Wills and Bequests
A will is a legal document that tells your executor how you want your estate to be divided upon your passing. The easiest form of charitable estate planning is naming a charitable organization in your will, which is referred to as a bequest.
- Donors can specify an exact amount, a percentage of the estate or a variety of other designations.
- The estate receives a charitable deduction for Estate Tax purposes as a result of a bequest.
A donor may designate a charitable organization as a full or partial beneficiary of a life insurance policy.
- Donors can use an existing policy or purchase a new policy to facilitate the gift.
- The estate receives a charitable deduction for Estate Tax purposes.
A gift of a donor's retirement plan assets - IRAs, 401(k) plans and other retirement plans - can be made during the donor's lifetime or following their death. Retirement assets generate income which means that in addition to estate taxes, the asset is subject to income tax by the beneficiary. By making a gift to a charitable organization, the tax implications can be greatly reduced.
- If a donor is 70 ½ years of age or older, the donor may direct that up to $100,000 from an IRA be distributed directly to a charitable organization without recognizing any income. This is commonly referred to as a charitable rollover.
A donor may gift appreciated, publicly-traded securities (stocks, bonds, and mutual funds) directly to a charitable organization.
- Transfers of publicly-traded securities must be facilitated through a transfer agent or broker having custody of the stock.
- Donors receive an income tax charitable deduction for the fair market value of the securities as of the date the gift was made.
- Donors avoid any capital gains tax that would have applied to the appreciated securities had they been sold during their lifetime.