Planned Giving is synonymous with charitable gifts arranged with forethought and meant to be executed either over time or at some point in the future. Planned Giving permits the donor to fulfill philanthropic wishes, become eligible for significant tax benefits, and, depending on the form of the gift, to also receive a lifetime income.
At St. Margaret Foundation it also means the wonderful knowledge that your charitable dollars also are being put to work in support of many programs and services that promote the greater health and wellness of your neighbors.
A free Planned Giving Calculator can help you see the power and potential of such a gift, based on your specific goals and circumstances. If you would like to have a Planned Giving representative from the Foundation contact you about options available, just Request Information.
The Legacy Society
Individuals making a commitment to St. Margaret Foundation through planned or deferred gifts become members of The Legacy Society.
Gifts That Pay Income
St. Margaret Foundation offers a variety of income-producing gift plans. Discover how your gift of cash, securities, or other property may provide you and/or other beneficiaries with income for life or a term of years. Click on the links below for details on the following income-producing plans:
Charitable Gift Annuities
With a gift annuity, you simultaneously make a charitable gift to St. Margaret Foundation and provide guaranteed payments for life to one or two persons (annuitants). If you are single, the payments will continue for the duration of your life. If you are married, you may choose a joint-and-survivor annuity that continues as long as either spouse lives. It is also possible to provide a lifetime annuity for someone other than yourself and your spouse - a parent or sibling, for example. The minimum amount to establish a gift annuity is $25,000.
The size of the payments depends on the age(s) of the annuitant(s) and the amount of your contribution. The older the annuitants when the annuity starts, the larger the payments. And those payments will never change, no matter what happens to the economy or interest rates. You will receive your annual payment in four installments, paid at the end of each calendar quarter.Your gift annuity brings you a special bonus at tax time: you receive an income tax charitable deduction in the year of your gift and, during your actuarial lifetime, a portion of your payments will be tax-free.
Example: Ms. A, age 76, contributes $10,000 cash and receives a lifetime annuity of $800, of which $484 is tax-free for the first eleven years. She also receives an income tax deduction of $4,294 which results in tax savings when she claims it.
Funding your gift annuity with appreciated securities can be a practical way to make a gift and increase your cash flow at the same time. You will avoid tax on a portion of the gain, and the remainder will be spread over your actuarial lifetime. Your income tax charitable deduction will be the same as if you had contributed cash, though the maximum amount you can use in any one year is 30% of your adjusted gross income, compared to 50% when you contribute cash.
Example: Mr. and Mrs. B, ages 72 and 71, contribute stock valued at $40,000 for which they paid $10,000 some years ago. The stock's current dividend is 3%, or $1,200 per year. The annual payments from the annuity will be $2,680, more than twice what they are now receiving in dividends, and each payment will be taxed as follows for the duration of their life expectancy: $1,242 ordinary income, $1,079 capital gain, and $359 tax-free. Another benefit is an income tax deduction of $14,141 they can claim as an itemized deduction.
Possibly you are in your peak earning years and you don't need more income now, but you would like to accumulate more for retirement during the next 10 or 15 years. The problem is that you are already contributing the maximum allowable to your Keogh, 401(k), or other qualified retirement plan. Did you know that you could contribute for a charitable gift annuity and stipulate that payments begin at whatever age you expect to retire? A significant portion of your contribution will be deductible now, and it will grow tax-free. Moreover, you may contribute appreciated securities as well as cash and defer tax on the gain. Unlike your qualified plan, there is no limit to how much you can contribute.
Charitable Remainder Trusts
You may have an asset - securities, real estate, or a sum of cash - you would like to give to St. Margaret Foundation but for now you need the income it provides. One possibility, of course, is to leave it as a bequest after your death. But there is another way: with a charitable remainder trust, you can make your gift now and continue to receive income
for life or a term of years.
Perhaps you have an asset with a low return. You'd like to sell it and reinvest in something more productive, but you hesitate because taxes on the capital gain would take a big bite out of the proceeds. By transferring it to a charitable remainder trust, you'll avoid tax on the gain and the full value of the asset will go to work for you and for St. Margaret Foundation.
With a charitable remainder trust, you make an irrevocable transfer of assets to a trustee you have selected. The trustee manages the assets and pays income to you and/or other beneficiaries for their lifetimes or a term of years. When the trust terminates, the remaining principal is used to benefit St. Margaret Foundation.
The amount of income paid to the income beneficiaries may be fixed for the life of the trust ("annuity trust"), or it may be a stipulated percentage of the trust assets as revalued annually ("unitrust"). The annuity trust offers the security of fixed payments, while the unitrust offers the possibility that payments may grow over time (if net total trust earnings exceed the stipulated payout rate).
