Gifts of Art:
In keeping with the high standards established at its founding, the Farnsworth Art Museum seeks gifts of works of art that celebrate Maine’s role in American art. All gifts of art must therefore be accepted by the Board of Trustees for accession into the collection.
Outright gifts: The Farnsworth welcomes outright gifts of art that fit within the museum’s mission. Depending on your circumstances, an outright gift, if accepted, may entitle you to a current income tax deduction, subject to certain limitations.
Promised gifts: If you would like to donate a work of art but are not yet ready to part with it, you may wish to make a promise to give the work of art to the Farnsworth at a future date. While the Board of Trustees’ acceptance of a promised gift does not currently have income tax benefits, it assures you that the museum wants the work and will include it in its collection whenever you choose to give it. If you choose to make the gift by bequest, this assurance enables you to develop your estate plan knowing that the value of the work will not be included in your taxable estate.
Partial gifts: Until recently, there were many advantages to making partial gifts of art. Changes in the federal tax law now impose numerous restrictions and conditions on partial gifts made after August 17, 2006. The Farnsworth urges a donor considering a gift of a partial interest in a work of art to consult with his or her tax advisor before making such a gift.
Because gifts of works of art require approval by the Board of Trustees, as much as six months should be allowed for the issuance of a letter of acceptance from the museum.
The Farnsworth Art Museum has been fortunate to receive many bequests over the years. Many donors have found it possible to make significant gifts of cash, works of art, or other property through a will. A bequest to the Farnsworth is deductible against estate taxes. Advance planning with your advisor and the museum can minimize these taxes, preserve more of your estate, and assure that your vision for the purpose of a gift can be accomplished.
In addition, the Board would be delighted to recognize you as a member of the Lucy Farnsworth Circle. If you would like to become a member of the Lucy Farnsworth Circle, you must notify the museum of your plans to include the museum in your estate plans. When the museum is informed of your intentions, it will contact you about this very special recognition program.
There are several types of bequests:
The creation of a will is a private matter; however, if you are considering a bequest to the Farnsworth, we encourage you to inform us of your plans so we may ensure that your wishes may be fully met by your bequest in accordance with museum policies. Bequests of art, as always, are subject to acceptance by the Board of Trustees.
Charitable Gift Annuities:
A charitable gift annuity (CGA) is a simple agreement between the donor and the Farnsworth Art Museum. In exchange for an irrevocable gift of at least $15,000, the museum agrees to pay the donor, or other individual(s) the donor names, an annual fixed income for life – a fixed percentage of the original gift value, which is based on the age(s) of the annuitant(s). Generally, the museum follows the maximum recommended rates set by American Council on Gift Annuities. A gift annuity can be established with a contribution of cash or securities and annuitants must be at least 60 years of age. Gift annuities are administered at no cost to the donor. Donors who establish a gift annuity receive an immediate income tax deduction for the gift portion of the original principal minus the value of the income payments to be made to the annuitant(s). If a CGA is created with appreciated securities, the capital gains taxes due will be deferred and, in some cases, reduced.
The annuity payments are guaranteed and backed by the full, unrestricted assets of the Farnsworth. Part of the annuity may become tax free, increasing your overall return. The gift annuity may be set up over a period of one or two lifetimes – one of which is often the donor’s.
We will be happy to provide a personalized illustration of the payments and deductions available to you. Please contact our Gift Planning Officer at 207-596-6457 ext. 117 or at GiftPlanning@farnsworthmuseum.org.
Deferred Gift Annuities:
A deferred gift annuity is similar to other annuities, except that the annuity payments do not begin until a specified future date, chosen by the donor, which must be greater than one year after the date of the contribution. Because the payments are deferred, the donor, or other individual(s) the donor names, receives a higher annuity rate as well as a higher immediate income tax deduction.
This type of annuity can also be an attractive supplement to your retirement income. If a donor has reached the limit of allowable contributions to an IRA account, Keogh plan, or other qualified pension plan, the deferred annuity can be an attractive tax-deductible source of guaranteed retirement income.
We will be happy to provide a personalized illustration of the payment and deductions available to you. Please contact our Gift Planning Officer at 201-596-6457 ext. 117 or GiftPlanning@farnsworthmuseum.org.
