BEQUESTS & PLANNED GIVING
Here we summarize planned giving basics, popular alternatives, and tax benefits of planned gifts.
Planned Giving – The Basics
A “planned gift” is any major gift made in lifetime or at death as part of a donor’s overall financial, tax, and estate planning. Planned gifts enable you to ensure the charitable legacy you want.
Including the HSCC in your planned giving is a meaningful and often significant way to help us continue to serve the animals in need and the people in our community. We have been blessed with generous gifts from individuals who had the foresight to include the HSCC in their plans to give, and plans by others to give in the future will support our mission going forward.
There are a variety of ways to achieve planned giving, such as wills and estates, trusts of various kinds, life insurance, retirement plans, “donor advised funds” or “donor designated funds” with a community foundation, and outright gifts that use appreciated assets as a substitute for cash. While in many ways these alternatives are quite different, all enable philanthropic individuals to support non-profit, tax-exempt charities with larger gifts than they could make from ordinary income in their lifetime.
Popular Ways for Planned Giving
It is common for people to use several of the options for planned giving. Below are highlights of some popular methods:
Will or Trust
A common form of planned giving is a charitable bequest in your will or trust you create. Your bequest may be a specific amount, a percentage of your estate, or even the residual balance of your estate after all of the other bequests have been made. The following is an example of suggested language to include in your will (different wording is used for a trust):
"I give and bequeath to the Humane Society of Cobb County, Inc., a not-for-profit, tax-exempt corporation, with principal offices presently located at 148 Fairground Street, SE, the sum of $_________ from [or _______% of] my estate, to be used for the accomplishment of its general purpose [or for a specific purpose if indicated]."
Perhaps the simplest and most tax advantageous gift is to name the HSCC as the beneficiary of your IRA, 401(k), or 403(b). Retirement gifts are usually taxed as ordinary income upon distribution to a beneficiary. As a public charity incorporated as a 501(c)(3) organization, however, the HSCC does not generally pay income tax. Gifts of retirement assets are worth 100% of their value for public charities, while individual beneficiaries may only enjoy 60-80% of the value on an after-tax basis.
As with your retirement funds, your life insurance beneficiary designation regulates who will ultimately receive your life insurance proceeds. You can designate the HSCC as the beneficiary of all or just a portion of your life insurance.
Charitable Remainder Trust
Charitable Remainder Trusts can be ideal for the individual or couple who have a need for current income, or want to provide someone else with current income, but want the balance remaining upon their passing or after a designated time period to be paid to a charitable organization. These trusts also provide you with an immediate tax deduction as well as allow you to avoid capital gains taxes on the assets contributed to the trust. You or the trust’s current beneficiary can receive a fixed dollar amount every year or a certain percentage of the trust’s assets each year.
Create (or Contribute to Existing) Donor Advised or Designated Fund
A “Donor Advised Fund,” typically provided by a community foundation, is a widely used vehicle for individuals to achieve their charitable interests. If one or more charities are specifically identified as exclusive beneficiaries, the fund is referred to as a “Donor Designated Fund.”
Both types of donor funds provide a unique combination of immediate (current year) tax benefits as well as flexibility going forward as a “Donor Advisor” to recommend: a) how assets are invested, b) the tax-exempt organizations to receive a grant (you can determine upfront or later, case-by-case), c) the time and amount of any specific grant, and d) a successor Donor Advisor.
The HSCC has a Donor Designated Fund with the Cobb Community Foundation, Inc. (“CCF”) for the exclusive benefit of the HSCC. The “Humane Society of Cobb County Fund” (the “HSCC Fund”) was established by HSCC Board Chair Steve Imler in 2009, and he remains the current Donor Advisor.
Click www.cobbfoundation.org to go to the CCF home page for more information. There you will see a link to a short video that further explains community foundations and their donor funds in an easy-to-understand way.
You can quickly establish a customized fund of your own. You can even more quickly and easily contribute to an existing fund if it also serves your donor intent (which could include the HSCC Fund).
Tax Benefits of Planned Gifts
While some planned gifts are notable for providing current year tax deductions, others are desirable for providing lifelong income to the donor. Other long-term gift plans use estate and tax planning to provide both for charity and heirs in ways that maximize the gift and/or minimize its impact on the donor’s estate.
As an aid for general understanding, below is a brief description of four broad categories that summarize how tax benefits can typically be realized by planned gifts:
- Donors can contribute appreciated property, like securities or real estate, receive a current year charitable deduction for the full market value of the asset, and pay no capital gains tax on the transfer.
- Gifts payable to charity upon the donor’s death, like a bequest or a beneficiary designation in a life insurance policy or retirement account, do not generate a lifetime income tax deduction for the donor, but they are exempt from estate tax.
- Donors who establish a life-income gift receive a tax deduction for the full, fair market value of the assets contributed, minus the present value of the income interest retained; if they fund their gift with appreciated property, they pay no upfront capital gains tax on the transfer.
- Gifts/contributions to a Donor Advised and/or Designated Fund with a community foundation are eligible for a current year tax deduction to the extent allowed by law.
Consult with your personal financial advisor and others for expert advice on these and other planned giving methods.
We hope you will include the HSCC in your plans for giving in order to promote the health and welfare of all animals in our community and help those in need. We would be happy to answer any questions and provide more information.
To start a dialogue beginning with email, please reach out to Steve Imler at email@example.com.
The material presented in this website is intended as general information on the topics discussed above and should not be interpreted as legal, financial, or tax advice. Please seek the specific advice of your tax advisor, attorney, and/or financial planner to discuss the application of these topics to your individual situation.