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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.
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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 KCSC by Future
Focus. Please report any problems to section
webmaster. Revised: April 1, 2007 21:51
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