Charitable Bequests-Planned Gifts

One of the most popular, and perhaps the easiest, way to make a planned gift is through a bequest in your will. When you make a charitable bequest to an organization, you retain ownership of your property during your lifetime. Your will, directs how this gift will be distributed from your estate.

A bequest provides you, the donor, with great flexibility. You can leave a specific asset, a sum of money, a percentage of your estate, or the remainder of your estate after you have provided for other beneficiaries. You can also designate the purpose for your gift or provide that the donee (the charity receiving the gift) may determined its use, while retaining the ability to change your will during your lifetime.

When should you make a charitable bequest?

You may wish to consider a bequest if you:

-Own highly appreciated property, with a low-cost basis, and low-yield,

-Want to reduce your estate tax liability,

-Want to keep appreciated assets in your family,

-Want to avoid capital gains taxes on the sale of highly appreciated property,

-Want to receive tax-favored income,

-Want to receive a current income tax deduction.

What are some advantages of making charitable bequests?

The federal government encourages charitable bequests because it allows an unlimited estate tax deduction for gifts to qualified charities. Certain assets such as lRAs, qualified pension plans, and savings bonds are subject to heavy taxation because their income has not been taxed during life. The taxes must be paid by the estate or the heirs. Therefore, these are usually the best assets to use for a charitable bequest. Cash or appreciated securities are more wisely used as gifts to family members.

What are some types of Bequests?

Specific Bequests. With a specific bequest, you designate who is to receive a specific dollar amount or specific property. Bequests can be in cash, securities, real estate, or other personal property. Residuary Bequest. You may designate who is to receive whatever remains in your estate after your other beneficiaries have received their portions of your estate.

Contingent Bequests. By making a contingent bequest, you stipulate who will receive a portion or your estate if one or more of your named beneficiaries passes away before you or disclaims a share of your estate.

Testamentary Trust. You can establish a testamentary charitable trust through your will. At the time of your death, the trust will use all or a portion of your estate to provide income payments to one or more beneficiaries you name. Upon the death of the last surviving beneficiary, the principal of the trust can be designated for the charity of your choice.

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