A Lasting Legacy
Legacy Giving, often called “planned giving,” may allow you to make a more meaningful contribution than you ever thought possible. You may be able to leave a deep and lasting legacy for generations of students to come while also qualifying for tax savings and other advantages that may actually increase the value of your estate for your heirs. Legacy Giving takes many forms, including bequests, living trusts and life insurance. In the process, you may be able to:
- Reduce or eliminate various types of taxation
- Improve your current cash flow
- Diversify your portfolio of assets relied upon for income
- Provide for your loved ones
- Secure a stream of payments during retirement
- Simplify your financial affairs
Wills
The most common kind of planned gift is through a will. If you are concerned that you will not have enough money to pass on to family members, you might consider structuring the bequest so that it is contingent on the estate being above a certain dollar figure. Also keep in mind that a will can be amended or revoked, so you are not making a binding commitment when you leave a bequest to a charity. If you have already completed a will but would like to change it by adding a bequest to a charity, you do not need to redo the entire will; rather, you can simply add a codicil to the will.
Beneficiary Designations
Many people are not aware that they can name a charity as the beneficiary of a life insurance policy or a retirement plan. New federal regulations make it easier than ever for a person to donate the proceeds of a retirement plan upon death. Check with your advisor for details.
Donating Appreciated Assets
The outright donation of appreciated assets such as stocks is preferable to the donation of cash because the donor avoids paying any capital gains tax on the asset. A donor can therefore make his charitable dollars go further, without increasing the level of assets that he is giving up.
Charitable Gift Annuities
Donors who are considering gifts of $5,000 and above might be interested in a Charitable Gift Annuity (CGA). Similar to a commercial annuity, a CGA provides the donor with a guaranteed, pre-determined income stream for the rest of the donor’s life (and her spouse’s life, where applicable), paid by the charity. The income stream is based on an interest rate that is often higher than one could receive from a certificate of deposit, U.S. treasury bond, or other investment. When the donor dies, any assets remaining from the donation belong to the charity. The BC Foundation works with the Jewish Federation of Seattle to coordinate Charitable Gift Annuities.
Charitable Remainder Trusts
For donors who would like to make a gift of $50,000 and above, the Charitable Remainder Trust (CRT) is a very popular tool. Similar to the CGA, the donor contributes certain property to a trust, in return for an income stream. The income stream can be for the rest of the donor’s life, or for a term of years. Upon the termination of the trust, the remainder interest in the contributed property goes to a designated charity. Many donors like CRTs because they can retain more control over the investment decisions. Perhaps the biggest advantage of the CRT is that it allows a donor to contribute a highly appreciated asset (such as stock) without paying any capital gains on that appreciation. Once placed into the CRT, the donor can then sell the asset and reinvest the proceeds in higher-yielding assets. The CRT can also be combined with other investment tools, such as a life insurance policy, to essentially replace the value of the asset that is donated to the charity. As you can see, the CRT is a very flexible vehicle for those who are willing to do some advance planning.
Discuss Legacy Giving With Us
We’re happy to discuss your plans and goals with you. We also suggest that you make an appointment with your accountant and tax advisor so that you understand all the benefits and details of legacy giving. Please contact us so that we can start a conversation. You may also be interested in learning about the many other ways to give to BC students.
Last Updated October 12, 2023