If you wish to make a deferred gift, maintain access to your assets and avoid probate, a living trust may be the right choice for you. The donor places assets into a trust and retains control of the trust during his/her lifetime. The successor trustee, upon death of the donor, makes distributions as directed by the donor’s trust.
Bequest in a will
A bequest is a gift included in a will that leaves a lasting legacy after the person dies. The estate receives a deduction for the bequest amount, thereby reducing the value of the estate and possibly reducing the estate tax. Bequests leave a lasting legacy to Grace after providing for family and friends, and take advantage of federal estate and gift tax deductions.
Life Insurance Gift
There are several ways to give a gift through life insurance. Some of the most common include designating Grace as beneficiary and giving a paid-up policy; a policy on which premiums are still being paid; or a new policy to benefit the church. Life insurance is used sometimes to replace the value of gifts given through charitable trusts.
Retirement plan gift
A retirement asset such as an IRA –– or 401(k), 403(b), pension or other tax deferred plan –– makes an excellent bequest to Grace. If the IRA were given to your family, much of the value may be lost through estate and income taxes. By designating Grace as the beneficiary of all or part of your IRA, the full value of the gift is transferred tax-free at your death and your estate receives an estate tax charitable deduction.
Real Estate gift
Two common ways people give real estate are as an outright gift (tax benefits are similar to appreciated securities) and reserving a life estate. By designating a life estate, the donor gives a personal residence, farm or other property to Grace while retaining the right to use and enjoy it during his or her lifetime. As the donor, you receive an immediate income tax deduction –– without the expenditure of cash or reduction in personal income. You also have the satisfaction of knowing that the church will receive the property when you no longer need it.
Charitable remainder annuity trust
In giving through a charitable remainder annuity trust, the benefactor permanently transfers property to a trust. He/She then sets the payments to be distributed (within IRS guidelines), to whom and for how long, and designates Grace to receive all or a portion of the trust remainder after the specified payments are made. Tax benefits may occur with such a gift.
Charitable remainder unitrust
A charitable remainder unitrust makes payments to you that reflect trust investments. There is the potential that your payments could increase over time with growth in the trust. The standard unitrust pays out a percentage of the trust assets each year. Another payout option used commonly for real estate permits the trust to sell the property tax-free and then begin making payments to you after the property has been sold. At the death of the beneficiary(ies) or at the end of the term of the trust, Grace receives the remaining assets.
Charitable gift annuity
This type of deferred gift can be set up by making a transfer of cash or marketable securities, and then Grace will pay you and/or another beneficiary a guaranteed annuity for life. The rate depends on the age(s) of the beneficiary(ies). Depending on your specific circumstances, three specific tax benefits may occur with such a gift. You may receive an immediate charitable tax deduction. A portion of each payment received may be tax free. Capital gains liability on appreciated assets may be reduced or deferred.
Charitable lead trust
A variation of the charitable trust, the lead trust provides immediate payments to Grace while enabling you to eventually transfer the trust assets to yourself or to your heirs. This gift planning tool may result in substantial estate tax savings by allowing the temporary transfer of property with a high appreciation potential.