Including the Phelps County Community Foundation in their estate plan is an easy way for your clients to make a significant impact on community needs and create a legacy that lasts forever.
After ensuring their loved ones have been cared for, your clients can use a variety of assets to make a planned gift and accomplish their charitable goals.
A charitable bequest to the Kalamazoo Community Foundation enables your clients to retain control over their assets during their lifetime and support the community they love later. A charitable bequest can be a specific dollar amount, a percentage of an estate, or what remains after other bequests are made.
Individual Retirement Accounts (IRAs) or other qualified retirement plans are often one of the best types of assets to leave to charity because they are taxed so heavily when left to heirs. When your clients leave retirement plan assets to a nonprofit––such as the Community Foundation––100 percent of the gift will be available to support their charitable interests.
GIFTS THAT PROVIDE INCOME
Charitable Gift Annuity
When your clients establish a Charitable Gift Annuity they can receive guaranteed income for life, benefit from an immediate income tax deduction, and leave a legacy that will support the causes that are important to them forever. Payments are based on age: the older your clients are the greater the annuity payment. If they choose, they can receive an income tax deduction now and defer receiving the annuity payments until a future date. After receiving annuity payments for life, the remainder interest may be used to establish a named charitable fund, or be added to an existing fund. The tax advantages of both a current and deferred annuity are two-fold. First, your clients receive an immediate charitable income tax deduction when they create the annuity. Second, a portion of the payments they receive may be treated either as tax-free return of principal or long-term capital gains. These tax advantages increase the effective value of the annuity payments.
Charitable Remainder Trusts
A charitable remainder trust offers your client a great deal of flexibility. Payments may be made to your client or another beneficiary for life, or a specified number of years. The income beneficiaries annually receive an amount equal to a fixed percentage of the trust’s fair market value, or a fixed dollar amount. A charitable remainder trust may be set up during your client’s lifetime or through their will. The eventual distribution to the Community Foundation will only take effect upon the death of the trust’s income beneficiaries, or at the end of the specified number of years. At this time, the remainder of the trust transfers to the Community Foundation.
CHARITABLE LEAD TRUSTS
A Charitable Lead Trust enables your clients to make significant charitable gifts now while transferring substantial assets to beneficiaries later. A trust is set up from which the Community Foundation receives annual payments for life or for a specific number of years. These funds may be used to support nonprofits your clients choose or be added to an Advised Fund. When the trust terminates, the principal is returned to your clients or distributed to others they designate. The trust assets pass to the recipients at reduced tax cost—sometimes even tax-free.
RETAINED LIFE ESTATES
Your clients can turn their property’s value into community good by making a gift of real estate to the Kalamazoo Community Foundation. Your clients can continue to live in and fully enjoy their home (or vacation property) while giving the future ownership of it to the Community Foundation. This is called a Retained Life Estate. The gift of the “remainder interest” is a charitable contribution in the year the gift arrangement is made, which may result in a substantial income tax charitable deduction. When the life tenancy terminates, the Community Foundation becomes the owner of the property. The proceeds of the property’s sale may be used to establish a fund at the Community Foundation or be added to an existing fund.