Charitable Remainder Trust | Charitable Lead Trust | Life Estate | Bequest | Beneficiary Designations

In addition to outright giving, “planned giving” is an exciting way to fulfill philanthropic goals, because a “planned gift” provides not only a gift in support of the Domestic Violence and Sexual Assault Coalition (DVSAC) a not for profit public foundation, but also provided multiple financial and tax benefits to the donor and his or her family.

For example, a donor may transfer cash or property to DVSAC foundation and, in return, receive lifetime income payments, or provide lifetime income payments to a family member or friend, and enjoy a sizeable income tax deduction.  After the passing of the donor(s), any remaining gift value will be used to benefit DVSAC for a win-win-win gift!

The above example is just one type of planned gift.  However, there are many more types of planned gifts available to DVSAC supporters, which are summarized below.  Similar to outright gifts, planned gifts can also be designated to benefit the general fund or our future Endowment.  Alternatively, planned gifts can be undesignated or for the use of DVSAC’s greatest needs.

The right type of planned gift will depend greatly on a donor’s personal situation, needs and objectives.  Accordingly, DVSAC and its professional advisors are committed to helping you discover the best gift planning solution that achieves all of your financial and charitable giving goals.

For more information on planned giving options or estate planning, please contact our Executive Director at 530-272-2046.

Charitable Remainder Trust (CRT)
A charitable remainder trust is a planned gift where a donor irrevocably transfers cash or property into a special type of tax-exempt trust – a CRT.  Because a charitable remainder trust is exempt from income taxes, it can actually sell property tax-free.

As a result, a charitable remainder trust is an excellent solution for charitably inclined donors who desire to sell an appreciated asset but do not want to pay capital gains tax.  Amazingly, by transferring the property into a charitable remainder trust, the trust may sell the contributed property and purchase new property without the payment of any capital gains tax!

In addition to the tax-free sale, donors will receive either fixed or variable income for life and a substantial income tax deduction.  Thus, a charitable remainder trust works wonderfully for donors who desire additional retirement income and for donors who have a significant tax liability in the current tax year.  When the trust terminates, any remaining assets in the trust will pass to DVSAC for purposes designated by the donors.

Charitable Lead Trust (CLT)
A charitable lead trust is a planned gift where a donor irrevocably transfers cash or property into a special type of trust – a CLT.  The charitable lead trust is an incredible gift and estate tax-saving vehicle.  Accordingly, donors with large taxable estates should look closely at the charitable lead trust.  With proper planning, it is entirely possible and perfectly legal for a donor to transfer $1 million, $5 million, $10 million or even $100 million to family with little or no gift and estate tax!

The operation of a charitable lead trust is rather straightforward.  After the transfer of cash or property to the trust, the charitable lead trust will make periodic charitable distributions to DVSAC for purposes designated by the donors.  Once the trust fulfills its charitable distributions, the donor’s family and friends may receive all of the trust assets, plus any growth in the trust assets.
The duration of the charitable lead trust will depend greatly on a donor’s goals and objectives.  For example, charitable lead trusts usually last anywhere between 5 and 25 years.  So, the longer the trust lasts the greater the gift and estate tax savings, and the greater the benefit to DVSAC.

Life Estate
A life estate gift occurs when a donor irrevocably transfers a home, vacation home or farm to DVSAC while reserving the right to live in the property for his or her life.  Although retaining the right to live in the property for many more years, a donor nonetheless is rewarded immediately with a very generous charitable income tax deduction.

A life estate is an excellent choice for donors who intend to leave a personal residence or farm to DVSAC upon their death, and for donors who want to lower their income tax liability in the current tax year.

Bequest
A charitable bequest is a wonderful way to express one’s philanthropic dreams.  While many may think philanthropy is reserved for a select few, the truth is that every bequest to DVSAC makes a mark that will last throughout history.  In fact, the charitable bequest is the most frequently utilized planned gift method in America.
Simply stated, a charitable bequest provides for a distribution of cash or property to charity upon a donor’s passing.  The charitable bequest provision is usually contained in or can be easily added to a donor’s will or revocable living trust.

The three most common types of bequests are as follows:

  • a bequest of a specific dollar amount, e.g. $10,000
  • a bequest of a specific asset, e.g. my Picasso painting
  • a bequest of a percentage of the estate, e.g. 10% of my residue estate

Donors might also want to consider a contingent charitable bequest.  A contingent charitable bequest takes effect only if the primary beneficiary is no longer living upon the donor’s death.  For example, a donor may provide that 10% of his estate goes to his sister.  However, if the donor’s sister is deceased at the time of his death, then 10% goes to DVSAC.

Beneficiary Designations
An excellent way to make a planned gift is to name DVSAC as a beneficiary of certain types of “beneficiary designation” assets.  For example, a donor may name DVSAC as a 20% beneficiary of her life insurance policy or IRA.  By doing so, a donor quickly and easily creates a planned gift that will avoid probate, fulfill philanthropic goals and potentially save significant income and estate tax.
Many people own life insurance policies and qualified retirement plans, such as 401(k) plans, 403(b) plans and IRAs.  In fact, these assets in most cases represent a significant portion of a person’s estate.  Accordingly, prudent estate planning requires giving careful thought to the eventual distribution of these valuable assets.

To many people’s surprise, “beneficiary designation” assets are generally not controlled by a person’s will or revocable living trust.  Instead, a beneficiary designation form controls the ultimate distribution of these types of assets.  Depending on the particular asset, the appropriate beneficiary designation form can usually be obtained from a plan administrator, an insurance company or a financial services company custodian.

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