SUPPORT CHORE THROUGH PLANNED GIVING
Consider the following facts! According to the CT Leave a Legacy organization, while 72 percent of all Americans support the work of charities annually, only 5.7 percent remember nonprofit organizations in their estate plans. When asked why this gap exists, most people say it is because they have not been asked or have not thought about it.
Planned giving is a way to work with your attorney, accountant or financial advisor (1) to support causes which you care about in your estate plans and (2) to make a tremendous difference in the world you leave behind.
Planned giving may take the form of • Outright Gifts • Bequests in a Will • Beneficiary of Retirement Plan Assets • Beneficiary and/or Owner of an Existing Life Insurance Policy
In addition, there are other options which tend to be more complex including • Life Income Gift • Charitable Remainder Trusts • Charitable Lead Trusts
For a summary of the above options, see the following “Examples of Planned Giving Vehicles and Potential Benefits.” For more information on planned giving and the associated tax benefits, please talk with your lawyer or financial/tax advisor or call • Diane Johnstone, Senior Vice President and Trust Officer, Salisbury Bank and Trust at (860) 435-9801 extension 1501 • Jill Gellert, Vice President of Finance and Administration, Berkshire Taconic Community Foundation at 413-528-8039
EXAMPLES OF PLANNED GIVING VEHICLES AND POTENTIAL BENEFITS
If you are thinking about planned giving, you should consult with your lawyer, financial or tax advisor. 1. Outright Gift Definition: A donation of cash or other assets such as stock, real estate or personal property. Benefits: Gift goes to work right away, provides income or estate tax relief, eliminates capital gains tax on donated appreciated property. 2. Bequests Definition: Gift made by a bequest in a will which may include a certain dollar amount, stock, real estate, all or a portion of what remains from an estate after debts, taxes, expenses and other bequests have been paid; assets only under certain conditions such as only if a spouse or other beneficiary does not survive. Benefits: Donor’s estate is entitled to an estate tax deduction for the full value of a charitable bequest. 3. Retirement Plan Assets Definition: Nonprofit named as beneficiary or partial beneficiary of retirement plan. Benefits: Provides income and estate tax relief. 4. Life Insurance Definition: Policy used to make a future gift to a nonprofit (i.e., beneficiary) or to preserve the legacy passed on to heirs by replacing other assets donated to charity with a life insurance policy purchased with capital gains and income tax savings. Benefits: Range of estate and income tax benefits. 5. Life Income Gift Definition: Cash and other assets irrevocably transferred to a trustee to manage while assuring the donor continued income from those assets; at the end of a term of years or at the end of a donor’s or beneficiary’s life, the remaining assets are used to support a nonprofit organization according to the donor’s desires. Benefits: Current commitment of assets may result in a larger future gift, provides immediate income tax benefits as well as relief from capital gains and estate/gift taxes, converts low or non-income producing assets into increased cash flow, can supplement retirement income, income can be used to buy a life insurance policy preserving wealth for heirs. 6. Charitable Remainder Trusts Definition: Cash or other assets irrevocably transferred to a trustee who manages the assets and pays income to the donor or beneficiary for life or a term of years. At the end of the trust term, a nonprofit endowment fund receives the remaining principal. Benefits: Donor receives income tax deduction and/or pays no tax on capital gains. 7. Charitable Lead Trusts Definition: Donor irrevocably transfers assets to a trustee and has income from the trust paid to a nonprofit endowment fund either for a certain number of years or until the donor’s death. At the end of the trust’s term, the principal is distributed to heirs. Benefits: Minimizes gift and estate taxes, provides no income tax benefits.