Ways To Give
Bequests
A bequest is a gift of property or assets to a beneficiary as defined in a will.
There can be long-term tax benefits because charitable bequests can reduce estate
taxes. In addition, there are the emotional rewards of knowing what a charitable
gift means to the charity and how it can benefit society. There can be other
tax benefits as well if the bequest involves appreciated assets.
Specific language (see
bequest information) is used to effect a bequest. The examples provided
here are for general information - please consult your attorney to make sure
your wishes are properly carried out. 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.
A Living Trust is a trust set up to operate during the life (and
can operate after the death) of the one setting up the trust. It can be revocable,
or, in other words, you can change your mind and have some or all of the trust
property returned to you during your life. An irrevocable trust cannot be changed
except in certain legal circumstances (fraud, unlawful agreements, merger of
interests, decision of the Court). Gifts may be made through a Living Trust
upon the death of the trustor. See Living
Trust for more information.
Gifts of Appreciated Securities (and
other assets)
The gift of an appreciated asset, often common stock or mutual fund shares,
is a valuable way to make a contribution to a charitable organization and receive
tax benefits based on the value of the asset(s). Appreciated assets have
a higher market value than their basis or tax purpose value (in most cases,
their cost). Such assets would, if sold by an individual or non-charitable organization
at a price higher than their basis, potentially generate taxable capital gains
(either long-term or short-term depending on the holding period).
The donor receives a charitable tax deduction based on the current market value
of the gift and avoids tax on any capital gains. The charitable recipient sells
the asset, realizes the full market value, and as a nonprofit does not have
to pay tax on any capital gains.
Another value to using appreciated securities instead of an anticipated gift
of cash is to increase the cost or basis value of securities you want to hold
for further appreciation. Suppose you hold a number of shares of a startup company
and have a cost basis greatly below the current market value. Anything you sold
would be subject to capital gains. But, suppose you gave some or all of the
stock to charity and then purchased the same number of shares at the current
value in the marketplace. It would be similar to giving that amount of money
to charity. But instead, you now have shares of stock with a current basis and
you have significantly reduced your future capital gains liability on those
shares. And, you have a charitable gift deduction equal to the current value
of the stock you gave.
While the gift of appreciated assets often is stock, other marketable assets (called tangible personal property) can be utilized as gifts with the possibility of tax benefits. These are assets such as real estate, antiques, coin or stamp collections, and art. However, these other assets are reviewed on a case-by-case basis. For more information about gifts of appreciated assets, please contact us so we can respond to your specific needs.
Bargain Sales
A bargain sale occurs when a donor sells property to CHRISTUS Spohn for less
than the property’s fair market value. The amount of fair market value
over the sales price is the donor’s charitable contribution, which may
be reduced by allocation of tax basis and reduction rules relating to unrealized
gain. Almost any type of asset may be sold in a bargain sale, depending on the
cash available for purchase and the suitability of the asset.
What are the advantages? The charitable contribution portion qualifies
for income tax deduction. It may be carried forward for five years if not fully
usable in year of gift and it allows the donor to receive some cash sales proceeds
while making a charitable gift. A bargain sale may avoid capital gain tax liability
on highly appreciated property.
Charitable Gift Annuities
A Charitable Gift Annuity is offered through a charity and used by many
to provide income for the annuitant and a second beneficiary, if any. The annuitant
(the person providing funds to the charity) receives a contract or agreement
from the charity which states that the charity will pay the annuitant a fixed
income for life (lives) with payments to start immediately or at some set future
time. Probate or court involvement is avoided on these funds. The income paid
under the annuity is secured by the assets of the charity. See Gift
Annuity Benefits for more details. Please contact us for an illustration
of how your gift can produce income for life. 
A charitable gift annuity can provide tax benefits now and a lifetime income
for the donor and a beneficiary if desired. A deferred gift annuity is a variation
on a gift annuity. A gift is made and the charitable organization promises in
return to pay you an income stream that begins on a future date you specify.
Since the payments do not begin for a period of time, the fund will grow without
withdrawals until the payments begin. With more money in the fund once payments
begin, the payments will be larger than with an immediate annuity.
Rates on charitable gift annuities are based on age and whether the contract
is immediate or deferred. If you would like an illustration of this life income
to address your particular situation, please click here and fill out the response form and send us the appropriate information. To look
at some specific rates on current gift annuities, click
here. A generic
example of a charitable gift annuity is available as well as a graphic
example.
