Charitable bequests are among the simplest and most flexible ways to donate. Other ways to give include individual gifts, stocks, annuities, employer-matched gifts, and in-kind support, or you can become a sustaining monthly donor.
This is the most common way to make a legacy gift for your favorite charity. A bequest (via your Will) or a distribution (via your Trust) is a convenient way to make a legacy gift and create potential estate tax savings. The actual cost of a bequest is actually less than the gift’s face value because of the tax benefits realized through the charitable contribution. If you’ve already prepared your Will, a bequest for the Circus Arts Conservatory can be accomplished via a simple amendment, called a codicil.
A bequest be created in several ways:
- A specific bequest of a particular dollar amount or particular assets.
- A residuary bequest of all or a portion or percentage of your estate, after the payment of all the specific bequests to non-charitable beneficiaries.
- A contingent bequest to take effect if primary beneficiaries die before you.
- A testamentary trust, which takes the form of a Charitable Remainder Trust, the corpus of which will be paid to the Conservatory upon the death of the trust’s income beneficiary.
If you own a life insurance policy that you no longer need, you might consider a revision to your beneficiary designation form to name Circus Arts as the sole owner and beneficiary of the policy. You would receive an income tax deduction for the cash surrender value of the policy. If the policy is not fully paid, you may consider continuing to pay the premiums – and, in doing so, you would receive a charitable contribution deduction for the annual premium amount. In some cases, donors use the value of the tax benefits to replace the life insurance with other assets that will be distributed at death to family members as part of their inheritance.
CHARITABLE GIFT ANNUITY
A gift annuity is a simple agreement between you and the charitable organization to provide you with a fixed income for your lifetime or the lifetime of one or two beneficiaries you name at the time you create this gift. The annual amount paid is determined by rates recommended by the American Council on Gift Annuities. As is the case with any annuity, the older the annuitant, the higher the level of income.
CHARITABLE LEAD TRUST
A charitable lead trust is a creative way to use some of your assets to fund annual gifts for your favorite charity for a period of years (or for your lifetime) and at the conclusion of this period, the assets in the trust are distributed either back to you or (more likely) to beneficiaries you name, often children or grandchildren). Besides the opportunity to make a substantial charitable gift, another advantage of this kind of trust is the opportunity it offers to pass substantial assets to a next generation with little or even no tax consequences. A charitable lead trust is a creative way to fulfill a gift or pledge over a number of years while reducing estate and gift taxes that might otherwise be due on the trust assets if given outright to children, grandchildren, or other loved ones.
DEFERRED GIFT ANNUITY
For younger donors, a deferred gift annuity offers increased income tax benefits. All of the features and benefits of a gift annuity are provided with a deferred gift annuity – but, the actual distribution of the income is delayed until a future date chosen at the time the gift is created. The longer the time between the creation of a deferred gift annuity and the start of the payments, the greater the rate of return and the larger the income tax charitable deduction.
WEALTH REPLACEMENT TRUST
A wealth replacement trust is a method of protecting the inheritance interests of your heirs while still providing a significant charitable gift. With this gift plan, you would contribute assets to Circus Arts – either outright or via a particular gift planning strategy. Using the resulting tax savings, you would then purchase a life insurance policy with your heirs as beneficiaries.