Bequests (specific, residuary, and contingent gifts made by will) are the most popular type of planned gift and have been crucial (along with remainders from charitable trusts) to the extraordinary growth and success of The Museum of Modern Art since its founding. Whether you wish to provide general operating income for the Museum to use wherever it is most needed or to support a specific department or program, your bequest expresses your lasting commitment to the Museum. A bequest to the Museum may also help you meet your financial and estate-planning goals since an estate-tax charitable deduction for the entire amount of the gift is allowed.
Charitable Remainder Trusts
Charitable remainder trusts allow you to make a gift to the Museum and at the same time retain a benefit from the assets you give. These separately managed trusts can be tailored to meet your financial goals with respect to the payout rate, type of income stream (variable or fixed), and payment schedule. To establish a remainder trust, you make an irrevocable contribution of cash, securities, or other property, which is placed in trust. The trust pays an income stream to one or more named beneficiaries (which can include you) for life and/or for a set term of years (not to exceed 20), and the Museum receives the right to principal as a remainder interest. The two most common types of charitable remainder trust are: (1) the annuity trust, which pays a fixed dollar amount each year based on a percentage (at least 5%) of the initial fair market value of the trust assets; and (2) the unitrust, which pays a variable income stream based on a percentage (again, at least 5%) of the fair market value of trust assets as revalued each year. A deferral feature is available for charitable remainder unitrusts. Because charitable remainder trusts (like an IRA or 401(k)) are tax-exempt, this deferral feature can make them a useful retirement planning tool if you are in a position to defer your receipt of an income stream. Charitable remainder trusts are typically funded with assets worth $100,000 or more. Establishing such a trust generally entitles you to claim an immediate income-tax charitable deduction.
Charitable Lead Trusts
A charitable lead trust is the reverse of a charitable remainder trust; the gift to the Museum is the income stream from the trust, not the remainder. Charitable lead trusts enable you to provide an income stream to the Museum immediately for a set term of years or for a term measured by one or more lifetimes after which the trust assets pass to you or your estate or to your heirs. Leaving the asset to heirs can significantly reduce the gift or estate tax that would otherwise apply.
Retirement Plan Assets
Assets in qualified (tax-deferred) retirement plans may represent a large portion of your total assets and therefore may be an important factor in planning testamentary charitable gifts. Retirement assets generally considered suitable for charitable gifts include such plans as IRAs, Keoghs, SEPs, 401(k)s, 403(b)s, and ESOPs.
Left to family members or friends, these assets are subject to income tax and may also be subject to estate tax and generation skipping transfer tax. Because of this potential double layer of tax, retirement plan assets may be particularly attractive as an asset to leave to the Museum. In other words, if you designate the Museum as a beneficiary upon your death of all or a specified percentage of a retirement plan, the portion of the plan payable to the Museum will generally escape estate taxes, and the Museum, as a tax-exempt institution, will not be required to pay income tax on the distributions. As a general rule, if you intend to make both noncharitable and charitable gifts at death, it makes sense to consider using your tax-deferred retirement plan assets for charity and other assets for heirs.
Life Insurance Policies
Naming the Museum the beneficiary of an existing life insurance policy that is no longer needed to provide for dependents offers a simple way to support this institution. Since you are the policy owner, the value of the policy will be included in your estate, but an offsetting estate-tax charitable deduction will generally be allowed. You may also be able to assign an existing whole life policy to the Museum, irrevocably making us the owner and beneficiary, and claim an income-tax charitable deduction for the lesser of either your basis in the policy or its fair market value in that year. If the policy is not paid up and additional premium payments are due, you may donate cash or the equivalent to the Museum to pay the premiums each year and claim a full tax deduction for the gift. Lastly, you may be able to purchase a new policy naming the Museum as owner and beneficiary, pay the annual premiums (through us), and claim the premium amount as a charitable contribution.
Tangible Personal Property
Tangible personal property, such as artwork and books, may be donated to the Museum during your lifetime or by bequest. The Museum must give special consideration to such gifts before it can accept them, and we advise you to contact us if you are contemplating donating tangible personal property to the Museum. (See note on gifts of artwork below.)
A donor of tangible personal property held long term and accepted by the Museum is potentially entitled to claim an immediate income-tax charitable deduction and avoid capital gains taxes. The extent of the allowable income-tax deduction for such a gift, however, would depend on whether the Museum uses the property in a manner related to its tax-exempt mission.
If the use of the contributed property is related to the Museum’s exempt purposes (e.g., gifts of modern or contemporary artwork accepted into our collection), the donor is generally entitled to claim an income-tax charitable deduction for the full fair market value of the property (up to 30% of AGI with a five-year carryover). If the use of the contributed property is unrelated to the Museum’s exempt purposes, or if the donor held the property for 12 months or less before making the donation, then the donor’s income-tax charitable deduction is limited to the cost basis in the property.
Note on Gifts of Artwork
If you are considering donating a work of art to the Museum, you please contact a curator in the appropriate curatorial department to talk about your proposed gift. The Museum has curatorial departments devoted to Architecture and Design, Drawings, Film, Media and Performance, Painting and Sculpture, Photography, and Prints and Illustrated Books.
The Modern Circle
The Modern Circle, chaired by Emily Rauh Pulitzer, recognizes members and friends who demonstrate their deep commitment to modern and contemporary art by making a planned gift or including the Museum in their estate plans. Through their foresight and generosity, these individuals play a key role in establishing a sound foundation for the Museum and ensuring its growth and success in the future. Members receive invitations to selected events and programs throughout the year.