage of the yearly value is called a unitrust. The unitrust may be funded with real property as well as cash, stocks or bonds. Because a unitrust investment value may go up or down, the payment also rises and falls with the value of the investment. Unitrusts were created by Congress to be flexible enough to readily accept gifts of real property as well as other types of assets.