For Donors

Years ago, our friend Carole Beckhoff made a Promise in the Book of Life to leave a legacy gift to the Jewish community. She had been a volunteer on the boards of Jewish Family Services and the Shalom House and became deeply concerned about people who might not have the means for a Jewish burial. She and Paula Steinberg brought their concerns to both JFS and the Jewish Federation.

Sadly, Carole passed away last year, but her dream to provide a "dignified Jewish burial to those who cannot afford it" was made possible through a gift from Carole's estate. The Carole Beckhoff Fund was established this summer in her memory to fulfill her wishes.

To know Carole was to instantly like her. She had a wide, enveloping smile and an interest in people and their activities. A Chicago native, Carole spent years working as an administrator in Chicago nursing homes. She had great empathy for the elderly and often brought her dogs to the Shalom House to interact with the residents. She loved animals and volunteered for several years at the Eastside Animal Care Center adopting several dogs, which brought much joy to her and her husband, Harry.

The Carole Beckhoff Fund is administered by the Jewish Community Endowment Foundation of NM. Gifts can be made to the Fund through a contribution to the Foundation, with a notation to the Carole Beckhoff Fund, at the Jewish Federation of New Mexico office, 5520 Wyoming Blvd., Albuquerque, NM, 87109.

Terry Lee made a Promise three years ago in the JCEF Endowment Book of Life. She signed a page in the Book of Life signifying that she would leave a gift to the Jewish community — for Albuquerque, Israel or elsewhere. At that time she wasn't sure how she would fund her legacy, the size of the gift or which causes or organizations would be the beneficiaries.

Today she has a legacy plan and is more certain of the causes and agencies she wants to support into the future.

She met with Erika Rimson, Board Chair of JCEF, to discuss her philanthropic goals and develop her legacy plan. Terry Lee signed an endowment fund agreement to ensure that her intentions will be carried out. She indicated that half of her retirement funds will flow directly to the JCEF, which, she said, was “easy to do.” The other half will benefit her late husband's grandchildren.

Terry Lee was impressed with the ideas she learned from attending the Jewish Legacy Forum in Tucson, Arizona. “If you view a legacy gift to the community through the foundation as another grandchild,” she learned, “you can allocate a percentage to the community as well as to your family.” This was a powerful statement for her. With that thought in mind, she will make the beneficiary designations in her endowment fund agreement to the causes she cares about; for example, Solomon Schechter Day School, which she helped organize, and the Jewish Federation of New Mexico, where she is currently a board member and active in raising funds for Taglit-Birthright Israel.

Her future gift will be endowed, meaning that her gift remains in perpetuity and annual distributions will be made to her designated beneficiaries from the fund's earnings. Terry Lee's generosity to her family and the community is an example for us all to follow.

Hertha and Irving Auerbach, pillars of our community, were posthumously awarded the Jewish Federation's Medal of Honor in June, 2011. Their story is one of courage, achievement and philanthropy.

Irving was born and raised in Cleveland, Ohio, received a doctorate in chemistry from Ohio State University, and worked at the War Research Project on OSU's campus. He moved to Albuquerque in 1959 to work in Sandia Labs as a research chemist.

Hedy's early life was far more difficult. She was born in 1927 in Frankfurt, Germany. The family fled Germany, first to Belgium, and then across German lines on a harrowing journey to southern France. Unfortunately, the family was betrayed by the French and turned over to German authorities. Hedy's father died at Auschwitz, but Hedy's mother saved herself and her children by working as slave laborers under false papers.

After the war, Hedy and her family immigrated to New York, and Hedy graduated in the sciences from Hunter College. Hedy and Irving married in the mid-1950s, divorced and later remarried and lived in Albuquerque. They remained devoted, loving partners until death.

Not wanting to choose between congregations, Hedy and Irving were active members of both B'nai Israel and Congregation Albert. Irving founded B'nai Israel's library in which Hedy volunteered, cataloguing and coding all of its books. When Irving turned 90 years old, he became a member of the Chevre Kaddisha of Greater Albuquerque (Jewish Sacred Society).

Hedy died in 2007 and Irving in 2010. Although modest and unassuming people, they left a generous bequest to the Jewish Federation of New Mexico and other charitable institutions. The bequest will endow the “Irving and Hertha Auerbach Fund for Jewish Identity” at the Jewish Community Endowment Foundation of New Mexico. Proceeds from the endowment will be earmarked for PJ Library, camp scholarships, and Birthright Israel/Taglit.

Excerpted from a speech given by Sara Koplik at the JCC/JFNM annual meeting, 2011

An old friend named Bill was a WWI veteran who loved telling school children about fighting in the “war to end all wars.” The local VA was among his favorite causes where he served as radio announcer and storyteller. He was also an active member of his synagogue. Bill passed away at the remarkable age of 104 in 1997.

Although a man of modest means, he left a generous legacy gift to the Jewish community and to other causes he had supported during his long life.

Before Bill died, he made a legacy plan. After speaking to a trusted member of his Jewish community, he formalized an agreement to carry out his legacy wishes. Future generations are the recipients of his wise planning.

