Charitable Estate Planning

Planned Giving

Many people who make use of Planned Giving vehicles find they can give more to charity while still providing for their family and loved ones.

In fact, Planned Giving may help you:

• Clarify your values and charitable intent.
• Leave money to charity that would otherwise go to pay taxes.
• Create a supplemental source of retirement income.
• Maximize and ensure a protected income for your spouse or other loved ones who survive you. Arrange funds to cover educational expenses for children or grandchildren.
• Increase your income from low-yielding stocks or other assets.
• Continue your support of Park Ridge Health and other charitable institutions.

There are several different gift plans that allow you to give more while helping to preserve your future economic well being:

A Bequest made in a Will is perhaps one of the simplest ways to give to charity. A bequest may also be made through a Revocable Living Trust. Also common are Beneficiary Designations that can be set up on life insurance and retirement accounts. The amount transferred to charity is deducted from the donor’s estate for estate tax purposes. If tax-deferred retirement accounts are used to make the gift, income taxes may be avoided.

Charitable Gift Annuity enables a donor to receive a fixed stream of income for life, derive income tax benefits, and make a meaningful gift to charity. In exchange for a donation, the charity agrees to pay the donor (and/or spouse) a fixed annual sum for their lifetime(s). The rate of return and charitable deduction are dependent upon the age of the donor and is calculated according to IRS formulas. A portion of the annuity is considered by the IRS as return of principal and is therefore tax free.

Charitable Remainder Trusts provide an income stream to the donor or the donor’s heirs in exchange for a gift to the trust. The trust pays a percentage of the value of the trust each year to the donor (or heirs) for the term of the trust (which can be a life, joint lives, or a term of years). At the end of the term, the remainder of the trust goes to a charity. Because the charity is tax-exempt, the trust itself is tax-exempt and no capital gains taxes are paid when the trust sells appreciated assets. The trust may also be created at death through a Will and funded with tax-deferred retirement accounts to continue to defer the potential income tax on these accounts. Often, low-yielding, publicly-traded stock is donated, sold and reinvested to provide an increased income stream to beneficiaries. Another benefit of a Charitable Remainder Trust is that the donor can designate more than one charitable beneficiary. This is a very useful for individuals who care passionately about several not-for-profit organizations.

An attorney or other professional advisor should be consulted before establishing such a trust.

A Charitable Lead Trust provides income to charities for a term of years and then returns the asset to the donor or donor’s family. These trusts provide an opportunity for fulfilling multi-year pledges while receiving most of the tax deduction for all of the gifts in the first year. Donors with large estates benefit by paying as little gift or estate tax as possible. These trusts are often designated in a donor’s Will and are funded at death to create large estate tax deductions while still ultimately passing the assets to the family.

Planned giving can be a complex undertaking without the assistance of a professional. Charitable Estate Planning Services are provided free of charge through the Park Ridge Health Foundation by Thompson & Associates, one of the most highly-respected firms in the country.

For more information about Planned Giving, please contact the Director of Park Ridge Health Foundation 828.681.2421