Over the last few years, many friends of LearningQuest have asked us about including LearningQuest in their wills or other estate planning vehicles in addition to making their annual gifts. We are indeed blessed.
Occasionally, financial advisors will recommend that gifts be made to charitable organizations before year’s end in order to reduce tax obligations. Other good friends want to plan well for how their estates will benefit those charities which they care about deeply.
Time after time, proceeds from an estate will be shared with LearningQuest because of the donors’ passion for helping to improve lives.
Here are a few ways you may want to consider in your estate planning:
· Bequest: One of the most common planned gifts. A nonprofit organization is bequeathed a gift in a donor’s will or trust. The gift may be designated as (a) percentage of the donor’s estate, (b) specific dollar amount or specific property, (c) residual of the donor’s estate or (d) contingent upon a certain event happening. The value of the gift to LearningQuest is not subject to estate taxes.
· Outright Gift: A gift of cash, appreciated securities, real estate, personal property, etc. – the title of which is legally transferred will generate an income tax deduction (for those who itemize deductions), for the full fair market value and capital gains taxes are avoided, reducing the cost of the gift to the donor.
· Life Insurance Policy: A relatively inexpensive way for a donor to leave a significant gift to a nonprofit organization. A new policy may be taken out on the life of a younger donor, and the policy given to LearningQuest to “create” a major, deferred gift to LearningQuest with the cost of the premium being a small fraction of the face value of the policy. Donors may also have existing policies which are no longer needed for their original purposes (such as to assure a child’s education) which can be given. With a change of policy ownership and beneficiary to the nonprofit, the donor can contribute the premium amount to the charity and the policy’s face value can be maintained. If the donor chooses not to continue payments, the cash value or “paid up insurance” value can be significant. Donors’ tax deductions are equal to their cash/replacement value or premiums paid, depending on the type of policy.
· Retirement Income: Retirement plan distribution. Retirement plan distributions can be taxed for both estate and income tax purposes (often 75%-80%) when passed from the decedent to other than the decedent’s spouse. Since 100% of the IRD plan can be gifted to a qualified charity without tax it has become a prime estate planning gift, leaving other estate assets (which are not taxed for income) to loved ones. Gifts of IRD plans should be gifted directly to LearningQuest by designating the charity as the beneficiary
There are other forms of planned gifts. We recommend that you work with your financial advisor and attorney for up-to-date information and regulations. These professionals can help you determine the best way to plan your estate. When doing so, we hope you will consider including LearningQuest in your plans.