The Equal Justice
Fund
Today's Opportunity—and an Invitation
In many ways, this is a crucial time in the history of Legal Services
in New Jersey, a potential turning point in the effort to establish a
firmer foundation for the representation and advocacy that have been provided
by New Jersey's Legal Services programs for thirty years.
Buttressed by a dramatically increased level of state support, the Legal
Services programs in New Jersey are being transformed into an integrated,
interactive, and technologically efficient statewide system. Under the
leadership of Legal Services of New Jersey (LSNJ), the central coordinating
program for the state, the fourteen independent local programs are working
together to make their individual programs more effective, and to take
greater advantage of the resources that the programs can share with each
other. The goal, of course, is to stretch still-limited funding to address
the needs of as many clients as possible.
At this crucial time in its history, New Jersey Legal Services would like to invite those who want to participate in a significant way in the work of ensuring equal justice for all to consider a new opportunity to do just that, through gifts to THE EQUAL JUSTICE FUND.
The EQUAL JUSTICE FUND has been set up to receive major gifts designated for specific areas of Legal Services activity. While support for current operations is urgently needed and encouraged, a major emphasis of the FUND will be on building an endowment. Through this endowment, donors can provide continuing support for the purposes that are most meaningful or important to them. The original amount placed in the endowment (the principal) remains intact while providing a steady flow of income, year after year.
EQUAL JUSTICE FUND priorities will be set and its operation overseen by the Board of Trustees of LSNJ. The FUND's assets will be managed by LSNJ in two segregated funds, one to receive gifts for current operations and the other for endowment gifts.
Major gift donors will have wide latitude in specifying how their gifts are to be used. Nevertheless, some current priorities for funding have been identified:
- Statewide initiatives in particular areas such as Domestic Violence, Family Preservation, Homelessness, and Welfare Reform, through general program support or the funding of designated staff positions.
- Capital projects, supported through grants or loans to address the needs of local programs for equipment and office space.
- Public information on legal issues and poverty, through support for regular publications, "white papers" on emerging current topics, and a public lecture series.
- Incentives for attracting a new generation of public interest lawyers, such as a law school loan repayment fund and paid internships.
Gifts for current operations will be recognized appropriately in LSNJ publications and general publicity. Gifts to endowment can reward the donor with lasting recognition, in the form of a named fund, as well as the special pleasure of knowing that the impact of a single act of generosity will be felt for generations to come. Examples of named funds would include:
- A named endowment for a Legal Services position at a specific location or in a particular area of law (minimum contribution of $500,000).
- A named endowment to provide support for a specific local program office ($100,000 minimum).
- A named endowment to support statewide activities in a
particular area of law ($25,000 minimum).
All donors who have made a gift of any kind to the EQUAL JUSTICE FUND, or have notified the FUND of a deferred giving arrangement for its eventual benefit, will be listed each year in the FUND's annual report.
In addition to what a major gift can do for Legal Services, it can also provide benefits to the donor, including savings on income, gift and estate tax; life income to the donor and other beneficiaries; and the opportunity to reorganize investments advantageously without penalty (i.e., capital gains tax). Every major gift should be made in such a way as to maximize the benefits of the gift, both to the donor and the EQUAL JUSTICE FUND; that's why the tax and estate planning implications of major gifts should be reviewed thoroughly, in consultation with your personal legal and financial advisors.
If, at this time, you would like to know more about the tax and estate planning consequences of charitable giving, we would be pleased to offer you assistance, including suggestions for solving specific estate planning problems. What follows is an overview of the various forms of giving, and some relevant tax and estate planning considerations.
An outright gift can be made in a variety of forms:
A gift of Cash qualifies an individual for an income tax charitable deduction, subject to the current provisions and limitations of the tax law.
A gift of Securities,
such as stocks or bonds that have appreciated, can produce significant
tax savings. The full market value of a gift of long-term capital gain
property is deductible for tax purposes, and there are no capital gains
taxes on the appreciated amount. Because of this, the value of the gift
is far greater than its cost to you. Illustration
A gift of stock in a closely-held corporation
can be made just as other gifts of property, and such gifts often help
reduce the usual problems of valuation for purposes of income tax, gift
tax and estate planning.
A gift of Real Estate has the same tax advantages as a gift of securities, including full value deduction and avoidance of current income tax. You can make any gift of real estate, including residences and income-producing properties.
A gift of Personal Property can include such tangible items as rare books, vehicles or equipment. These qualify for a deduction of the full market value of the gift property when four conditions are met:
- Use of the property is directly related to the charity's tax-exempt
purpose.
- The donor has owned the property for more than one year.
- The item has not been created by the donor.
- An independent appraisal of value supporting the gift amount accompanies the donated item.
A Matching Gift is a way for you to double, or even triple, the value of your gift. Many corporations have matching gift programs by which an employee's gift of cash or securities will be matched according to a formula.