Today, the Jewish Community Endowment Foundation of New Mexico can be the trusted member of our community who can help create your legacy plan. The Foundation can guide you through a simple and confidential process. You select the charities and causes that you want to support, and the Foundation will turn your vision into a reality.

Together we can build a plan for gifts of any size, large or small, according to your wishes.

by Grace Allison
Adjunct Professor of Law, UNM

Many of you remember the "charitable rollover" provisions of prior law, under which certain distributions, made directly from a Traditional IRA to charity, were not subject to income tax. The good news is that, under the new tax act, these provisions are back for 2012 and 2013—with two special twists.

"Charitable Rollover" in a Nutshell
Under normal tax rules, distributions from your traditional IRA are generally taxed to you as owner. Under the "charitable rollover" provisions, however, "qualified charitable distributions" (up to $100,000), made from your IRA to charities such as the Jewish Community Endowment Fund, are not subject to tax. In addition, you can elect to treat certain transfers made in 2013 as if made in 2012—and to treat certain indirect transfers as direct transfers. (The rules for how the elections are to be made have not yet been written.)

Twist #1
If you are over 70 1/2, and are the owner of an IRA, you now have an extra month—through January 31, 2013—to make a charitable contribution from that IRA for 2012. Buried in the tax act just signed into law by President Obama is a special rule that allows charitable contributions made from an IRA before February 1, 2013, to satisfy (in whole or in part) minimum distribution requirements for 2012. And if you have already satisfied your minimum distribution requirement for 2012, any additional distributions made to charity before February 1, 2013 (subject to the $100,000 limit) will not be taxed to you.

Twist #2
If you took a distribution from your IRA in December of 2012 and then use the distribution to make one or more qualifying charitable contributions prior to February 1, 2013, you can elect to treat the distribution you received as a direct payment from the IRA to charity in 2012. As a result, the distribution will not be subject to tax. Depending on your individual tax situation, this may be a better result than including the distribution in income and claiming a charitable deduction.

Double Dip in 2013?
As under prior law, the maximum "qualified charitable distribution" for each year is $100,000 per I RA holder, i.e. $100,000 for you and $100,000 for your spouse or partner. (Caution: distributions to private foundations, donor advised funds and certain "supporting organizations" will not qualify.) What's special about 2013 is that, in addition to electing to make a deemed charitable rollover for 2012 in January of this year, you can also act anytime in 2013 to complete a regular charitable rollover for 2013. In other words, so long as you make the appropriate elections— and are over 70 1/2 at the time each "qualified charitable distribution" is made—you can contribute up to $200,000 to charity from your IRA during the 12-month period beginning on January 1 of this year.

Talk with Your Tax Advisors Now
Under the new rules, amounts distributed (or deemed distributed) to qualified charities from your IRA will not be included in your gross income. For those who do not itemize deductions—or who have excess charitable contribution carry forwards—or who are subject to the new Pease limitations in 2013, this is a particularly attractive proposition. Definitely an idea to discuss now with your tax advisors!

© 2013, Grace Allison.

by Grace Allison
Adjunct Professor of Law, UNM

Donors may be well-advised to make substantial charitable contributions sooner rather than later. Although the income tax charitable deduction now appears "untouchable," the tide could turn as Congress digs into deficit reduction.

Obama 2013 Budget Proposal. In successive budget proposals, President Obama recommends capping most itemized deductions claimed by upper-income taxpayers, including the charitable deduction, at 28%. (Currently, those in the 35% bracket get a 35 cent tax deduction for each $1 contributed to charity.) The Obama proposals also include reinstatement of the Pease limitation for upper-income taxpayers. An often ignored technical provision, Pease can reduce an anticipated income tax charitable deduction by as much as 80%.

Republican Platform. The 2012 Republican platform is less specific, stating only that "donations to [charitable organizations] should continue to be tax deductible." This, theoretically at least, leaves room for a wide range of modifications to the existing tax benefits from charitable giving.

Stalemate. What if Congress fails to act in the lame-duck session or thereafter? Donors still aren't safe. Along with higher tax rates, the 80% haircut of the Pease limitation would automatically go into effect on 1/1/13, potentially reducing the tax benefits from donors' contributions.

Simpson-Bowles. And, as always, there are outliers, such as the bi-partisan Simpson-Bowles proposal. If implemented, Simpson-Bowles would replace the income tax charitable deduction with a flat 12 percent income nonrefundable income tax credit available to all taxpayers ( but with a 2% of AGI floor.) Simpson-Bowles has been mentioned by both parties in recent weeks as a starting point for tax reform negotiations.

The best course? Take all these new potential limitations into account as you and your tax advisors discuss your year-end giving plans. You may decide to act sooner rather than later in order to take advantage of current law.

© 2012, Grace Allison.

by Howard Friedman, CLU, CHFC, AEP

Are you looking to make a gift to charity and get the biggest bang for your buck? Life insurance can be an excellent tool for making charitable gifts for a number of reasons.

First, the death benefit is guaranteed. This means that the charity will receive an amount that is fixed in value and is not subject to the potential downside of security or real estate markets.

