Bequests

Bequests are one of the easiest ways to give to the Community Foundation because donors retain complete control over the assets during their lifetime.  Bequests can be a specific dollar amount, a percentage of the estate, or the residual that remains after all other bequests are made.  Bequests may be made as an unrestricted gift to the Community Foundation to be used as directed by the Board.  Bequests may also be made to an existing fund or to a new fund to be established by the gift in the donor’s name.  Bequests to the Community Foundation are excluded from assets for estate tax purposes.  Sample language for a bequest by a codicil to your will can be found here.

Individual Retirement Accounts & Retirement Plans

Donors may designate the Community Foundation as the beneficiary of IRAs and retirement plans.  These assets are some of the best to leave to charity because there is no estate tax or income tax due as the gift will qualify for a charitable deduction.  These same assets included in the donor’s estate or left to heirs may be taxed at a cumulative rate of over 65%.  The only document required to make this change is a beneficiary form which is available from the trustee, custodian or plan administrator.  The donor retains access to all the funds during their lifetime.  The donor may specify the gift unrestricted or to establish a special fund in the donor’s name at the Community Foundation. Consider making a charitable gift from your IRA. 

Charitable Remainder Trusts (CRT)

A charitable remainder trust pays the donor or a beneficiary designated by the donor to receive regular income payments for life or a specified trust term (up to 20 years) and whatever remains will be transferred to the Community Foundation.  The donor receives an immediate charitable tax deduction for the present value of the gift in the year the gift is made.  The CRT can be structured to pay fixed income or income that varies with the value of the trust.  A CRT is useful for securities and real estate that have appreciated in value but earn little income since the assets the trust can be sold and reinvested without incurring capital gains tax.  The remainder of the trust paid to the Community Foundation may be specified as an unrestricted gift or used to establish a new fund in the donor’s name.

Charitable Lead Trusts (CLT)

A charitable lead trust pays annual payments for the donor’s life or for a specified number of years to a fund established at the Community Foundation.  The annual payments may be fixed or may be variable based on the value of the trust.  When the trust terminates, the trust principal is distributed to family or others designated by the donor as the beneficiary.  A CLT can be established during life or through a will.  A Charitable Lead Trust shelters investment earnings from tax and offers gift, estate, and generation-skipping tax benefits.  For example, trust assets are removed from the donor’s estate for estate tax purposes.

Life Insurance Policy

Life insurance provides a simple way to provide a significant gift to charity.  The donor can make the Community Foundation the owner and irrevocable beneficiary of a life insurance policy.  This can either be a paid up policy or one for which the donor continues to pay premiums.  The donor receives a tax deduction for the approximate cost or fair market value, whichever is less.  If the policy is paid up, the donor may receive an immediate tax deduction.  If not, continuing tax deductions on premium payments can be claimed for premium payments made through gifts to the Community Foundation.  Insurance proceeds can be specified as an unrestricted gift or to a special fund established at the Community Foundation.  Donors can also make a gift to the Community Foundation and replace it for their heirs with life insurance through ownership of the policy by the heirs or through an irrevocable life insurance trust.

Retained Life Estate

Donors may deed their homes or property to the Community Foundation and retain the right to live there for the rest of their lives.  The gift of the remainder interest is a charitable contribution in the year the gift arrangement is made and may result in a substantial income tax charitable deduction.  When the life estate ends, the real estate is sold and the proceeds are used as specified by the donor as an unrestricted gift to the Community Foundation or to establish a special fund in the donor’s name.  This type gift removes the property from the donor’s estate which may realize estate tax savings and avoids probate and estate administration expenses.

We encourage you to work with your lawyer or financial advisor as you consider these options.  Our staff is experienced in the use of these giving vehicles and is eager to work with you and your advisor in this process.  If you have questions about these types of gifts, please call us at 864-233-5925 or e-mail Bob Morris or Gina Blohm.

Sample bequest provision CFG