Understanding Planned Gifts and their Benefits
Planned giving is a way for you to integrate your personal, financial, and estate planning goals by making lifetime or testamentary charitable gifts. Below are some common types of planned gifts. You can also learn the advantages of several gift vehicles and determine which method of giving meets your personal and financial goals by viewing the gift table below.
One of the easiest planned gifts is to include United Way in your will or revocable living trust. You can make bequests for specific dollar amounts, a percentage of an estate, or for a remainder amount after other bequests are fulfilled. You can make this provision as part of a new will or add it to your existing plan as a codicil to your will or an amendment to your trust. Naming United Way as a beneficiary of your will can, when properly planned, reduce the rate at which your estate is taxed.
Charitable Remainder Trust
A charitable remainder trust is a flexible way to make a charitable gift and receive income! A charitable remainder trust may be funded with cash or appreciated assets such as securities, real estate or other property. You and/or other beneficiaries can receive income for life or for a set number of years. You receive an immediate charitable income tax deduction, immediate income and may receive relief from tax on capital gain. When the trust expires, the assets remaining in trust go to support the mission of United Way of Sheboygan County.
Charitable Lead Trust
A charitable lead trust enables you to preserve a large portion of your estate and pass assets tax free to yourself or to your heirs. The trust holds an income producing asset for a fixed term, or your lifetime, during which United Way of Sheboygan County receives income. At the conclusion of the trust term, the asset is returned to you or your beneficiary - tax free.
Life insurance enables you to make a substantial gift for a relatively modest annual outlay. If you purchase a life insurance policy and name United Way of Sheboygan County as the beneficiary and owner, you pay the annual premium, which can be deducted from your income tax as a charitable gift to United Way, who in turn pays the insurance company. On your death, United Way of Sheboygan County receives the life insurance benefit free of any taxes. If you have an existing policy that you no longer need, consider giving it to United Way of Sheboygan County. You may receive an income tax deduction in the year of the gift, as well as for future premiums. One other method is to simply name United Way of Sheboygan County as beneficiary on a policy you still own, and your estate may receive an estate tax deduction.
Tax-qualified retirement plans and Individual Retirement Accounts (IRAs) represent wonderful charitable opportunities. Designating a charity as the beneficiary of a retirement account causes the charitable gift to be deductible for estate tax purposes. Also, heirs may prefer to receive assets that are less highly taxed, leaving the retirement assets instead to charity. A tax-exempt charity will not have to pay the income taxes otherwise due and will therefore enjoy the full value of a gift.
What's right for you?
Knowing the right option and best asset to donate depends on your unique needs, goals, family situation, charitable interests, and assets.You can make your gift with cash, appreciated securities, retirement plans and IRAs. In many cases, your gift can return financial benefits to you. Our development specialists can help you explore your options and then work with you and your own financial advisers to design a gift plan that meets your needs. Call 920.458.3425.