Types of planned gifts
Bequests
A bequest is a planned gift that is created by providing for a gift to a particular individual or organization in your will. Types of bequests include:
- Specific bequests: a gift of a specific asset
- Pecuniary bequests: a gift of a specific amount of money
- Residuary bequests: a gift of all or a portion of what remains in an estate after all expenses, taxes, specific bequests, and pecuniary bequests have been made
Donors may direct that a bequest be restricted to support a specific area of interest within the Museum, or may simply direct that the bequest be used to benefit the mission of the Museum. The Museum’s Planned Giving office is available to work with you and your advisors to craft bequest language that accurately reflects your gift intentions.
Gifts of Art
Since its inception in 1910, the Milwaukee Art Museum has been shaped immeasurably by generous gifts of art. Today, the Museum houses more than 23,000 objects. With limited resources to display, store, and care for the Collection, careful consideration must be given to each object offered before the Museum is able to accept a gift of art.
If you are interested in donating art to the Museum, first review the tax considerations for donating artwork and contact the appropriate curatorial staff member:
Decorative arts and American art to 1900: Liz Flaig at 414-224-3277 or liz.flaig@mam.org
Prints, drawings, and photographs: Brooke Mulvaney at 414-224-3817 or brooke.mulvaney@mam.org
Antiquities, Asian art, and earlier European art to 1900: Catherine Sawinski at 414-224-3293 or catherine.sawinski@mam.org.
Modern and contemporary art, folk and outsider art, and Haitian art: contact John McKinnon at 414-224-3266 or john.mckinnon@mam.
After your gift has been approved for acquisition, in order to ensure that it is accepted into the collection as a year-end gift, your object must be delivered to the Museum, accompanied by your signed and notarized deed of gift, and the director, or authorized designee, must approve it before noon, December 31. If you wish a year-end income tax deduction, please submit your gift as early as possible. In special circumstances approved by the registrar and the director, physical delivery may not be necessary if your deed of gift is a legally binding instrument and contains a provision, which states the gift is irrevocable.
Note: To claim a year-end income tax deduction, your signed and notarized deed of gift must be postmarked by the U.S. Postal Service (other express carriers do not qualify) no later than December 31.
Gifts of Real Estate
A planned gift of a donor’s undivided real estate interest can be arranged via an estate plan or can occur in small segments during the donor’s lifetime. The gifting of a partial interest in real estate is attractive because it allows for tax benefits to be spread over a period of years.
Due to the various legal considerations inherent in making a real estate gift, the Museum’s Planned Giving office and Museum counsel will work with a donor’s advisors to prepare a formal agreement describing the assignment of the deed of property, a statement identifying the intention of each party in making and receiving the gift, and the understanding of the Museum’s rights and the donor’s rights—both during the donor’s lifetime and after.
Gifts of Tangible Property
The value or cost of gifts to the Museum of tangible personal property, such as antiques, jewelry, gems, books, coins, stamps, automobiles, boats, airplanes, etc., are deductible for income tax purposes. The amount of the deduction will vary depending on whether or not the gift relates to the mission of the Museum. Capital gains tax may be avoided on the appreciated value of the gift.
Charitable Remainder Trusts
A charitable remainder trust is a trust arrangement between a donor and a trustee of the donor’s choosing. The basic provisions of a charitable remainder trust are:
- Irrevocable transfer of property by a donor to a trust
- Donor (and the donor’s designated survivors) retain a right to receive income from the property during their lifetimes.
- At the end of the trust’s term, the trust principal distributes to a charity (i.e., the remainderman)
- Once a charitable remainder trust is established, the donor receives a life income and also receives a partial income tax charitable deduction in the year of the gift, along with avoidance of capital gains and estate taxes.
A charitable remainder trust can be formulated so that the life income paid is a fixed dollar payment on an annual basis, or an annuity, and is referred to as a Charitable Remainder Annuity Trust (CRAT).
A charitable remainder trust can also be formulated to provide a fluctuating annual payment based on a percentage of the trust’s value each year, and is referred to as a Charitable Remainder Unitrust (CRUT).
Life Insurance
Transferring a life insurance policy to the Museum is one of the most straightforward planned gifts a donor can make. An irrevocable transfer, in which the donor makes the Museum both beneficiary and owner of the policy and gives up all rights associated with it, entitles the donor to claim an income tax deduction for the policy’s cost basis or cash surrender value, whichever is less. (The deduction is capped at 50% of the donor’s adjusted gross income, with any unused deduction carried forward for up to five years.) If all premiums are paid on the policy, the income tax deduction is equal to the single-premium payment that would be necessary to buy a new policy with comparable benefits. If all premiums are not paid, and the donor opts to pay the premium directly to the insurance company, the deductibility cap is only 30% of adjusted gross income, with the five-year carry forward provision. The donor can claim this deduction for each payment as made.
Changing the beneficiary on an insurance policy unfortunately does not earn a tax deduction, since the donor has not given up control and the right to subsequently change beneficiaries again.
Retirement Plans
A qualified retirement plan—such as a defined benefit pension plan, money purchase pension, annuity plan, 401(K) plan, stock bonus plan, Employee Stock Ownership Plan (ESOP), or Individual Retirement Account (IRA)—receives favorable income tax treatment during a donor’s lifetime. After the donor’s death, a retirement plan often makes a large, taxable distribution, with the general rule that the entire balance of a retirement account must be distributed within five years of the donor’s death. Only a surviving spouse can roll over an inherited distribution to her/his own IRA and continue to receive an income tax deferral; all other beneficiaries are immediately taxed.
By donating retirement assets, those funds avoid estate taxes and “income in respect of decedent” taxes. A donor can be certain that the balance of the retirement funds will support philanthropic objectives, at a modest cost to individual heirs.
©2009 Milwaukee Art Museum