Planned Giving

Background

Those who came before us at FUSF had the foresight to establish an Endowment Fund to strengthen the financial soundness of the Society. With FUSF Endowment Funds, we were ultimately able to purchase the property for building a home of our own at the current Chestnut Street location. Supporting FUSF is happening through both outright gifts of cash and can also be done by donating appreciated securities. A planned gift can be directed to FUSF’s Endowment Fund, Building Fund or Mitchell Religious Education Fund. There is growing awareness now of the kind of giving that can be a part of an overall financial estate plan. It is known as Planned Giving.

Overview

Planned gifts take the following forms:

  • Specific Bequests from a will
  • Life income plans
  • Real estate or life insurance gifts- mutually beneficial to FUSF and the donor!

The life income plans, such as Charitable Gift Annuities and Charitable Remainder Trusts, can provide income to the donor (and sometimes a beneficiary) for life, or a term of years, and, at the end of that time, the remainder will pass to the charity. Besides lifetime income, there are other benefits to the donor. These include: 

·         A charitable deduction for income tax purposes

·         Reduced capital gains and estate taxes

·         Freedom from investment management responsibilities 

Life income plans can be funded with cash, appreciated securities or closely held stock, mutual funds, retirement funds and real estate. 

Special Bequests

Donors can provide for FUSF in their wills. A Specific Bequest can be designated for example, to the FUSF Endowment Fund, Building Fund or Religious Education When revising your will, you should consult an attorney to help ensure that your bequest will be worded so that your wishes are carried out.

Bequest provisions can be added to your existing will through a codicil or can be made when you update your will. An example of bequest language is as follows:

"I give to FUSF, a non-profit religious institution located in Franklin, Massachusetts, the following (amount of cash, securities or other specific asset, percentage of my estate, etc.), to be added to and administered as part of its endowment fund."

Charitable Gift Annuity

A gift annuity is an agreement whereby a donor transfers assets in the form of cash or appreciated securities to FUSF in exchange for a fixed, lifetime annual income.  Some of this income is tax-free for a period of years and can be paid monthly, quarterly or annually, depending upon the needs of the donor.  A gift annuity can also be set up to provide for a spouse or beneficiary.  There are income tax and capital gains benefits, a charitable deduction (spread out over 5 years, 3 years for non-cash assets), and a possible reduction in probate costs and estate taxes. The rate of return is based on the donor's age at the time of the gift, and the fact that if the income will be spread over more than one life, the rate will be lower.  The sample gift rates below are for a one-life gift annuity.

Age

Rate

 

Age

Rate

65

7.0

 

80

9.2

70

7.5

 

85

10.5

75

8.2

 

90

12.0

The minimum gift in this situation is $2,000.

Deferred Gift Annuity

Many donors may want to make a sizable charitable gift of capital now because they do not need additional current income.  They would also like to reduce their income taxes.  However, upon retirement, they would like to have additional income.  A Deferred Gift Annuity, sometimes called "the charitable IRA", can save income taxes now and provide retirement income later.  The donor makes a charitable gift but defers receiving income from it for more than one year.  For example, a 55 year old donor may defer the income until age 65 when he/she retires.  The longer the deferral, the higher the rate of the income, but the amount of the income is determined at the time of the gift.

The benefits at the time of the gift are similar to the Charitable Gift Annuity including a charitable deduction (can be spread over 5 years, 3 years for non-cash assets), capital gains tax savings and the ability to provide for a spouse or other beneficiary.  When the income stream starts, the donor may receive additional income tax savings and convenient monthly, quarterly or annual payments.  The minimum gift is $2,000.00.

Charitable Remainder Trust

Charitable Remainder Trusts provide a charitable deduction and an income for life or a fixed term of years.  At the end of the payout period, the trust principal passes to the charity.  You select the payout rate (usually between 5 and 8%). The higher the payout rate, the lower the charitable deduction.  There are two types of Charitable Remainder Trusts -- the annuity trust and the unitrust.

The annuity trust payout is a fixed dollar amount, regardless of the performance of the trust assets.  This amount is determined at the time of the gift and no additional contributions may be made to the trust.

With a unitrust, the payout rate is a percentage of the fair market value of the trust assets, and it is determined at the time of the gift.  These assets are re-valued annually, providing the donor with a variable income and a good hedge against inflation.  The donor may make additional contributions to the unitrust.

Both types of trusts provide a charitable deduction, income tax and capital gains savings, and a possible reduction in probate costs and estate taxes.  A testamentary unitrust (established by a will), can result in significant estate tax savings as well as providing income for a beneficiary.

 

Charitable Lead Trusts

The lead trust is the reverse of the other life income plans.  Instead of the donor receiving an income for life from the trust, then the principal passing to the charity, the charity receives income for a designated time period, then trust assets revert back to the donor or the donor's family.  This type of trust can provide a large charitable deduction or gift and estate tax benefits, depending on how the trust is set up.  There are also some taxable income and generation-skipping tax implications, so if you are considering a lead trust, it is important that you consult your own financial advisor.

Gifts of Life Insurance and Real Estate

Real estate can be given outright to FUSF or used to fund a charitable remainder trust.  Using real estate to make a charitable gift can result in a significant reduction in probate costs and estate taxes.  If the property is highly appreciated, there are also capital gains savings.  Funding a charitable remainder trust with a piece of real estate is a good way to turn it into an income producing asset with no management and investment worries for the donor.

Life insurance that is no longer needed can be used to make a substantial charitable gift at little or no new cost to the donor.  Making FUSF both the owner and beneficiary of a paid-up policy entitles you to a charitable deduction at the time of the gift.  If you make FUSF both the owner and beneficiary of a policy on which you are still paying premiums, a charitable deduction is available at the time of the gift and you may also deduct each premium payment as a charitable gift. Gifts of life insurance can also result in reduced probate costs and estate taxes by removing the assets from your estate.