There are several ways to memorialize those dear to you. Gifts may be made to the Community Foundation in memory of deceased persons, to honor living persons, or to commemorate anniversaries or other special events.
Another option is to establish a fund in someone's name and/or designate the fund to benefit a cause important to the individual who is being celebrated.
Scholarship funds also serve as a unique option for memorial gifts.
Including a charitable bequest as a part of your will is a great way for you to provide long-term support for the charitable organizations you are passionate about while also effectively managing your estate.
Making a charitable bequest is easy. If you want to leave a bequest to a charity, you must specifically do so in a will or trust. Your will or other personal trusts are simply legal records of your wishes regarding how your assets should be handled at your death.
Instructions regarding the dispensation of your assets are called bequests. Because there are so many ways to arrange a bequest, the future security of your surviving spouse or others can be assured.
Bequests are not subject to estate or inheritance taxes, therefore reducing the tax burden of an estate. Charitable bequests also provide flexibility because they may be changed at any time. Your estate will be entitled to a charitable deduction for the full, fair market value of your gift.
The Rockland Community Foundation can assist you and your attorney with standard legal language necessary to establish your named fund through a charitable bequest.
General Bequest
With this type of bequest, you simply leave a specified dollar amount (e.g., $25,000) to your named fund at the Rockland Community Foundation.
Specific Bequest
A bequest of this type involves the designation of specific property (e.g., a home, property or shares of stock) that you want your fund at the Community Foundation to receive.
Residuary Bequest
Through a residuary bequest, your named fund at the Rockland Community Foundation will receive the remainder of your estate after all liabilities and other bequests have been paid. It may augment a general or specific bequest to the Community Foundation if the size of the estate allows, or may ensure that other beneficiaries receive their bequests prior to distribution to the Rockland Community Foundation.
Percentage Bequest
You may direct that your named fund at the Rockland Community Foundation receive a percentage of your estate or residuary estate. In this case, if the size of your estate changes, the bequest will change proportionately.
Contingent Bequest
It is important to anticipate a situation in which a beneficiary might die before you or choose to disclaim the property. To prepare for such an occurrence, consider naming the Rockland Community Foundation the contingent beneficiary.
A charitable remainder trust is an efficient estate planning vehicle. It is a special type of trust that provides for and maintains two sets of beneficiaries. The first set are the income beneficiaries (you and, if married, a spouse). Income beneficiaries receive a set percentage of income for your lifetime or for a fixed term not to exceed 20 years from the trust. The second set of beneficiaries are the charities you name. They receive the principal of the trust after the income beneficiaries pass away.
There are two basic types of charitable remainder trusts; one is an annuity, one is a unitrust. There are subtle differences between the two. The Rockland Community Foundation can administer charitable remainder unitrusts and annuity trusts, both of which pay lifetime income to you or other named beneficiaries.
Establishing either trust is simple:
- Cash or property is transferred to the trust.
- The income beneficiaries receive annually an amount equal to a fixed percentage of the trust’s fair market value (unitrust) or a fixed dollar amount (annuity trust).
- Upon termination of the trust, the assets are transferred to your named fund at the Rockland Community Foundation to support your individual or personal charitable giving goals. This fund can be established for any charitable purpose and can even be set up to allow family members to serve as advisors to the fund.
The eventual distribution to the donor's named fund at the Rockland Community Foundation will take effect only at the death of the trust’s income beneficiaries (or at the end of the term of the trust if a fixed term is chosen for the trust).
A charitable gift annuity from the Rockland Community Foundation is a way for you to receive a guaranteed income for life and an immediate income tax deduction, while at the same time leaving a legacy to the charitable causes you care about.
When you transfer $50,000 or more to the Rockland Community Foundation, you receive a fixed stream of income for life. After paying the lifetime annuity to you – and your spouse, if you choose – the remaining principal is transferred to your named fund at the Rockland Community Foundation to accomplish your specific charitable goals.
Our payments to you are based on your age – the older you are, the higher the rate. If the annuity is for you and your spouse, the calculation is based on your joint ages. You can choose to receive payments quarterly, semi-annually or annually. If you do not need the income now, you can use our deferred plan, receive the income tax deduction now, but begin receiving payments when you reach a specific age. This is an excellent complement to your existing retirement plan.
