Frequently Asked Questions
What
Is A Bequest? Bequests are the actual gift
disbursals that result, upon one's passing, from a
specifically worded commitment in a will or trust
agreement. Bequests are unlike any other gifts we
receive because they represent individuals' final
statements about what is most important to them. Every
bequest is a powerful expression of loyalty, good
will, and faith in the future of us and our mission.
I'm
Not Wealthy, Can My Bequest Still Make A Difference?
You do not have to be wealthy to create a legacy.
A bequest of any size can be significant in helping
to preserve our mission and our reach.
I
have a will. Do I need anything else? In addition
to a will, most experts recommend that you have a
durable power of attorney, which allows another person
to act on your behalf should you become incapacitated.
Also, a living will is helpful to your heirs in that
it directs at which point you do not want your life
artificially supported.
Can
bequests be handled in a living trust? Certainly.
You may wish to consider a living trust as an estate
planning tool. More information
is available. Living trusts may be either revocable
or irrevocable and there are advantages and disadvantages
to consider in both.
What
happens to my personal possessions? Personal
possessions are best distributed through a tangible
personal property memo in which you list the personal
items you wish to give to specific people. Your will
must mention the existence of this memo and you should
keep a copy of it with your will.
If
a trust agreement is established as irrevocable, it
means that it can't be revoked (broken) except under
unusual circumstances. Why would anyone want an irrevocable
trust? There are always specific reasons for
making an irrevocable trust agreement. 
Perhaps
it involves a family business where some of the family
members are getting on in years and the family wants
to make certain that management continues to run smoothly
even if hindrances, such as senility, enter the picture.
Many times the reasons for an
irrevocable trust involve estate and/or income tax
avoidance. In order to be successful in such avoidance,
the trustor must not have any direct or indirect power
or control over the trust property or income. The
regulations on this subject, set out in the Internal
Revenue Code, must be carefully followed.
What
is the difference between a charitable remainder unitrust
and a charitable remainder annuity trust? The
major difference is in the valuation of the assets
of the trust, which establishes part of the calculation
for the determination of the amount of income received
by the income beneficiary(-ies). The annuity assets
are valued at the time the assets are placed in the
trust and are never revalued. Annual payments remain
the same, whether the assets appreciate (increase
in value) or decline (lose value).
The assets in the unitrust are
revalued annually. If the trust assets appreciate,
the payment to the income beneficiary(-ies) will increase.
If the trust assets depreciate, the payment will decrease.
What
happens to my assets in a trust for a charity if the
charity goes out of business before the expiration
of the trust? Your trustee is authorized to
name a substitute, if that is the sole charity.
Should
I name a charity as trustee of my charitable remainder
trust? This is often done if the organization
is qualified to so act under local law. The organization's
representatives can satisfy you in that regard. Often
they will serve without fee, which is an additional
incentive.
How
often should I update my will or trust? These
documents should be updated any time your financial
or your family circumstances change. As laws vary
from state to state, if you move you should have an
attorney licensed in and familiar with the new state's
laws review your will or trust agreement. It is always
wise, even if there are not any significant changes
in your circumstances, to periodically review these
important documents. A good rule of thumb is to review
your will every three years.
Can
I use my insurance to benefit charitable organizations?
Yes. This is an area overlooked by many. You can name
one or more charities as alternate or as primary beneficiary.
Furthermore, if you no longer need the policy proceeds
in your estate for use now, you can transfer ownership
of the policy to the charity or charities. If the
policy has cash loan value, the charity can draw this
out and use it. In this case, you not only receive
a charitable gift deduction, but any additional premiums
you pay are tax deductible for you now. And, on your
death, the charity receives the balance of the policy
proceeds and none of it is included in your estate
for tax purposes.
How
can I fund a charitable gift annuity and how is my
income calculated? The usual funding sources
for a charitable gift annuity are cash and marketable
securities. There can be tax benefits associated with
the gift of appreciated securities (the current market
value exceeds the cost or basis value). As a gift
annuity is considered partially a gift and partially
an annuity, part of the gift avoids capital gains
tax entirely. Real estate and other marketable assets
may also be used. Generally, the charity will convert
the assets to cash to fund the annuity.
The income provided you by the
annuity is determined by your age and the age of any
additional beneficiary and is calculated using tables
established and filed with regulatory agencies under
which the charity operates its annuity program.
Can
I set up a charitable gift annuity and delay the start
of the income until I will more likely need it, such
as at my retirement, when my income is lower? Yes,
there is flexibility in the establishing of charitable
gift annuities that make them a popular and effective
retirement planning vehicle. Using a deferred gift
annuity, the annuity earnings accumulate on a tax-deferred
basis. Thus
the deferred payment annuity accomplishes several
things. First, the donor receives a tax deduction
in the year the annuity is established, which is usually
when the donor is in a higher tax bracket. Secondly,
the gift to the charity becomes larger as the deferred
earnings increase the annuity's principal. Finally,
since the deferred payment annuity grows in size while
income is deferred, the ultimate income will be more
per year.
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
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Revised: June 9, 2008 18:49.
