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Planned & Life Income Gifts
“Planned giving” is a term that sometimes frightens people, but the concept is really quite simple. A planned gift is a charitable gift that requires some planning before it is made, and which the YWCA receives at a future date. Planned gifts are popular because they can provide valuable tax benefits and some provide income for life.
Some Benefits of Planned Giving:
- Allow you to make a significant contribution to the YWCA
- Provide you with income tax benefits
- Enable you to avoid capital gains tax
- Empower you to pass assets to family at a reduced tax cost
- Increase your current income, or someone else’s that you choose
The most common type of planned gift is a bequest, or a gift made through a will. Usually, a donor will set aside a certain dollar amount or percentage of their estate, or certain asset for the benefit of the YWCA. The donor's estate will receive a charitable estate tax deduction upon his or her death when the gift is made to charity.
There are many types of planned gifts, and the best one for you depends on your personal, charitable and financial goals.
Common Types of Planned Gifts:
- Bequests and Remembering the YWCA in Your Will
- Charitable Lead Trust
- Charitable Remainder Trusts
- Gift Annuities
- Life Insurance
- Real Estate
- Retirement Plans
Bequests
Bequests (or gifts through a donor's will) are the most common type of planned charitable gift received by the YWCA. Typically, a donor will set aside a certain dollar amount or percentage of the estate, or a specific asset to benefit the YWCA. The donor's estate will receive a charitable tax deduction upon his or her death when the gift is made to charity. Bequests help the YWCA repair and maintain its building, launch and support important community programs, and prepare the organization for future growth.
Donors may specify that bequests be used for general purposes or designated for a specific use. An attorney can help you word your bequest so its intended purpose is clear. We have included here (below) some sample language that may be used by your attorney when preparing a bequest to the YWCA Missoula.
Unrestricted Bequests:
An unrestricted bequest may be used by the YWCA to provide support for our greatest area of need, or may be held for future use as deemed by the Board of Directors.
I leave ($______ or _____% of my estate, or a complete description of specific property or asset ) to the YWCA Missoula, a not-for-profit organization in Missoula, Montana or its successor organization.
Restricted Bequests:
This type of bequest provides the YWCA with funds to be used for a specific purpose, as described by the donor in his or her will.
I leave ($______ or _____% of my estate) to the YWCA Missoula, a not-for-profit organization in Missoula, Montana, or its successor organization, to be used for (specify use). If these funds cannot be used as specified, I grant authority to the Board of Directors to use them for a purpose that most closely represents my wishes as stated herein.
Residual Bequests:
You may name the YWCA as the beneficiary of all or part of the residue of your estate.
I leave (the balance and remainder of my estate, both real and personal property, (or) _____% of the balance and remainder of my estate) to the YWCA Missoula, a not-for-profit organization in Missoula, Montana or its successor organization, to be (used for _____ or used as determined by the Board of Directors. If these funds cannot be used as specified, I grant authority to the Board of Directors to use them for a purpose that most closely represents my wishes as stated herein.)
Contingent Bequests:
You may name the YWCA as the contingent beneficiary of your bequest in the event that the primary beneficiary(ies) should predecease you. If any or all of the above-named beneficiaries should predecease me, then I give to the YWCA Missoula, a not-for-profit organization in Missoula, Montana, or its successor organization all the property, real or personal, which said beneficiary or beneficiaries would have received if they had survived me.
Charitable Lead Trust
This type of trust makes payments, either a fixed amount (annuity trust) or a percentage of trust principal (unitrust), to the YWCA during its term. At the end of the trust term, the principal can either go back to the donor (a grantor lead trust) or to heirs named by the donor (a non-grantor lead trust). The donor may claim a charitable income tax deduction for funding a grantor lead trust or a charitable gift tax deduction for funding a non-grantor lead trust. Since lead trusts are typically used to pass assets to heirs, non-grantor lead trusts are much more common than grantor lead trusts.
Charitable Remainder Trust
This type of trust makes payments, either a fixed amount (annuity trust) or a percentage of trust principal (unitrust), to the donor or someone else they choose to receive the income. The donor may claim a charitable income tax deduction and may not have to pay any capital gains tax if the gift is an appreciated property. At the end of the trust term, the YWCA will receive whatever amount is left in the trust. Charitable Remainder Unitrusts provide some flexibility in the distribution of income, and may be helpful in retirement planning.
Gift Annuities
Many donors wish to make generous donations to the YWCA but do not have the income or assets to do so. You make a significant contribution by naming the YWCA as the owner or beneficiary of an existing life insurance policy, or create a new one and receive a tax deduction for the premiums.
Life Insurance
Many donors wish to make generous donations to the YWCA but do not have the income or assets to do so. You make a significant contribution by naming the YWCA as the owner or beneficiary of an existing life insurance policy, or create a new one and receive a tax deduction for the premiums.
Real Estate
A donor may give real estate in several different ways. Following are several common ways to make a gift of real estate to the YWCA:
- Bargain Sale: A bargain sale allows a donor to sell a piece of property to the YWCA for an amount less than the property is worth. The donor may take a charitable tax deduction for the gift part of the bargain sale.
- Charitable Remainder Trust: A donor can give real estate through a Charitable Remainder Trust, receive a stream of income, and once the property is sold, obtain a charitable income tax deduction. A donor can avoid paying capital gains taxes on a gift of appreciated property made to a charitable remainder trust.
- Outright Gift: Donors who own a second home or other property may make an outright gift of real estate and immediately receive a charitable income tax deduction.
- Personal Residence or Farm (Retained Life Estate): A donor may give his or her personal residence or farm to the YWCA and retain the right to live there for the remainder of his or her life. The donor receives an income tax deduction for the gift. Upon the donor's passing, the YWCA can use or sell the property.
Retirement Funds
The best gift at your death may be from your retirement plan.
Many individuals today have qualified retirement plans such as an IRA, 401(k), 403 (b), Keogh or Profit Sharing plan. These assets have been growing tax-free for years. Once you begin to receive payments from these qualified plans, the distributions are taxed. The plans are also included in your taxable estate. A retirement plan may be an excellent source of funds for making a gift to the YWCA Missoula. One way to make a gift of your retirement plan is to name the YWCA as the beneficiary (or contingent beneficiary after the death of a spouse) of the asset through a bequest. When a charity such as the YWCA is designated as the beneficiary (or contingent beneficiary after the death of a spouse), the assets given to charity are exempt from taxes. The YWCA may be named as the beneficiary for the entire amount or for a percentage of the asset. The YWCA must be stated as a beneficiary on the retirement plan, as well as in your will.
Another way to make a gift of your retirement plan is to create a Charitable Remainder Trust through your will. Your IRA assets will be transferred to a Charitable Remainder Trust. There is no tax due because the Charitable Remainder Trust is a tax-exempt entity. The trust will provide life income to the beneficiary (your spouse or child, for example) and then the YWCA will receive the asset after the death of the last beneficiary. The beneficiary will pay income tax on the distributions from the trust. However, there are tax benefits to paying distributions over time rather than in a lump sum where there can be substantial tax consequences.
For more information, please contact our Executive Director at 406.543.6691, ext. 101, or cweese@ywcaofmissoula.org.