When considering estate, financial or long-term tax planning, planned or deferred giving is a commonly used vehicle for making contributions in future years or over a long period of time. Long-term planned giving can be accomplished through a variety of methods, such as bequests, split interest gifts, or life insurance. Many of these planned giving options not only provide tax benefits, but also can provide donors with an income stream as well. For more information or to discuss specific planned giving options in more detail, please call Developmental Programs Resource Development at 484.475.2463.
With your will or living trust you have the power to continue the tradition of caring and serving the individuals with intellectual and developmental disabilities we support in the Developmental Programs division as part of your life's legacy. Common bequest options include:
- Specific bequest - Determine a specific dollar amount or asset that you wish to leave to one of the facilities or programs of the Developmental Programs division.
- Residual bequest - After first taking care of loved one, name one of the facilities or programs of the Developmental Programs division to receive a percentage or all of your residuary estate.
- Contingency bequest- Leave a portion of your estate to one of the facilities or programs of the Developmental Programs division in the event that your named beneficiary does not survive you.
We encourage you to contact your attorney when drafting or amending your will.
Split Interest Gifts
Split-interest charitable giving techniques allow you to make a substantial charitable gift today, while retaining an interest in the property and receiving both immediate and longer-term tax benefits. With a split-interest charitable gift, the asset is split into two parts: a stream of income produced by the asset (income interest) and the principal remaining after the income interest is paid (remainder interest). Through the use of a charitable trust, the donor transfers the asset to the trust and names a beneficiary for either the income interest or the remainder interest, with the charity receiving the other interest. Assuming the charitable trust is properly designed, a split-interest gift may provide a current federal income tax deduction, avoidance or delay of capital gains taxation and/or a reduction of the federal estate tax bill. Charitable gift annuities, pooled income funds, and charitable remainder trusts are all varieties of split-interest gifts.
If you are considering a split interest gift or to discuss a specific split-gift instrument, please call Developmental Programs Resource Development at 484.475.2463. We will be happy to talk with you and your tax advisor.
The simplest way to use life insurance is for you, as owner of the policy, to name one of the facilities or programs of the Developmental Programs division as beneficiary of your life insurance policy. This may allow you to make a larger gift than you could otherwise afford. If the policy is a form of cash value life insurance, you still have access to the cash value of the policy during your lifetime. However, this type of charitable gift does not provide many of the income tax benefits of charitable giving, because you retain control of the policy during your life. When you die, the proceeds are included in your gross estate, although the full amount of the proceeds payable to the designated facility or program can be deducted from your gross estate.
Another alternative is to assign all rights in an existing life insurance policy to one of the facilities or programs of the Developmental Programs division. You must also deliver the policy itself to us. By doing this, you give up all control of the life insurance policy forever. This strategy provides the full tax advantages of charitable giving because the transfer of ownership is irrevocable. You may be able to take an income tax deduction equal to the lesser of your adjusted cost basis or FMV. The policy is not included in your gross estate when you die, unless you die within three years of the transfer. In this case, your estate would get an offsetting charitable deduction.
You and your heirs will benefit significantly by naming one of the facilities or programs of the Developmental Programs division as beneficiary of your IRA, 401(k), 403(b), Keogh or other qualified plan. You can take withdrawals during your lifetime and change the beneficiary if your circumstances change. Giving us all or part of your retirement plan assets through a will or revocable trust avoids both income and estate tax levied on the residual. This enables you to distribute your assets in a more tax-efficient manner, because you can use assets not subject to income tax (unlike retirement accounts) to make gifts to your heirs.
The Pension Protection Act of 2006 provides special opportunities for individuals aged 70 1/2 and older. With certain restrictions regarding deadlines, amounts and conveyance procedures, donors can now make lifetime gifts using funds from their IRA without undesirable tax effects.
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