The Montana Endowment Tax Credit allows donors to pay less in Montana state income taxes when they give a qualifying planned gift to a Montana qualifying charitable endowment.

The incentive is 40% of the present value of a planned gift, up to a maximum $10,000 tax credit, per year, per individual or estate, and a credit of 20% of a direct gift made by a business (to a qualified endowment), up to a maximum of $10,000 per year.

Example: A donor, 65, purchased a $10,000 charitable gift annuity in 2003 with a certificate of deposit that matured. As income beneficiary, the donor will receive a 6.3%* annuity or $630 per year for life.

The donor named the permanent endowment of a favorite Montana non-profit 501 (c)(3) organization as the remainder beneficiary of the annuity. Therefore, the donor is eligible for the Montana Endowment Tax Credit. The federal charitable deduction for the gift is $2,512* and the qualifying amount for the Montana Endowment Tax Credit is $1,004 or 40% of the federal deduction. (Assumes an IRS discount rate of 3.8%).

*These figures were calculated using IRS discount rates in 2003 and are subject to change.

Qualifying charitable contributions are irrevocable planned gifts to any qualified endowment. Unlike annual giving, planned gifts are generally used by individuals and families to make an irrevocable commitment of a principal asset for the future benefit of charity. At the same time, the donor may retain the use of the asset or income from the asset during his lifetime.

This tax-credit encourages individuals to make substantial charitable commitments now to the future of Montana. But it is not simply for the wealthy. It is also a way for Montanans of more modest means to provide for themselves and their favorite charities. The planned gifts may be made using any of the following techniques:

• Charitable Remainder Unitrusts
• Charitable Remainder Annuity Trusts
• Pooled Income Fund Trusts
• Charitable Lead Unitrusts
• Charitable Gift Annuities
• Deferred Charitable Gift Annuities
• Life Estate Agreements (gift of a residence or farm)
• Paid up Life Insurance Policies (great for those of more modest means)

Watch for more information in upcoming issues of Alumni Almanac!

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