Planned Gifts
For donors who wish to make significant gifts but have a continuing
need for income from the assets that would be donated -- or want the
security of possessing those assets during their lifetime -- there
are a variety of planned giving strategies to consider.
Bequests
The simplest form of planned giving is the Bequest. You may will cash, securities, real estate or other assets to a charity, and the value of the gift will be deductible from your estate. You may also establish charitable trusts by means of a Will and gain estate tax savings. Bequest options to consider include the following:
- Designate a specific amount of money.
- Designate a specific percentage of your estate.
- Designate a specific piece of property.
- Will the residue of your estate after you have taken care of other
specific bequests.
- Name a charity as a contingent beneficiary.
- Establish a testamentary trust, with income going to one or more survivors and the remainder ultimately going to charity.
The other forms of planned giving generally provide the donor both current and future benefits, and ensure a future benefit for charity. Benefits to the donor include lifetime income, decreased income tax, avoidance of capital gains tax, increased net income from property, investment advantages, and reduced estate taxes. The following are brief descriptions of some planned giving opportunities.
Charitable Remainder Unitrusts
The donor irrevocably transfers property (e.g., cash, securities, real estate) to a trustee, who manages the gift as a separate fund. The donor and/or other income beneficiaries receive an annual income, the amount of which is determined by multiplying a fixed percentage (at least 5%) by the fair market value of the principal of the unitrust as it is valued each year. Trust income exceeding the fixed percentage and not paid out is added to the principal. Upon the death of the last income beneficiary (or after a specified term of years, not to exceed 20), the assets remaining in the trust are distributed to the charity or charities named in the trust instrument. Additional gifts may be made at any time. The donor benefits from both an immediate (i.e., when the trust is funded) deduction for income tax purposes and estate tax savings. Proposed remainder trusts should have assets of at least $100,000.
Charitable Remainder Annuity Trusts
The donor transfers property to a trustee, just as in the case of the unitrust. An annuity trust differs in the manner in which the amount of income is calculated: the income beneficiaries' annual income for all years is determined by multiplying a fixed percentage (no less than 5%) by the initial fair market value of the gift. Any trust income over the required payment is added to the principal. No future contributions can be made to an annuity trust, though additional annuity trusts can be created at any time. As with unitrusts, the remainder passes to charity and the donor benefits from both an immediate income tax deduction and estate tax savings. Again, the minimum for trust assets is $100,000. Illustration
Charitable Lead Trusts
The donor transfers property in trust for a designated period of time. During the time that the trustee holds the property, income is paid to one or more charitable beneficiaries. At the end of the designated period, ownership of the property reverts to the donor or passes on to specified heirs. A lead trust can be designed to transfer significant family assets from one generation to the next, and avoid at least some of the gift and estate taxes on the transfer.
Charitable Gift Annuities
A gift annuity provides the donor with an income tax deduction and a source of income that is partially tax-free. In exchange for cash or property, the charity issues an annuity that promises to pay annually to the donor and/or another named beneficiary an amount determined by multiplying the fair market value of the assets exchanged by a fixed percent. Annuity payments to the beneficiary can be set to begin immediately or at some later date (e.g., the beneficiary's planned retirement date). The minimum amount for establishing a charitable gift annuity with the EQUAL JUSTICE FUND is $5,000. No future additions to the annuity may be made, but additional annuities can be established at any time.
A donor can give a personal residence or farm to charity while retaining the right to occupy it during his or her lifetime (or the lifetime of a donor couple). The donor is entitled to any income the property produces and is responsible for necessary upkeep, and receives an income tax deduction in the year the irrevocable gift is arranged. At the death of the donor, the charity takes possession of the property to use where needed or as directed by the donor's intentions. Illustration
Gift of Life Insurance
A donor can give to charity an existing policy or a new one. If the charity is made the owner and beneficiary of an existing, paid-up policy, the donor receives an immediate income tax deduction and the proceeds from the policy are removed from his or her taxable estate. The donor can also open a new policy with a charity as the owner and beneficiary, and make annual, tax-deductible contributions to the charity to cover the policy premium payments; with the right kind of insurance policy, the ultimate benefit to the charity will be far greater than the sum of the annual contributions.
If you are interested in learning more about these or other giving opportunities, the various forms of giving, or general information and background about taxes and estate planning, Legal Services of New Jersey would be pleased to make the material available to you. Please call or write:
Thomas A. Makin, Ph.D.
Director of Development
Legal Services of New Jersey
P.O. Box 1357
Edison, New Jersey 08818-1357
(732) 572-9100
FAX: (732) 572-0066
e-mail: tmakin@lsnj.org
The tax and financial planning elements included herein are intended to provide accurate and authoritative information of a general character only. LSNJ is not engaged in rendering legal or tax advisory service to donors. For advice and assistance in specific cases, the services of a private attorney or other professional advisors should be obtained.
Copyright ©
Legal Services of New Jersey.
Terms of Use | Privacy
Policy