Legacy Gifts
Ways to Make a Planned Gift in the Future: Legacy Giving
As a part of your estate planning, you may wish to consider a bequest or a life income gift. A planned gift may help you combine philanthropic giving with your financial needs and tax planning. We advise you to work with your attorney and financial advisers to plan the charitable arrangement that is most advantageous to your estate. An added bonus of planned gifts is that they may reduce estate taxes for those who face such taxation.
We encourage you to explore the possibilities and opportunities for creative gift planning. For further information on planned gifts, please contact Laurie Caswell Burke at 802-878-2332 or lburke@sterncenter.org. All inquiries regarding gifts to the Stern Center will be completely confidential. If you have already included the Stern Center as a beneficiary in your will, please let us know so that we can recognize your generosity.
Estates
Estate gifts provide support to the Stern Center after your lifetime. These gifts generally avoid probate and may also save income taxes or "death taxes" in your estate.
Bequests by Will or Living Trust
The value of a gift by bequest is deductible from the value of the estate that is subject to estate tax. Bequests may be unrestricted or designated to a particular purpose, such as one of our programs. It may consist of a specific dollar amount or the residue remaining after all other obligations are met. Bequests may also be made contingent upon another event occurring—such as a spouse or another beneficiary predeceasing you.
Contact Laurie Caswell Burke to request sample language that you can review with your attorney.
Benefits to Heirs
Charitable giving, as part of informed estate planning, can benefit your heirs as well. A charitable gift is deductible from the total value of your estate. This may reduce the rate at which the remainder of your estate is taxed, thereby preserving the value of the estate passed to heirs. The assets you select to give—cash, securities, insurance, real estate or personal property—may also affect the value of the estate passed to heirs.
If you already have a will:
The easiest way to make a charitable gift through a bequest is by adding a codicil—a simple statement spelling out the beneficiary organization and the gift. You do not need to change the body of your will. The codicil is executed with the same formalities as a will.
Retirement Plan Assets
Your Retirement Plan May Offer Tax Advantages
You can create an excellent legacy gift by naming the Stern Center as a beneficiary of your Individual Retirement Plans (IRA), 403(b), 401(k), Keogh, or other qualified pension plan. This can usually be accomplished by completing the appropriate beneficiary forms provided by the administrator of the plan. Because it is a qualified charity, the Stern Center as beneficiary can receive all proceeds from such retirement plans without having to pay any income tax. If the beneficiary is an individual, that individual must pay income tax on the funds received from the plan. When the Stern Center is named as a beneficiary, the donor may also qualify for a reduction in estate taxes (depending on the size of the total estate assets).
Other Possibilities
Designate a specific amount to the Stern Center before the division of the remainder among family beneficiaries.
Name the Stern Center the beneficiary of all or part of the balance remaining after your spouse's or another beneficiary's lifetime. Donors should note that any distribution from these plans during their lifetimes will result in taxable income to the donor, even if the distribution is to a qualified charity. Likewise, the donor will not avoid income tax by transferring the entire plan to charity during his or her lifetime. The income tax avoidance only occurs if the plan is distributed to a charity after the donor's lifetime through beneficiary designation or through a specific bequest in the donor's estate plans.
Life Insurance Proceeds
Do you have an existing life insurance policy that is no longer needed because your circumstances have changed? A life insurance policy can be an excellent tool for making a gift to support the work of the Stern Center. A gift can be accomplished simply by making the Stern Center the beneficiary of an existing policy. The Stern Center would then receive the proceeds of the policy after the covered party's lifetime. If you contribute the policy to us and continue paying the premiums, you will be entitled to an income tax deduction.
Life Income Gifts
Life Income Gifts allow you to receive a lifetime income from the investment of the assets you donate. They can also be very flexible.
Some benefits to you:
- You get an income tax deduction for the gift
- You may increase your retirement income
- Fund the gift with appreciated securities and reduce capital gains tax
- Charitable gift annuities
What you receive:
- Income for Life: You have the benefit of a lifetime income for yourself and another person, if you choose.
- Tax Deduction Savings: The portion of the transaction that is considered a gift qualifies as a charitable income tax deduction.
- Tax-Free Income: Part of the annual income is considered a tax-free return of capital, excluding it from gross income until you reach your life expectancy.
- Capital Gains Tax Savings: If you contribute appreciated securities, you will need to pay some capital gains taxes for the "sale" portion of the transaction, but it is payable over your life expectancy rather than being due all at once.
HOW A GIFT ANNUITY WORKS
The concept of a gift annuity is simple. A person wishing to support the Stern Center makes a gift of cash or marketable securities. The Stern Center, through its investment firm, reinvests the assets and pays your designated beneficiary/beneficiaries a fixed income for life. Upon the death of the last beneficiary, the remaining funds are deposited into the Stern Center's endowment. The transaction is partly a charitable gift and partly a purchase of the income interest. Annuity payments are determined by the age or ages of the beneficiaries. Gift Annuities typically range from $10,000 to $100,000.
Charitable Remainder Trusts:
There are two types of charitable trusts: charitable remainder unitrusts and charitable remainder annuity trusts. Trusts can be funded with various assets such as cash, securities, or real estate.
How a charitable remainder unitrust works:
A charitable remainder unitrust allows you to make a significant gift while retaining income from the property for yourself or another designee. The amount you receive as a life income is a fixed percentage of the trust's market value each year. You fund a unitrust with assets (appreciated property or stocks generate the greatest net savings for you). You are allowed an income tax deduction upon establishing the trust, based on the actuarially determined value of the charity's remainder interest. After your lifetime (and, if you wish, that of a survivor), the principal of your trust is turned over to the Stern Center for use as you specified. A unitrust is a useful way to generate tax savings during your income-earning years and supplemental income after retirement.
YOUR ANNUAL INCOME FROM A CHARITABLE REMAINDER ANNUITY TRUST NEVER VARIES
This trust is similar to the charitable remainder unitrust, with the exception that this plan will pay you a fixed dollar amount each year for the rest of your life. At the outset, you decide the amount to be paid to you each year from the trust. You will receive payments from the trust assets, and it will be the same amount each year, regardless of changing interest rates and stock market fluctuations.