Deferred Charitable Gift Annuities
An attractive benefit of this arrangement is that it enables a donor to make
a gift now and take a charitable income tax deduction now while in a high tax
bracket. Income may be deferred, for instance, until after retirement, when
the rate of tax will presumably be lower. Deferred gift annuities are creative
ways to delay income to pay for children's or grandchildren's college expenses,
supplement your retirement income, or assist with assisted-care living arrangements
that may be inevitable.
A part of each payment, as in any gift annuity, may be tax-free for a period
of years. However, the precise amount of each payment will depend on the tax
rules in effect when the payments start.
Charitable Remainder Trust
A Charitable Remainder Trust is established for the life of the donor (also
trustor or grantor) and/or for the life of any beneficiary(-ies) and is irrevocable.
While there are certain changes that may be made, once the trust is established,
it cannot be revoked. If it is desired, the income period of the trust can be
established for a specified period of time not to exceed twenty years. The twenty-year
maximum does not apply if the trust life is based on the life expectancy of
the income beneficiary(-ies).
A charitable remainder trust is an attractive planning tool for the disposal
of highly appreciated assets. While the assets revert to the charity rather
than the heirs of the estate, the use of an irrevocable life insurance trust
in conjunction with a charitable remainder trust could replace the asset's value
for the heirs.
There are two different types of charitable remainder trusts.
A charitable remainder unitrust (see example)
is a popular way to achieve tax benefits as well as a fixed annual percentage
on the value of the assets in the trust. The assets are revalued annually and,
if the trust value changes, the payment to the beneficiary(ies) changes.
A charitable remainder annuity trust is set up to pay a fixed rate of return
based on the initial valuation at the time the property is placed in the trust.
The trust assets are never revalued.
Charitable Remainder Trusts provide a good degree of flexibility that is valuable
in charitable gift planning. For example, a variation on remainder trusts can be an effective way to make gifts of real estate. A graphic example of a charitable remainder trust is available.
Charitable Lead Trusts
A charitable lead trust is often called the reverse of a charitable remainder
trust. During the term or life of the charitable lead trust, an annuity or unitrust
income interest is distributed each year to the designated charitable beneficiary
and the assets are eventually transferred to the trustor's or grantor's designated
non-charitable beneficiary(ies).
The Charitable Lead Trust (CLT) is a powerful way to make a future transfer
of assets to your heirs at a significantly reduced gift and estate tax cost,
while also providing CHRISTUS Spohn with income. During a specified number
of years, the lives of one or more individuals, or a combination of the two,
a contribution is paid to CHRISTUS Spohn. A lead trust may be structured to
provide a fixed dollar contribution annually (CLAT) or a fixed percentage contribution
(CLUT). At the end of the trust term, the assets pass to the beneficiaries the
donor's name. The donors choose the trustee.
You can fund a charitable lead trust with cash, publicly traded securities,
closely-held stock, income-producing real estate, partnership interests, or
a combination of the above. You can establish a CLT during your lifetime, or
as a testamentary trust through your will.
There are two basic types of Lead Trusts: Non-Grantor and Grantor.
- In a non-grantor CLT, the most common type, the trust assets revert
to your children, grandchildren, or other heirs at the end of the trust term.
A non-grantor CLT provides a gift tax charitable deduction and is useful in
reducing the cost of intergenerational wealth transfers.
- In a grantor CLT, the trust assets revert to you, rather than to
your heirs, at the end of the trust term. Donors creating grantor CLTs receive
a large charitable contribution income tax deduction. Such a gift structure
may be particularly useful if you wish to make a multi-year pledge and accelerate
future deductions into the current year.
Donors establishing a CLT should be advised by an attorney who is experienced
in the area of charitable trusts and estate planning. Please contact us by phone
or e-mail so that we can assist you or use our response/request
form.
Gifts of Real Estate
Depending on the circumstances that are involved, gifts of real estate can be
an effective means of planning a gift. Much of the individual wealth in America
is invested in real estate. While the first thought often is a home or farm,
real estate also can involve a vacation or second home, an apartment or commercial
building, a shopping center, or undeveloped land.
Often our real estate holdings, be it our house, a second home or investment
property, are a significant part of our net worth. Gifts of real estate, therefore,
can enable us to make significant contributions. Each piece of property and
its unique circumstances need to be reviewed to determine the suitability of
the property as a gift. Generally speaking, a rule of thumb is that an acceptable
piece of property is one that can be readily sold.
