Testamentary Trusts

Phil and Alicia had often put some of their savings into the stock market. One of their first charitable gifts had been a gift of appreciated stock. They were also employed by companies that had 401k plans. They kept investing and the value of their plans kept growing.

Phil: "It really has been a wonderful ride. Our first experience was giving several hundred shares of a stock that had more than doubled in value. We needed some help that year with our tax situation and that gift was a great idea. Also, our tax-sheltered retirement plans kept growing and just recently we rolled them into our IRA. It's grown beyond our wildest dreams."

Alicia: "But taxes will eat up so much of it. Not that we need it all, but we were hoping to get more value out of it."

Phil: "We found a way to do everything we wanted - have access to the principal if we need it and, when we're gone, provide income for our kids. And, this will provide a nice gift for those who need it. Our attorney told us about a testamentary charitable remainder trust funded with the assets that remain in our IRA after we're gone."

Alicia: "Tax benefits, protecting our family, and knowing we're making a difference in other peoples' lives - it feels good!"

A testamentary trust only becomes effective and irrevocable at the time of your death. For Phil and Alicia, a beneficiary designation in their IRA will transfer the remaining assets at their death (second to die) into the testamentary charitable remainder trust.

The results are that the assets remaining in the IRA at their deaths will not incur any income tax liability going into the trust and a nice future gift for the charitable organization is established. In addition, by funding the charitable remainder trust, Phil and Alicia can freeze the amount of ordinary income in their plan (allowing growth that occurs after their deaths to be taxed at more favorable capital gains rates), their heirs may have greater control over the timing and size of withdrawals and some estate taxes may be saved.

As we said earlier, there are as many ways to support The Ruth Lilly Health Education Center as there are needs for your support. Please contact us should you have questions or if you would like to discuss your personal circumstances to see how you can enrich your heart as many others already have. The next page has some final thoughts regarding gift giving and the contact page has names and phone numbers for your convenience.