Planned Giving Resources & Services

Introduction to Bequests & Planned Giving

Bequests

Philanthropic gifts are usually separated into three types: annual gifts, which are funded from current income; capital gifts, which are usually larger and come from accumulated savings; planned gifts, which often involve assets accumulated over a life-time. Planned gifts are often capital gifts. What makes planned gifts unique is that they can provide income to the donor during his or her lifetime.

The simplest form of planned gift is the bequest, which is a provision in one's will bequeathing something to an individual or organization. Bequests may be for a specific dollar amount or a percentage of one's estate. Bequests may also be residual, meaning that a legacy will be provided only if assets remain after other specified legatees, and estate-related expenses have been provided for or contingent, meaning that a beneficiary will only receive a legacy if all other heirs have died.  Other options include a Testamentary Trust which provide one's heirs with income for their lives after which the assets go to a philanthropic organization like a church and the Testamentary QTIP, in which income, and if need principal, are paid to your spouse during his or her lifetime; at their death the trust's remaining principal goes to a charity. Anything, of any value, may be bequeathed -- cash, securities, real property are all possibilities. You may even leave all or part of your qualified retirement plan to charity. Bequests are revocable, meaning that as circumstances or interests change, one may change one's will to amend or eliminate an estate provision.

Click "here" for sample language for a bequest.

Planned Gifts

Planned giving donors have a number of options. They may establish an annuity, which is a simple contract between the donor and the UCC. The donor will give cash or securities to the UCC for the benefit of the local church, the Conference or the national denomination and in return receive a fixed amount of income for life. Upon the death of the donor (and, if he or she chooses, a spouse), the principle of the gift will go to the beneficiary. A UCC annuity may be funded with a gift of $1,000 or more. For donors who do not need immediate income, a deferred gift annuity is available; with the DGA, the donor defers income payments to a date in the future. The benefit of this kind of annuity is a higher payment and larger tax deduction.

 

Another option is the charitable remainder trust. CRTs come in two varieties: the Unitrust and the Annuity Trust. A Unitrust pays a fixed percentage of income and is revalued annually. If the trust grows in value, the payments to the beneficiaries will increase, too. Donors have the option of adding to a Unitrust over time. An annuity trust pays income just like a gift annuity -- a fixed dollar amount is set when the gift is made. Many donors find the annuity trust an attractive option since it provides a guaranteed income while leaving an ultimately larger legacy for the charitable remainderman. Trusts may be funded with cash, securities, and other liquid assets, like a vacation home. The minimum gift for a UCC trust is $50,000.

The pooled income fund is a planned gift that works like a mutual fund. The donor's gift goes into a trust, that is, it is pooled, with other gifts, all of which are managed according to a particular investment strategy - balanced growth, value-oriented, international equities. Donors, or their designated beneficiaries, receive a share of income based on their share of the pool. At the death of the income recipient, the principal goes to a charitable organization, such as your local church.

Two other options are the charitable lead trust and the retained life estate. With a charitable lead trust, you transfer assets to a trustee (e.g., the UCC). The trustee will pay an annual sum to a designee (e.g. your church) for a specific number of years (the usual term falls between 10-25 years). At the end of the trust's life, the principal plus any appreciation will go to your designated beneficiaries (usually your children or grandchildren).

Donors to Charitable Lead Trusts receive a receive a federal estate tax deduction equal to the estimated value of the annual trust payments to the charity. One of the nice features of a CLT is that any appreciation in the assets during the term of the trust will not be subject to additional estate tax, meaning more money for your heirs.

Do you have a home but no heirs or heirs who will not need the property? If so, you can put this property to work to support your church by donating it to your church while retaining the right to use the property! This gift, called a Retained Life Estate, will yield a charitable deduction for a portion of the appraised value (which must be determined by an independent appraiser). You will remain responsible for all taxes and property maintenance. At the end of the life estate, your property will be sold with the proceeds going to support your church.

For more information, please contact Andy Gustafson.