Planned giving is the process of making a significant charitable gift during your lifetime or at death as part of your financial or estate plan. Your financial, tax or estate planner, assisted by the staff at the Community Foundation, can help you select which gift best suits your situation.
Your planned gift options may include:
Charitable bequests generate much of the philanthropy at work today to make our region an even better place to live. By designating the Foundation as a beneficiary of your will or living trust you can give to an existing fund or create a permanent fund that supports your favorite charities or causes.
You may also choose to create a shell agreement for your bequest at the Community Foundation, ensuring we know exactly how you would like your estate gift to be used.
Talk with your estate planner about including the Community Foundation in your will or living trust. Use this sample Codicil to Last Will to make your bequest. You can name a specific dollar amount, a percentage of your estate or the remainder of your estate.
By giving stock through your Community Foundation, you can avoid capital gains taxes that would be due as a result of its sale. You can give to an existing fund or establish a charitable fund that benefits the causes and organizations you care about most. With gifts of appreciated stock, your stock market earnings translate into community impact, so you get a more rewarding return on your portfolio.
IRA and Retirement Plan Assets
Did you know that 60%-65% of your retirement assets may be taxed if you leave them to your heirs at your death? Another option is to leave your heirs assets that receive a step up in basis (such as real estate and stock) and give the retirement assets to the Community Foundation. As a charity, we are not taxed upon receiving an IRA or other retirement plan asset.
Your retirement assets may be transferred to the Community Foundation by completing a beneficiary designation form provided by your plan custodian. If you designate the Community Foundation as beneficiary, we will benefit from the full value of your gift because your IRA assets will not be taxed at your death. Your estate will benefit from an estate tax charitable deduction for the gift.
Life insurance provides a simple way for you to give a significant gift to charity and establish your legacy, with tax benefits that you can enjoy during your lifetime.
You can make a gift when life insurance is no longer needed for personal financial wealth replacement by either giving a paid-up policy or continuing to pay premiums. You may receive a number of tax benefits, including reduced estate and income taxes. And, if you choose to continue paying premiums through your Community Foundation, you will be entitled to a charitable contributions deduction of up to 50 percent of your adjusted gross income.
You can also designate the Community Foundation as the beneficiary of your life insurance policy. You will continue to own and can make use of the policy during your lifetime. The policy will be included in your taxable estate when you pass away, but your estate will benefit from an estate tax charitable deduction for the value of the gift to us.
Charitable Gifts of Annuity
A charitable gift annuity is an easy way for you to make a charitable gift during your lifetime and still receive income. You and one other person may receive immediate or deferred income through the charitable gift annuity.
To start an annuity you must:
- Be at least 60 years of age
- Make an irrevocable gift of at least $25,000
A charitable gift annuity lets you:
- Support your favorite charities and causes through the remainder of your annuity
- Receive an immediate charitable income tax deduction
- Lock in fixed, partially tax-free payments for life
Charitable Lead Trust
A Charitable Lead Trust (CLT) distributes income to your charitable fund for a period of years or during your lifetime. Then, the assets return to you or surviving family members. A CLT can allow you to make a significant gift to charity and transfer assets to family members while saving taxes.
It is even possible to set up a lead trust that will allow you to transfer assets to your family with zero transfer taxes. The IRS assumes that a lead trust is only earning at the current low federal rate. If the actual investments of the trust produce a higher return than the payments made to the Community Foundation over the term of the trust, then the full value of the trust may be transferred to your family with zero gift tax.
Charitable Remainder Trust
Charitable Remainder Trusts (CRTs) provide for the eventual transfer of property to charity after paying income to one or more non-charitable beneficiaries.
- A Charitable Remainder Annuity Trust (CRAT) makes fixed income payments to the beneficiary.
- A Charitable Remainder Unitrust (CRUT) provides a variable payout equal to a percentage of the trust’s market value as determined at the end of each year.
- Charitable Remainder Trusts are often appealing to donors with appreciated assets producing little or no income, such as real estate or securities. This is because the assets can be sold without capital gains tax and invested to provide a high income stream.
The benefits of a charitable remainder trust include:
- A charitable income tax deduction for the present value of the remainder gift to charity;
- No capital gains due on the sale of appreciated assets within the trust;
- The opportunity for increased income;
- Reduced estate tax liability;
- Asset diversification and professional trust management;
- The opportunity to make a sizable gift to one or more charities.
You may establish a Charitable Remainder Trust in any amount with a trustee of your choosing. The minimum contribution for the Community Foundation of the Northern Shenandoah Valley to serve as trustee is $200,000. When we serve as trustee, the CFNSV must be named the sole charitable beneficiary at the termination of the trust.
Making a charitable gift of real estate through your community foundation can help you turn your property gains into community good. Gifts of real estate range from personal residences and vacation homes to rental properties, farmland, and commercially developed land – the value of which may exceed that of any other asset you own. With the help of your Community Foundation, you can use real estate to make a bigger charitable difference than you thought possible, avoid estate taxes, and minimize or eliminate burden placed on your heirs.
A gift of real estate must be professionally appraised to establish its fair market value. It is also assessed for compliance with our acceptance policies to make sure its resale will provide the appropriate value to community.