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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. If a trust agreement is established
as irrevocable, it means that it can't be revoked (broken)
except under unusual circumstances.
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.
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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.
For a complimentary
consultation, or to answer your questions on how you might
make a donation, please contact:
Ted Meyers, ACFRE
Washington, DC 20009
(301) 421-5800
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 Gift Planning section has been developed for Central
Union Mission by IDS
and Future Focus. Please report any problems to section
webmaster. Revised: April 30, 2008 20:04 .
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