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You’re considering
a gift made after death as part of your
estate > You want to help ensure our
future viability and relevance > Estate
planning is more important to you than an
immediate income tax deduction
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When it is time to begin planning your estate, you think about the institutions which have played a role in your life. You have helped them with time, guidance, and financial assistance. You endorse their mission and believe that they will continue to make a difference for good in the world far into the future.
How can you provide for the future support of your favorite charity? By including a charitable bequest to them in your will or revocable trust.
A bequest is easy to arrange (see sample text below). It is not payable until death, so it does not affect your assets or cash flow during your lifetime. It is private. Your will is not filed or made public until your death. And, it is revocable. You can change the provisions in your will or trust at any time until death.
Consider the charities that have made a difference
in your life. There's the hospital that treated
a loved one, the museum you love to visit,
and probably many more! |
A bequest can deliver a specific
gift (“I bequeath the sum of Ten Thousand
($10,000) Dollars), or a percentage of the balance
remaining in your estate after taxes, expenses
and specific bequests have been paid – what’s
known as the residue of your estate (“I bequeath
Ten Percent of the residue of my estate”).
Generally, giving a percentage of the residue
allows for more flexibility in your long-term
planning.
A charitable bequest or trust distribution is deductible for federal estate tax purposes, and there is no limit on the deduction your estate can claim. In addition, the gift is usually exempt from state inheritance taxes.
Since the charity will likely not receive your bequest until far into the future, its terms should be as general as possible – to avoid a gift benefiting a project that the charity no longer pursues, or with terms that will be difficult to meet. Please consult the charity if you are considering a bequest for a specific purpose.
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Suggested Text for a Bequest:
I bequeath Ten percent (10%) of the residue of my estate to Best Charity, a Missouri non-profit corporation located in Kansas City, MO, to be used for its general purposes.
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You May Be Wondering…
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What’s the difference between
a will and a trust?
A will is your instruction manual to your survivors about how you want your property distributed. It is a revocable, private document that only takes effect after your death.
A revocable trust (sometimes called a living trust) is a legal entity that holds assets during your lifetime, then transfers ownership of them – or benefit from them – to family and charity upon your death. Unlike a will, a trust must take title to assets before it can pass them to your survivors.
There is no difference between wills and trusts in how transfers from them are taxed. In some states, however, the probate and distribution process is simpler with a revocable trust. Your advisors can guide you in choosing which vehicle will work better for you.
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What if I have already written my will or trust?
You can amend a will or trust to make a gift to your favorite charity. Your attorney can prepare the simple document, called a codicil, that adds a new charitable bequest while reaffirming the other terms of your will. Similarly, she can prepare an amendment to your revocable trust to add your charity as a beneficiary.
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