Planned Giving Offers a Variety of Benefits
Recognizing our dependence on philanthropy, many individuals have provided for Memorial Healthcare in their wills and trusts. These legacies have ranged from relatively small sums to several hundred thousands of dollars and have varied widely as to the form and designation, but each, in its own way, has added strength to our hospital.
Many do not realize that they can enjoy a higher standard of living and pass on even more of their estate to their heirs just by including Memorial Healthcare in their estate plans. The key, though, is the planning.
Planned giving refers to a variety of arrangements through which an individual commits a future gift to the Foundation while receiving certain present benefits from the contribution. The principle types of planned gifts are bequests, gift annuities and charitable trust agreements (annuity, unitrust, etc.). The advantages of planned giving are many:
- A More Generous Life Income
- Avoidance of Capital Gains Taxes
- Reduction of Income Taxes
- Reduction or Elimination of Gift or Estate Tax
- Generation-Skipping Tax
- Professional Management of Income Programs
- Security of Knowing that Your Wishes Will Be Fulfilled
If your estate is taxable, you can pass more of it on to your heirs by establishing a charitable trust or a gift annuity. These structures allow for lifetime income to the donor and/or designated beneficiaries from a professionally managed fund, as well as significant tax reductions. For example, if you make a gift of property or appreciated stocks during your lifetime (say $10,000 worth for which you paid $1,000), the recipient must pay capital gains on all appreciated monies above your cost basis, that is, capital gains on $9,000. If, however, the securities and real estate are gifted from the trust, they come to the recipient on a stepped-up basis – at the actual fair market value upon the donor’s passing. The stocks and property could be sold for $10,000 without incurring any capital gains or income tax. Again, if you willed the proceeds from a retirement program to an individual, that person would be liable for income tax on each dollar distributed, since the money was placed pre-tax and grew tax-deferred. The full value of those assets are also taxed in the donor’s estate.
If you have been lucky enough to experience large paper gains as a result of increasing stock prices, now may be an excellent time to do that charitable gift annuity program or to fund a charitable remainder unitrust or charitable remainder annuity trust. You can receive a partial deduction for the assets you transfer into these programs, plus the deduction will be based on the fair market value of the security. The lifetime income program will most likely provide an income far larger than the dividends generated by the securities.
You may even want to consider giving your home, farm or other real estate to the Foundation, while retaining a life interest or life estate. Under this plan, your property tax, insurance and other maintenance costs do not change but you do receive current income tax deduction for part of the property’s value. Later, if you decide to move, a joint sale of the property – or the sale of your interest in it to the Foundation – could be arranged.
There is a wide variety of giving arrangements and to determine what type of plan is right for you, consult with your financial planner and/or tax attorney.
You should consult your legal advisor about making or revising your will. If you have a will, simple additions or changes can be made through a codicil. More complex changes may require a new will. In either case, your attorney should be consulted for the proper form and language to accomplish your distribution plan and to ensure that your will conforms with the laws of your state of residence.
Types of Bequests
Bequests for the Memorial Healthcare Foundation are generally included in your will as:
- Specific Bequests – by which the Foundation receives a specific asset, such as securities or real estate; or
- Residuary Bequests – by which the Foundation receives a stated percentage of the estate or all of the remainder of the estate after specific bequests have been fulfilled
Unrestricted and Restricted Bequests
Unrestricted gifts to the Foundation or to a particular department or program are extremely valuable since they provide support for areas of immediate need at the time the gift is received.
Many individuals, however, wish to support special programs or special needs at the Foundation. This can be accomplished by stating clearly in your will how you wish the bequest to be used.
It would be beneficial to you and the Foundation to discuss the bequest language with the Memorial Healthcare Foundation’s staff. Typically, we ask that your bequests include a clause to allow for other uses under changed conditions in the future.
If you would like to consider any of these alternatives to planned giving, please call the Foundation and let us know of your plans.