Second, Through a relatively small annual cost (the premium), life insurance can give you tremendous leverage and help you maximize your gifting goals while tremendously benefiting your favorite charities. And by creating a new asset with life insurance, assets earmarked for your family can be kept intact.

Third, the death proceeds can be received by your designated charity free of federal income and estate taxes, probate and administrative costs and delays, brokerage fees and other transfer costs. Your charity will receive 100% dollars.

Fourth, because of the contractual nature of the life insurance contract, large gifts to charity are not subject to attack by disgruntled heirs.

You can use life insurance in a number of different ways:

• Name a charity as the beneficiary of an existing or new life insurance policy on your life.
• Make a gift of a life insurance policy you currently own or donate a new life insurance policy. This will yield a current income tax deduction. Your immediate deduction will be equal to the lower of (a) your cost (premiums paid less any dividends you've received) or (b) the value of the policy. You'll also receive a deduction for amounts you pay to the charity in future years to help the charity pay premiums.
• Life insurance may make it possible for you to make an immediate gift of land or some other asset. This concept is called “Wealth Replacement.” You could make your gift of the land to the charity immediately and obtain a very large income tax deduction. With the tax savings, premiums on a new life insurance policy could be paid. The beneficiary of the new policy could be your children or grandchildren. This creates a win-win-win situation: the charity receives a nice gift, you get nice tax savings, and your heirs receive nice cash benefits to replace the asset that went to the charity.

Contact Erika Rimson at the Federation offices at 821-3214 if any of these ideas might be of interest to you.

by Grace Allison, Adjunct Professor of Law, University of New Mexico Law School

1. Fund your future charitable giving now.

Historically, the Internal Revenue Code has encouraged charitable giving. Under current law, taxpayers in the top income tax bracket (35%) are entitled to an income tax charitable deduction equal to as much as $.35 for each dollar donated to charity. This reduces the after-tax cost of a $100 gift to $65.

However, as you may have heard, pending tax proposals (under consideration by Congress) would limit the value of the income tax charitable deduction for upper-bracket taxpayers to $.28 for each dollar donated. For those in the 35% bracket, this translates into a potential loss of $7 in tax benefits for every $100 donation, whether your gift takes the form of cash or property.

If you like to plan ahead, one solution is to fund your future charitable giving now through a donor advised fund or donor advised endowment fund. These vehicles, which are offered by the Jewish Community Endowment Foundation of New Mexico, offer an immediate income tax charitable deduction for your contribution, based on the liberal provisions of current law. In other words, you can lock in your tax benefit now. Actual distributions from the fund to qualified charities can then be made in future years—when the tax law may not be as favorable.

2. Donating stock to charity—instead of cash—may mean additional tax-savings on your 2011 federal income tax return.

Example: assume you purchased 100 shares of XYZ stock in 2008 for $20/share. The stock's value has risen to $30/share, so your built-in gain is $1,000.

If you were to sell this appreciated stock in 2011, you would pay a 15% capital gains tax, i.e. $150 on the $1,000 gain. If, instead, you contribute the shares to a qualified charity such as the Jewish Community Endowment Foundation, you pay no capital gains tax—under either the regular income tax or the alternative minimum tax! Best of all, the dollars you save in taxes may allow you to be even more generous.

Note: for stock that has declined in value, it is better to sell and take the tax loss, contributing the cash proceeds to charity.

3. Don't wait until it's too late.

In 2009, the latest year for which statistics are available, over $15 billion in charitable bequests was reported on federal estate tax returns. That's a big number—but, according to experts, it's not as big as it might be. Each year, millions of potential donors fail to execute estate planning documents—or fail to have their estate planning attorneys include charitable provisions in whatever documents are executed.

Uncertainty about the likely value of an estate causes many to hesitate: will there be enough for a spouse, a child, a grandchild, niece or nephew? One simple solution: written provisions that give a fixed percentage of the estate to the charities of your choice. That way, even if values fluctuate, there will be enough for everyone.

by Vivian Skadron

Some benefits do come to those who get older, and I'm one of them. The IRA Charitable Rollover, first enacted in 2006, has been extended through December 2011.

At age 70 1/2, I was required by law to make an annual distribution from my IRA which is subject to taxes. The IRA Charitable Rollover allows me to make my distribution directly to a charity without counting it as income, and, consequently, without paying taxes on it. To me, it's a win-win!

I contacted my IRA administrator and requested them to make a direct transfer of funds from my IRA to the Jewish Women's Endowment Fund of New Mexico in care of the Jewish Federation's Jewish Community Endowment Foundation of New Mexico. This newly created Fund will make grants to agencies and programs that assist women and their children in the Jewish community.

It's a great opportunity for me to make a tax-free contribution to a worthy charity, and it counts toward my minimum distribution requirement for the year. Next year I plan to look into the different funds managed by the Jewish Community Endowment Foundation of NM.

Please note: Charitable contributions from an IRA must go directly to a public charity that is not a supporting organization. Contributions to donor-advised funds and private foundations, except in narrow circumstances, do not qualify for tax-free IRA rollover contributions.