Donating Personal Property

Personal property can be contributed to UJA-Federation in ways that afford many benefits. It is possible for the donor to generate productive income from these gifts, while also realizing income-and estate-tax benefits.

An item of property can be contributed to a Charitable Remainder Trust, which pays income to the donor for his or her life. By selling the property that is contributed to the trust and investing the cash realized from the sale, the trust is able to pay the donor these lifetime annuities.

Taxes are avoided in many ways. By contributing the property to a trust instead of selling it themselves, donors do not recognize the capital gain on the appreciation of the item, thereby avoiding capital-gains tax. The trust pays no capital-gains tax because it is tax-exempt. Also, the property is removed from the donor's estate, thereby avoiding federal estate taxes.

Trusts can be established with various forms of tangible property. Recently, trusts have been funded with the contribution of a rare musical instrument, a precious gemstone, a diamond ring, and a valuable costume collection. These once unproductive assets now generate significant income.

The benefit of income productivity, accompanied by avoidance of a capital-gains tax and reduction of estate taxes, makes this a charitable-giving transaction of substantial benefit to individuals who have tangible personal property. It is a nontraditional form of charitable giving, but one that should be considered by donors and their advisors when designing financial and estate plans.

Advantages of a Gift of Personal Property
•    Chance to generate income from formerly nonproductive assets;
•    Fixed-rate annual payments for life;
•    Elimination of tax on capital gains for contributed property;
•    Avoidance of estate taxes in many instances; and
•    Opportunity to make a significant gift to UJA-Federation.