Gifts from Estate Plans

The most practical way to make significant gifts may be through your estate plan, by means of a will, living trust or beneficiary designation on a life insurance policy or retirement account. Such gifts are wholly revocable while you are alive and may save significant taxes for your estate.

Wills and Living Trusts

A bequest is the most traditional way to provide significant help for worthwhile causes. With a gift through your will or living trust, you keep full use of your gift assets during your life. Some bequest language you can share with your adviser is located in Facts for Advisers.

You can structure a bequest in ways that will be both personally satisfying and tax advantageous. Charitable bequests take many forms:

Outright (specific) bequest. This is a gift of a particular amount of money or item of property (for example: "I bequeath $25,000.").

Residuary bequest. The residue of an estate is the amount remaining after all specific bequests have been distributed; the exact amount will not be known until the final accounting is completed. The residue may pass as a percentage bequest (e.g., "I give one-third of the residue of my estate.").

Contingent bequests. You can name a secondary beneficiary to receive property in the event the primary beneficiary is not alive (for example: "I bequeath $10,000 to my father, but if he has predeceased me, I direct the $10,000 be paid to.").

Financial Accounts
Most accounts at financial institutions can be made payable on death to a person or a charitable organization. Ask the manager of the institution how you can arrange to designate a death beneficiary for your CD, savings account, share accounts, etc. In some areas, this is accomplished through a "P.O.D." (payable on death) designation. Securities in a brokerage account can be left through a "T.O.D." (transfer on death) designation.

Retirement Accounts
Your estate can save both income taxes and estate taxes if you make a charitable organization beneficiary of part or all of your IRA or other retirement account. Family members might keep only 30 cents on the dollar, after taxes, from these assets. Recent changes in IRS regulations have made it simpler and more favorable to name worthwhile causes as beneficiaries of IRAs and other retirement accounts.

Life Insurance
You can name our organization as the beneficiary of a life insurance policy (or a percentage of the proceeds) just contact the company for appropriate forms. A better idea may be to transfer actual ownership of the policy to us (assuming it is a "surplus" policy that is no longer needed for family security). Your gift will entitle you to an income tax deduction, and any future premium payments will be tax deductible.

Residences and Farms
Friends who own personal residences, including condos and vacation homes, can make gifts of their property but continue to use the property for the rest of their lives. The same opportunities works with farms and ranches. The advantage of a lifetime gift, reserving lifetime use, is that you receive an income tax charitable deduction, in addition to estate tax savings.

Call us before . . . you make or amend your will, establish a living trust or name beneficiaries for pension plans and life insurance.

Let Us "Borrow" Investment Assets Temporarily with a Charitable Lead Trust
To continue the agricultural comparison, you can "keep the tree but give the fruit." It's possible to contribute merely the income from securities or other property temporarily and enjoy substantial income tax or gift and estate tax benefits. We're talking about an exciting technique called the "charitable lead trust." Alternatively, you can lend cash (up to $250,000) and remove the annual interest from your tax bracket.

This technique can be especially helpful to friends who need large charitable deductions in a year of exceptionally high income, or face heavy federal estate taxes. Call us for details.