When you establish a charitable remainder trust, you receive an income tax charitable deduction for the present value of the estimated remainder that will be available to support St. Margaret Foundation when the trust terminates. This can result in significant tax savings over the period (up to five additional years beyond the gift year) during which you report the deduction on your tax returns. If the trust is set up under your will to be effective at your death, your estate would receive an estate tax deduction.
For many donors, however, an even greater benefit is the avoidance of all tax on the capital gain when appreciated property is placed in a charitable remainder trust. This means that the entire asset can be reinvested to meet the trust's income and/or growth objectives.
Example: Mr. and Mrs. C, ages 68 and 65, own stock worth $250,000 they purchased years ago for $50,000. If they were to sell the stock and reinvest the proceeds, tax on the $200,000 gain would consume $40,000, leaving only $210,000 to reinvest. Instead, they contribute the stock to a charitable remainder unitrust with a payout rate of 6% for their lifetimes. They receive an income tax charitable deduction of $77,470. The trustee sells the stock and reinvests the proceeds, achieving an average net total return of 8%. The first full year of the trust, Alice and Millard receive payments of $15,000 (6% of $250,000). However, because the trust principal is growing by 2% (8% return less 6% payout), their payments will also increase over time. When the trust terminates, the principal will be used to augment St. Margaret Foundation's endowment.
Gifts Through a Will or Living Trust
In your will or living trust, you can leave St. Margaret Foundation a specific amount, a percentage of your estate, or the residual amount after providing for other commitments. A bequest is simple to arrange, can reduce estate taxes, and does not affect your current assets.
Sample Bequest Language
As you contemplate a bequest to St. Margaret Foundation, you and your attorney may find it helpful to consider the following wording for different types of bequest provisions:
Specific sum of money:
"I give to St. Margaret Foundation the sum of [insert here the exact dollar amount]."
Specific property such as real estate, stocks, bonds, works of art, or other items: "I give to St. Margaret Foundation [insert here a description of the particular property]."
Rest and residue of estate after paying debts, taxes, expenses, and other bequests:"I give to St. Margaret Foundation all [or a stated percentage] of the rest, residue, and remainder of my estate."
Contingent bequest if you are not survived by certain individuals:"If [name/s of primary beneficiary/ies] do/es not survive me, or shall die within ninety (90) days from the date of my death, or as a result of a common disaster, then I give to St. Margaret Foundation [insert here the exact dollar amount, description of property, or percentage of residual estate]."
A Gift That Also Provides for Heirs
Property passing from one generation to another can be taxed at a rate of approximately 50 percent. That means your children may receive only one-half of every dollar you leave them during life or upon your death.
If you face this problem, you should know about the charitable lead trust, a unique giving arrangement that enables you to minimize or even eliminate gift and estate taxes while making a gift for the benefit of St. Margaret Foundation.
Under this plan, you irrevocably transfer assets (cash, publicly-traded securities, closely-held stock, and real estate are all acceptable) to a trustee and provide that income be paid to St. Margaret Foundation, either for a certain number of years or until the end of your life or another's. At the end of the trust term, the principal is distributed to your children, grandchildren, or other heirs at greatly reduced gift and estate tax rates. Sometimes the principal escapes taxation altogether, since only the present value of the remainder interest (the amount remaining for heirs) will be subject to tax.
Example: Mrs. D funds a lead trust with $1,000,000 and stipulates that the Rep is to receive $75,000 per year for 15 years, after which the remaining principal will be distributed to her three children. She will report a gift-tax charitable deduction of $744,593, leaving just $255,407 subject to gift tax. If she had simply given the $1,000,000 to her children, the entire amount would have been taxable.
Because Mrs. C established the trust during her lifetime, she receives a gift-tax deduction. If the trust were set up under her will to be effective at her death, her estate would receive an estate-tax deduction.
Gifts of Retirement Funds and Other Assets
Many people have considerable sums of money in
IRAs, 401(k) accounts, Keoghs, or other qualified retirement plans.
Indeed, sometimes they may have set aside more than they will need during retirement. In such cases, it makes good sense from a tax standpoint to designate that St. Margaret Foundation will receive some or all of what remains at the end of their lives. (This is because the Foundation will pay no income or estate tax on what it receives, whereas retirement plan assets left to family members will be subject to taxation.) In certain situations, it can even be appropriate to draw on retirement funds to make lifetime gifts.
Similar considerations apply to gifts of U.S. Savings Bonds and commercial annuity contracts. In addition, artworks and other tangible property can result in tax benefits when contributed to St. Margaret Foundation, especially if we are able to make use of them in productions or other aspects of our work.
And don't forget life insurance policies.
You can either assign ownership of a policy to St. Margaret Foundation or designate the Foundation as a beneficiary. If you give a policy to the Foundation, you will receive an income tax deduction for the current value of the policy as well as for any future premiums you pay. If you name the Foundation as the policy beneficiary, the gift qualifies for an estate tax deduction.