Answers to Your Prospects' Questions

I'll share a little of my personal experience (this answer is from Scott): 

This picture is from a newsletter at a former position.  It accompanied the story of our newly formed Legacy Society while it was still in the very beginning phases.  But the real reason I used it was because that adorable little boy is my son. 

We went through a process of soliciting responses from likely members about what we should call our society.  "The St. Mary Legacy Society" won by a mile.  I thought it was a boring name, but I was wrong.  Many professionals want a name that will stand out from the other societies at our friend's charities, but most cute names leave people wondering what you're talking about.  

We went to the board and to the most likely legacy donors to get "charter members" of the Legacy Society and we had a specific time deadline.  This created a capital-campaign-like sense of urgency.  We put together a four-member campaign team (patterned after a capital campaign committee) to call and meet with each board member individually.  The board chair was on this committee and his goal was 100% participation by the board.  Although we didn't reach that in our short charter time frame, it was an admirable goal and provided a lot of energy.  

By the end of our ten-month charter period, we had enrolled 41 members with $8,000,000 in bequest commitments, including one commitment for $3,000,000.  This at a hospital which had received a total of $600,000 from 18 individuals during its first 33 years.  

So my advice is to go for it.  But don't blow the one opportunity to start well by starting slowly.  Get input from your best prospects, buy-in from your boards, have realistic goals and challenging deadlines, and put together a working committee to solicit bequest commitments. 

We take the mean of the high and low prices for the security on the day it came into our possession.  If the high price was $80 per share and the low price was $70 on that day, your gift will be valued at $75 per share.

Yes, and we can coordinate the transfer with the administrators of your fund.

You can, but your deduction will be limited to the current, depressed value of the stock.  It's wiser planning to sell the stock, take a tax loss, and then get a second tax benefit by giving us the cash proceeds.

Here are some questions we will need to answer before we can accept your gift offer:

• Can we use the property to help us carry out our mission?
• If not, is the property saleable within a reasonable period of time?
• If we keep the property, will the costs of adapting it to our use and maintaining it over the long-term be reasonable?
• Are there any mortgages or liens on the property?
• Does the property have any environmental issues that could be a liability for us?

In many cases, yes!  Real estate is most often placed in a charitable remainder unitrust, which will pay income to you, your spouse, and/or other beneficiaries, and provide you with income and capital gains tax benefits.

(For more information on unitrusts, go to gift plan details and sort for unitrusts.)

Donors do face a hurdle they don't have to deal when giving securities or real estate.  To be deductible at fair market value, items of personal property must be related to the tax-exempt functions of our organization. In other words, we have to be able to use them.  Property gifts that are unrelated to our mission may only be deducted at the donor's cost basis.

In some cases, yes.  A transfer for that purpose would generally be considered an unrelated use, reducing your charitable deduction.  Be sure to consult with your advisors before making a gift decision.

The circumstances of our lives change constantly. If you already have a will, here are some everyday events that should nudge you to change it: marriage or re-marriage; divorce or the death of a spouse; a new baby, step children or grandchildren; the death of named heirs; the sale of your house, a family business, or any asset that made up a large part of your estate; adjustments in distributions to your heirs to account for lifetime gifts to some of them, or the anticipated need of others for ongoing care after your death; you wish to add or change a charitable beneficiary.

An executor or personal representative is the person who will manage and distribute your estate in accordance with your will. An executor's work will be monitored by the Probate Court. An executor does not need to be an expert in finances, probate law or taxes (they should hire experts in those fields to assist them). A good executor will be honest, organized and possess good common sense. Your executor should be willing and able to serve in this capacity, too. Most people will name an adult child, another close heir, or a financial advisor. If possible, name someone who lives nearby and who is familiar with your financial matters. That will make it easier to do chores like collecting mail, selling assets and finding important records and papers.

It's an amendment that makes one or more particular changes to a will, but otherwise leaves the document intact.  A codicil thus saves the cost and complication of re-writing an entire will.

Download a sample codicil.

• If the policy is paid-up (i.e., no more premiums are due), or you have made some premium payments but not all of them, the charitable deduction will be the lesser of the policy's fair market value (which is approximately its "cash surrender value") or the total of your net premium payments.
• To qualify for a deduction, you must make us the irrevocable owners as well as beneficiary of the policy. If you name us beneficiary but retain ownership of the policy, the IRS holds that you have not made a "completed" gift and therefore cannot claim a deduction.
• Similarly, there is no deduction for taking out a new life insurance policy, even if you make us irrevocable owners. You can claim a deduction for gifts you make to us that offset our ongoing premium payments on the policy (since we're the owner, we pay the premiums).

We make that decision on a gift-by-gift basis.  We look at actuarial factors, the size of the potential death benefit, and whether you want us to use your gift for long-term endowment or an immediate project.

Simply contact your IRA or retirement plan administrator and request a copy of the Change of Beneficiary Form.  Use the form to designate our organization to receive all or a portion or the remainder of your plan's assets.

Both have distinct advantages. A gift of cash will produce a larger tax-free portion of the annuity. A gift of stock can increase your effective rate of return because of the reduced capital gains cost. Both assets produce the same annuity rate and charitable income tax deduction.

A charitable gift annuity can only be set up for one or two lives. This is typically a husband and wife, but it could be two siblings, two friends, etc. Generally, a child's longer life expectancy lowers the annuity's rate of return to an unattractive level.

Yes, you can.  You can set a series of alternate start dates in your deferred gift annuity contract, then choose the one that best fits your evolving work, health and family circumstances.  Each start date will offer progressively higher payment rates.  Your charitable deduction will be based on the earliest start date that your annuity contract provides for.

In most cases, yes. Remember that an asset like that may not be producing income, and so the unitrust's beneficiaries may receive little or nothing until a sale and re-investment into income-producing assets.

It depends on the age(s) of any children you name as income beneficiaries. Our interest in the unitrust must be at least 10% of the value of the assets you donate to it. This interest is calculated using the life expectancies of the income beneficiaries. The younger your children, the longer their life expectancy and the smaller the value of the charitable remainder. Even younger adult children may disqualify the trust.

• You will receive an immediate income tax deduction for your gift; pay no capital gains tax on the transfer of appreciated assets to the trust; remove a large asset from your taxable estate.
• You and/or other beneficiaries receive stable, predictable income for life or a term of years.

It depends on the age(s) of any children you name as income beneficiaries. Our interest in the trust must be at least 10% of the value of the assets you donate to it. This interest is calculated using the life expectancies of the income beneficiaries. Thus, the younger your children, the longer their life expectancy and the smaller the value of the charitable remainder. Even younger adult children may disqualify the trust.

• The difference between market value and the purchase price is your gift, for which you'll receive a charitable deduction.
• You pay no capital gains tax on the donated portion of the property.
• With one transaction, you can take cash out of an asset and make a significant gift to us.
• You can apply a lump-sum payment from us toward the price of another property or the entry fee for a retirement facility.
• You can use installment payments from us as supplemental retirement income.

• Even though you haven't moved out, you'll receive an immediate charitable deduction based on the fair market value of the property (minus the present value of your future tenancy there).
• You pay no rent for your ongoing use of the property.
• You can make a significant gift with what may be the most valuable asset you own, without disturbing your living arrangements or your cash flow.
• You can terminate your life estate at any time and take an additional income tax deduction.