Frequently Asked Questions
What Is A Bequest?
Bequests are the actual gift disbursal's 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
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
Can bequests be handled in a living
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.
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
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?
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 Internal Revenue Code and the accompanying Regulations should be carefully followed when considering irrevocable trusts.
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.
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.
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 can I fund
a charitable remainder trust and how is my income calculated?
The usual funding sources for a charitable remainder trust
are cash and marketable securities. Real estate and other marketable
assets may also be used, though not all charities accept real property
such as real estate. Generally, the charity will convert the assets
to cash to fund the trust. Each charitable organization will establish
what assets it will accept, as there are often time and conversion
expenses to assets other than cash and marketable securities.
The income from the trust is based on an annual percentage of the
value of the trust. The percentage must be at least 5% (but may
be more) of the fair market value of the trust assets. Note the
valuation difference in the next question between an annuity trust
and a unitrust.
and state income tax deductions are available in the tax year the
trust is created. The deductions are based on the age of the donor
and the amount (value) placed in the trust. Please check with your
tax advisor or development officer concerning the calculation of
If the trust is funded with cash, an amount up to 50% of the donor's
adjusted gross income in the tax year the trust was established
is tax deductible. If appreciated assets such as securities or real
estate are used, the percentage of gross income that is deductible
is up to 30%. If the value of the trust exceeds the percentage limits
of adjustable gross income, the excess may be carried over after
the tax year the trust was established and used as deductions in
subsequent years (not more than five additional years).
What is the difference
between a charitable remainder unitrust and a charitable remainder
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. The trust assets are never revalued. Annual payments
remain the same, whether the assets appreciate (increase in value)
or depreciate (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.
Return to the Legacy Giving home page or to the Quick Guide to Legacy Gifts.
For more information or a confidential discussion of your charitable options, please email or call the Development Director, Susan Lefkowich, at 510 644-2020 ext. 114.
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.
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