The tax advantages of both a current and deferred annuity are two-fold. First, you receive an immediate income tax charitable deduction when you create your annuity. The amount of the deduction is based on your age and annuity payout rate. Second, a portion of the payments you receive may be treated either as tax-free return of principal or long-term capital gains. These tax advantages increase the net income you receive.
A retirement plan is one of the best types of assets to transfer to a charity following death because it produces taxable income. Most inherited assets are free from income tax. However, an heir will pay income tax on disbursements from a decedent’s retirement plan such as a profit sharing plan, Section 401(k) plan or IRA. If you are going to make a charitable bequest, it is usually better to transfer assets subject to income tax to a tax-exempt charity – such as the Rockland Community Foundation – and to transfer assets not subject to income tax to heirs.
For a taxable estate over $3 million, the combination of estate and income taxes will frequently exceed 75 percent of the total amount – even more if the generation skipping transfer taxes are triggered. At a cost to your heirs of only 25 percent of the fair market value of these types of assets, you could apply 100 percent of the assets to a named charitable fund at the Rockland Community Foundation to accomplish your specific charitable objectives.
Of course, married couples can postpone the decision by transferring the assets to the surviving spouse and claiming the marital estate tax deduction. However, since that deduction is not available to unmarried individuals and the second-to-die of married couples, a charitable bequest of pension plan assets might be the best option.
You may have purchased life insurance when you needed protection for your family, business or estate. In later years, you have found you know longer need that insurance. If you want to achieve immediate tax benefits, you should consider irrevocably assigning an insurance policy to the Rockland Community Foundation.
Giving life insurance as a gift to charity allows even those with modest means to leave a substantial contribution to the cause most meaningful to them. A gift of life insurance is a deferred gift, which means the proceeds from a commitment made now will be realized in the future. Donors often struggle between their desires to achieve philanthropic goals and their need to preserve their estates for their families. A gift of life insurance can eliminate this conflict.
In addition to gifting an existing life insurance policy, a new life insurance policy can be purchased from your life insurance professional naming the Rockland Community Foundation as owner and beneficiary. The initial premium payment plus subsequent insurance premium payments made by the donors are deductible as charitable contributions. A gift of insurance will not reduce your current stream of income.
Naming the Community Foundation as Beneficiary
Perhaps a charitable gift sounds attractive but you are not ready to give up ownership of your life insurance. By naming the Rockland Community Foundation as beneficiary only, you retain ownership of the policy, have access to the cash value and the right to change the beneficiary. If you would prefer that a member of your family remain the primary beneficiary, you can make the Rockland Community Foundation the contingent or successor beneficiary to receive the proceeds if your primary beneficiary dies before you.
Because you retain ownership of the policy, there is no charitable deduction for the value of the policy upon designation of the Rockland Community Foundation as beneficiary or for subsequent premium payments. However, any proceeds payable to the Rockland Community Foundation at your death will not be subject to federal estate tax.
Like many people, you may have a large percentage of your assets in real estate. Yet the difficulty of donating real estate to charity may have kept you from contributing it.
Maybe you dread the daunting task of selling a personal residence or vacation home you have lived in or enjoyed for many years. Or maybe you own commercial property, such as an office building, warehouse or condominiums. Although this is often the most valuable type of real estate, selling it can be more complex than selling other kinds of real estate.
When all the pieces fall into place, a gift of real estate can be a tremendous advantage for you and the beneficiaries of your charitable giving.
Why donate real estate?
- You may be able to attain a new level of giving you might not have considered possible through an asset you own right now.
- You receive the maximum tax deduction allowed by law when you contribute your property.
- You avoid capital gains tax with your gift of real estate.
- Your donation of real estate could help you attain personal financial goals and allow you to gain the equivalent of your own private foundation.
- You may choose to participate in a special giving opportunity, which would pay you and/or your spouse a lifetime income stream.
- You could start to achieve your own dreams of charitable giving immediately.
Your donation of real estate could be:
- A house or condominium
- An apartment building
- Farmland or undeveloped land
- A vacation home
- A commercial building
Then you can partner with the Rockland Community Foundation's team of experts with more than 100 years of charitable giving experience to gain the greatest enjoyment from your grant making.
Let us manage the transaction of such a sale while you enjoy the freedom to cultivate the charitable dreams you've always imagined.