There are many ways to donate property. It can be an outright gift, a retained
life estate, or placed in a trust . It may also be a 'bargain sale,' which is a part sale and part donation arranged
between the donor and CHRISTUS Spohn. A person holding property that is not
perceived as readily marketable and who wants an immediate cash return may use
a bargain sale. Or the property may be mortgaged and the arranged sale/gift
allows the donor to pay off the mortgage with the proceeds from the sale.
In any case, while we discuss some generalities here about donating real estate,
if you are considering such a gift to CHRISTUS Spohn, please contact us. There
can be significant benefits for you and CHRISTUS Spohn.
Gifts
of Life Insurance
There are several ways you can use life insurance as the basis for a charitable
gift.
- Making CHRISTUS Spohn a Beneficiary of Your Life Insurance Policy
You may wish to make CHRISTUS Spohn Health System Development Foundation the beneficiary (or a contingent beneficiary)
of a life insurance policy as a way to make a sizeable future gift. You retain
lifetime ownership of the policy, keeping the right to cash it in, borrow
against it, and change the beneficiary. A gift of this nature is treated much
like a bequest made through your will. Because you retain the ownership of
your asset (the policy), you will not receive an income tax charitable deduction
for this future gift or for your premium payments during your lifetime. The
policy's proceeds will be included in your gross estate, and your estate can
take an estate tax charitable deduction.
- Making a Gift of Your Policy
You may wish to transfer ownership of a policy to the charity, or purchase
a new policy with the charity as owner and beneficiary. If you make a charity
the owner and beneficiary of a policy, you are entitled to certain tax advantages.
- Wealth Replacement Using Life Insurance
A donor may make a current gift to charity and receive a charitable tax
deduction. At the same time, the donor may purchase life insurance to replace
the donated amount or perhaps, the amount after estate tax that the beneficiaries
would have received. Depending on the circumstances, the charitable tax savings
and any life income resulting from the gift may defray the cost of the wealth
replacement insurance premiums.
- Creating a Life Insurance Trust
You may want to set up an Irrevocable Life Insurance Trust (ILIT). An ILIT
removes the life insurance from your estate to help reduce estate tax while
providing other benefits. For example, upon one's death, the proceeds of the
life insurance policy may remain in the trust to provide income for the surviving
spouse, but stay outside of the spouse's estate for estate tax purposes. Or,
the trust could be used to distribute proceeds to children of a previous marriage.
Although ILITs can be expensive and more complicated than owning life insurance
directly, they may be an attractive option in certain situations.
As with all matters concerning estate planning, please consult
your estate and tax specialists.
Gifts of Retirement Assets
Contributions to retirement plans can provide an excellent opportunity for growth,
as they grow tax-free, meaning that the growth or earnings are not taxed annually
but can continue to grow pre-tax. The earnings are taxed when they are withdrawn,
but this has allowed more dollars to be invested for more growth. Additional
savings can occur if the recipient is in a lower tax bracket when the funds
are withdrawn (for example, during retirement) than when the investments were
growing.
However, careful planning concerning the withdrawals from retirement funds
needs to be done. Not only is there a potential income tax burden, but if there
is a balance in your retirement account at your death, there may be estate taxes
as well. Estimates are that taxes could eat up as much as 75-80% of retirement
assets under certain circumstances.
Using qualified retirement plan funds is an excellent source of assets to fund
bequests. By designating CHRISTUS Spohn Health System Development Foundation as a beneficiary (it can be a contingent
beneficiary after the death of a spouse - see sample bequest language), funds
pass to CHRISTUS Spohn free of taxes. It is possible to set up the charitable
beneficiary as the recipient of the entire remaining funds in the account or
establish a percentage to fund the bequest.
Please
note - the designation of CHRISTUS Spohn as a beneficiary of retirement
fund assets cannot be simply written in your will or trust. CHRISTUS Spohn Health System Development Foundation must
be designated as a beneficiary of the retirement plan.
Please
note, individual financial circumstances will vary. The information on this
site does not constitute legal or tax advice. Donor stories and photographs
are for purposes of illustration only. As with all tax and estate planning,
please consult your attorney or estate specialist. All material is copyrighted
and is for viewing purposes only. Use of this site signifies your agreement
with the
terms of use. The content in this Planned Giving
section has been developed for CHRISTUS Spohn and is owned by
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