Planned Giving

Charitable contributions can be the simplest estate-planning tool. A charitable contribution is simply a gift of property to a charitable organization.

Charitable contributions can be made in a variety of manners. An individual donor may make an outright gift to charity without a retained interest of any kind. On the other hand, a donor may make a contribution to a charity of cash or property and receive an immediate income tax deduction while retaining an income interest off such property for a period of years. In addition, a donor may choose to make a contribution to a charity of property or cash and give the charity an income interest for a period of years, while retaining a remainder for non-charitable purposes.

Like other investments, the key to making the most of charitable gifts requires careful consideration of what you want to accomplish and then careful planning to achieve that goal. Considering what to give, when to give, and how to give will help you make the critical decision of how much to give. Exploring the options will also help make you aware of various tax incentives that can stretch your charitable dollars.

Because the rules regarding the tax implications of planned giving may change, we urge you to consult one of the many professionals who stay abreast of changing laws and their effect on the taxation of specific investments. It is good to partner with a financial advisor with whom you are comfortable to annually assess the status of your estate.

The St. Joseph School Endowment appreciates each and every gift. Thank you for your consideration. Your gifts allow us to accomplish our mission of supporting St. Joseph School. Please give Jacqueline Kordsmeier, Executive Director, a call at 501-329-1818 if we can be of assistance to you.

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Ways to Give

Bequests In A Will

In addition to outright gifts, charitable contributions can be made as a bequest in a will. A donor should keep in mind the only way to make a charitable contribution at death is to provide for such contribution in the last will. By making a charitable contribution at death, as provided in the donor’s will, the donor has the advantage of having full and unlimited access to the property up until the time of the donor’s death.

Life Insurance in Charitable Planning

Using life insurance to fund a charitable gift is a very attractive method of giving. There are advantages for both the charity receiving the gift, as well as the donor.

  • The death benefit proceeds are promptly paid to the charity, the policy’s beneficiary. There is no need to wait for a will to settle or the estate to clear probate.
  • Life insurance allows people of modest means to give a substantial gift to their favorite organization.
  • Pennies now in premium create future dollars in death benefit to the charity.

There are various methods in which life insurance can be utilized to make a charitable gift, consult your personal estate planner for more details.

Use of Trusts in Charitable Giving

Charitable contributions can be tailored to more specifically fit the individual’s cash flow needs through the use of charitable remainder trusts or charitable lead trusts. These planning tools allow donors to split property rights by giving the charitable organization either just the income from the property placed in trust for life of a term of years, or keep the income interest and donating the remainder interest to the charity.

Charitable Remainder Annuity Trusts

A charitable annuity trust (CRAT) pays specified amounts, at least annually, to the donor or other non-charitable beneficiaries. The payment may be for the life of the beneficiary or for a term not to exceed 20 years. At the end of this period, the balance of the trust must be held for the charitable organization or distributed to such organization. The payout to the non-charitable beneficiary is fixed at the inception of the trust. Consequently, valuating occurs only once and the donor cannot make any additional payments to the trust after the initial contribution.

Charitable Remainder Unitrust

Like a charitable remainder trust, the charitable remainder unitrust (CRUT) pays specified amounts, at least annually, to the donor or other non-charitable beneficiaries.

The payments may be for the life of the non-charitable beneficiary or for a term not to exceed 20 years. At the end of this period, the balance of the trust must be held for the charitable organization or distributed to such organization. The primary difference with the unitrust is the payment to the non-charitable beneficiary must be valued on an annual basis. Specifically, each year the non-charitable beneficiary’s income interest will vary with the value of the trust assets as valued on an annual basis. Unlike the annuity trust, subsequent payments may be made to a charitable remainder unitrust after the initial property is contributed.

Charitable Lead Trusts

A charitable lead trust is essentially the opposite of a charitable remainder trust. Here, the donor gives the charity an income interest for a particular term. The income must be either in the form of a guaranteed annuity or a fixed percentage of the annual net fair market value of the trust’s assets. At the end of the period, the assets revert to the donor or the other non-charitable beneficiary. The amount of the charitable deduction is the present value of the amount of the income interest given discounted back to the date the trust was created. This allows the donor to, in effect, front end charitable deductions in a year in which the donor has a particularly valuable use for more deductions. However, in future years, the donor will be treated as the owner of the trust’s assets for income tax purposes. This means the donor will be taxable on the income of the trust, even though most or all of the income is being paid to the charitable organization.

Charitable Gift Annuity

A charitable gift annuity is an extraordinary way to make a gift, increase your income and receive tax benefits. A charitable gift annuity is a contract in which you exchange a gift of cash or securities for a fixed income each year for the rest of your life (or for the lives of two people). Gift annuity rates are determined by the age of the person or persons who receive the income payments. The older you are, the higher the rate of return. Payments can be made – quarterly, semi-annually, or annually. You may choose one-life or two-life annuities and cash or securities to fund your gift. Cash gifts allow maximum tax-free income; gifts of securities allow you to minimize capital gains taxes.