Turnkey Family Foundation Program

Gift Plans:
Pre-paid Tithing

Many people make annual cash donations to their church or other favorite charities. This is sometimes called payment of tithes.

We have developed a 'Pre-paid Tithing' plan that achieves the equivalent of a triple tax deduction plus a life annuity. The following example illustrates this planning technique.

• Step 1: An individual or family establishes a family foundation with the American Foundation.
• Step 2: Real estate, stock or any other highly appreciated assets valued at $100,000 are transferred into the family foundation.
• Step 3: The asset is sold and the proceeds invested to yield an annual return of 10%.
• Step 4: Each year the family foundation distributes $5,000 to the donor's church or to other selected charities.

The donor achieves the equivalent of a triple deduction, plus a life annuity:

1. The donor receives a full $100,000 charitable gift income tax deduction, limited to 30% of AGI in each year. Any unused deduction can be carried forward for five additional years.

2. Because the foundation is tax-exempt, there is no capital gains tax when the property or stock is sold. This is equivalent to an additional full tax deduction.

3. The property or asset is removed from the donor's estate, which is equivalent to a 100% estate tax deduction.

4. Assuming that the donor in this case is normally making cash donations to his or her church or charity, the result of this new foundation would be increased annual cash flow to the donor by the amount that he/she is no longer contributing personally to charity. The family foundation makes these same donations -- resulting in an increase in personal cashflow for life, which is the definition of an annuity.

This plan works equally well with cash or assets that are not appreciated.