Goal: Defer a gift until after your
Benefit: Your donations are fully exempt from federal estate tax and you retain control of your assets
David and Ann originally established a scholarship that would help particular students meet some of their college expenses. They had made an outright gift to their college of some appreciated stock. It was later, after their experiences with the recipients of the scholarships, that they changed their will to include a bequest that will magnify the scholarship tenfold.
Ann: "We felt good about helping through establishing a small fund. But we had no idea what the fund would bring to us."
David: "Over the years, we have since met with some of the recipients of the scholarship. I can't describe how good it feels to sit with these young people, to hear them describe their dreams and ambitions. To realize that we have become a part of their future and that they have become a part of our family."
Ann: "I feel like we really have accomplished something good!"
Setting all the emotional rewards aside, this was a wise financial move. First, there were some immediate tax benefits on the initial gift based not on the cost of the stock, but on its appreciated value. Second, their estate will benefit by having a write-off to charity through the bequest (see bequest information).
There is some additional information available about the benefits of utilizing a charitable bequest and how bequests enable you to keep control of your assets.
Using funds from a retirement account to make bequests is often a good strategy. If there is a balance in your retirement account at your death, not only is there a potential income tax burden, but there may be estate taxes as well. Estimates are that taxes could eat up as much as 70-75% of retirement assets under certain circumstances. Careful planning concerning retirement funds needs to be done. Some additional information regarding retirement assets is available.
Another option to consider in making a gift is to use life insurance policies that are no longer needed or necessary. There are some different ways to make a gift of life insurance.
Ann and David found their experience enriched their hearts and lives. Often donors are surprised by just how wonderful the giving experience is.
Now click here to meet Joyce.