Charitable Remainder Trusts:
Charitable remainder trusts are gift arrangements that enable you to contribute to the Farnsworth Art Museum in the future while providing an income to yourself and/or another beneficiary for life or for a term of up to twenty years. At the termination of the trust, the principal becomes the property of the Farnsworth. An individually managed trust can help increase retirement income over that earned from assets you currently own; or provide for your spouse, family members, or other beneficiaries.
Trusts allow a donor to make a substantially larger gift in the future than he or she might be able to make at the present time. In addition, when the trust is created, an income tax charitable donation may be taken (subject to the limitations provided by law) for the projected value of the trust as of its termination. There are two basic kinds of charitable remainder trusts: the charitable remainder unitrust and the charitable remainder annuity trust.
The charitable remainder unitrust provides for payments to the beneficiary or beneficiaries in amounts that may vary and that have the potential to keep up with inflation. The unitrust pays a specified percentage of the market value of the trust’s assets, as determined each year; the unitrust may be augmented by additional contributions.
The charitable remainder annuity trust pays a fixed amount each year – a percentage of the original principal set at the outset; it does not permit additional contributions.
We will be happy to provide a personalized illustration of the payments and deductions available to you. Please contact our Gift Planning Officer at 207-596-6457 ext. 117 or GiftPlanning@farnsworthmuseum.org.
Charitable Lead Trusts:
A charitable lead trust is created by transferring property, such as cash, securities, privately held stock, real estate, and limited partnership interests, to a trust. A charitable lead trust can be funded during your lifetime or through a will. During the term of the trust, which is often a specified number of years, the Farnsworth Art Museum receives either a fixed dollar amount or a fixed percentage of the trust principal, revalued annually. At the end of the trust term, the remaining principal is distributed to beneficiaries – typically children or grandchildren – either outright or in further trust. Charitable Lead Trusts can serve as powerful transfer tax-saving devices while also generating significant charitable gifts.
Depending upon the length of the trust and the annual payment to the Farnsworth and applicable IRS discount rates at the time the trust is created, the tax on the gift to beneficiaries can in some cases be significantly reduced or eliminated. Additionally, because you have parted with ownership of the trust property, it is not taxable in your estate.
We will be happy to provide a personal illustration of the payments and deductions available to you. Please call the Gift Planning Officer at 207-596-6457 ext. 117 or at GiftPlanning@farnsworthmuseum.org.
Retirement and Pension Funds:
Retirement plan assets are the basis for a financially secure future. There are ways through philanthropy to preserve retirement assets after life as well.
Generally, the undistributed balance of qualified retirement plans is taxed as part of an individual’s gross estate for estate tax purposes. Because the funds in retirement accounts usually represent deferred compensation that has not yet been subject to income tax, leaving retirement funds to individual heirs other than a spouse also exposes the funds to income taxes. Retirement dollars can be depleted by this double taxation.
Retirement accounts are often subject to combined federal and state estate taxes and income taxes of up to 75 percent or higher on taxable estates. Yet many of these taxes can be avoided or reduced through a carefully planned charitable gift.
There are several ways to make a charitable gift using retirement plan assets:
This can only be accomplished by designating the Farnsworth Art Museum using the beneficiary designation form available from the plan administrator.
Life Insurance Policies:
A gift of a new or existing life insurance policy is a wonderful way to make a sizable contribution, provides immediate tax savings, and helps ensure the future of the Farnsworth Art Museum. By naming the Farnsworth as owner and beneficiary of a life insurance policy, the cash value of the policy becomes tax deductible. Death benefits payable to a charity are not included in the taxable estate. Gifts involving life insurance require advance approval of the museum’s board.
The Farnsworth would expect the donor to make provisions for the payment of any future premiums, which would provide additional tax deductions for the donor.
Alternately, you can name the Farnsworth as a contingent beneficiary on a life insurance policy. Should the primary beneficiary predecease the insured, the Farnsworth becomes the beneficiary.
A gift of real estate can be an attractive way to support the Farnsworth Art Museum and to realize immediate tax benefits. The Farnsworth will sell the donated property and use the proceeds to support its mission, while the donor receives valuable tax benefits. Income from a rental property can also be donated to the museum. By making a gift of real estate, you may be able to reduce significantly the amount of income, capital gains, and estate taxes you otherwise would have to pay.
A primary residence, vacation home, or farm can be given to the Farnsworth:
Gifts of real estate require consideration and formal acceptance by the museum’s board and legal counsel. Any proposed gift involving real estate should be reviewed with your advisors and communicated to the Gift Planning Officer to initiate this process.